Walmart vs Amazon | The Battle for the #1 Spot on Fortune 500 list
The Fortune 500 list ranks the largest companies in USA by revenue. Walmart, with an Annual revenue of over USD 572 Billion, was ranked first in the list for the 10th consecutive year. The 2nd ranked company on that list was global E-commerce giant Amazon of USD 470 Billion. Leading experts from JP Morgan believe that Amazon will overtake Walmart to become the largest US retailer by 2022, while experts from Edge by Ascential believe it’ll be by 2024.
Walmart was founded in 1962 giving it a 32 years head start over Amazon. What has been Amazon's strategy which has allowed it to put it within striking distance of Walmart, which is a name feared by many Retail companies across the globe.
What is Amazon doing to catch up to Walmart?
According to estimates by JP Morgan, Amazon’s GMV (Gross Merchandise Volume) is growing faster than that of Walmart. In 2020, Amazon’s GMV increased by more than 41% to yoy to USD 316 Billion, where as Walmart’s GMV is estimated to have grown only by 10% yoy to USD 439 Billion according to the JP Morgan analysts.
Some of the major factors helping Amazon catch up with Walmart include
- Expansion into the under-penetrated categories including, apparel and grocery
- Strong growth in third party seller sales
- Prime Wheel
The COVID-19 pandemic accelerated the adoption of E-Commerce which played into the hands of Amazon and it's race to the top against Walmart, as the former has a vastly superior infrastructure and other resources built in this area. Many studies show that Amazon’s E-commerce share which was 24% in 2014, became 39% by 2020.
Not only did customers who were stuck in their homes order groceries and consumer goods, they also purchased the other services provided by Amazon even more. These services include AWS (Amazon Web Services) and Amazon Prime. Amazon’s presence in both the physical and digital world further increases it’s chances of outdoing Walmart in revenue.
Amazon has over 200 Million Prime subscribers! With the standard Amazon prime membership at USD 14.99 per month, that’s a rock solid monthly revenue stream for Amazon. Statista shows the Prime subscriptions have made Amazon nearly USD 32 Billion in 2021.
Amazon is also expanding its presence in the package delivery business and had delivered over 5 Billion packages in 2021, just a little short of the 5.5 Billion packages delivered by the market leader UPS. It is predicted by many experts that Amazon will dethrone UPS as the market leader in the industry within months if not an year.
Here’s a breakdown of Amazon’s main Revenue Streams in 2021 (in Billions)
- Online Streams: USD 222.08 B
- Physical Stores: USD 17.08 B
- Retail Third Party Seller Services: USD 103.37 B
- Subscription Services: USD 31.77 B
- Amazon Web Services (AWS): USD 62.2 B
- Other: USD 2.18 B