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Amazon Dethrones Walmart (Lance Turner Editor’s Note)

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It was inevitable but still something to see The New York Times proclaim last week that, for the first time, Americans are spending more money with Amazon than Walmart, toppling the Bentonville firm from its perch as the biggest retailer outside China.

Walmart reported second-quarter results on Tuesday, which gave FactSet analysts the last bits of data to determine that, over roughly the same 12-month period, Amazon outsold Walmart by about $44 billion. Walmart reaped $566 billion in revenue for the year that ended in July, while Amazon garnered $610 billion for a stretch that ended in June.

Experts have for years expected Amazon to overtake the legacy retailer, even before the pandemic that powered online sales to new heights. From a sales perspective, the pandemic has been good for both companies. But Amazon, a digital native, was positioned to benefit the most and quickly.

In March, Wells Fargo proclaimed Amazon as the country’s No. 1 clothing retailer with an estimated $41 billion in apparel and footwear sales in 2020, up 15% from the previous year and 25% above Walmart. In June, JPMorgan put Amazon on track to pass Walmart next year in “gross merchandise volume.”

But the pace of Amazon’s revenue gains — the sharp ascent on a line graph, like a Blue Origin rocket to the stratosphere — is what catches the eye. Looking at annual revenue increases for each company in three pre-pandemic fiscal years, Walmart’s 2% to 3% annual revenue growth looks positively modest compared with Amazon’s spikes of 20% to 30% — even as Walmart annually tacks on revenue equivalent to multiple Fortune 500 companies.

Amazon has been growing faster than Walmart and doing it where it counts: online.


The story of Walmart at the dawn of the internet age was an unprecedented build-out of physical stores.

Walmart made its portfolio of stores and Sam’s Clubs ubiquitous, a fixture of rural countrysides, paved suburban enclaves and some cities. When it saturated the U.S., it sought to wring revenue from Mexico, Japan, the U.K., Brazil, India and China.

Amazon has preferred the virtual landscape. Launched by Jeff Bezos in Bellevue, Washington, in 1994, Amazon began life as a place to buy one thing online — books. But the grander vision was to sell everything. Not only that, Bezos wanted to sell other things for other retailers, opening a marketplace to hawk items from a bottomless inventory and extract a fee for each. After that came the piece de resistance: to deliver these items fast and free of shipping charges to subscribers paying an annual fee.

It was a commerce model tailor-made for the internet. Everything — communication, social interactions, government services, entertainment — was moving online. Of course shopping would, too.

Walmart was aware of this. It partnered with Microsoft Corp. to launch its first website in 1996, with Walmart suppliers shipping orders direct to customers. Walmart would experiment with an array of online sales strategies in the coming years, but it arguably didn’t get serious about the Amazon threat until the early 2010s — and its modern vision for e-commerce didn’t solidify until around 2016, with its $3.3 billion purchase of Marc Lore’s retail website, jet.com.

Quickened by COVID-19 and Amazon’s surge, Walmart is now remaking its business into an omnichannel juggernaut. It’s expanded its online marketplace, allowing thousands of retailers to sell on walmart.com, and it’s monetizing the technology that powers its business by offering paid access to third parties.

It’s also piling billions of dollars into its supply chain, seeking new efficiencies through automation and artificial intelligence. A key component of that strategy is its physical stores. The retailer says 90% of Americans live within 10 miles of one, and they’re ideal pickup sites for online orders or as outposts from which to make final-mile delivery runs.

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There are lessons here for businesses great and small. Technology continues to give entrepreneurs new tools to upend old business models, which means everyone’s business is forever in the crosshairs. There’s always a faster gun.

So how do you guard against disruptive competitors? At Arkansas Business Publishing Group, we spend time thinking about how we’d disrupt ourselves. How would I, as an outside go-getter with little more than a laptop and an internet connection, try to take a bite out of this business? These thought exercises can seem outlandish — until they don’t.


Lance Turner is the editor of Arkansas Business.
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