These are the world’s top two retail giants, competing for the same customer base. These two are the market leaders who set operating standards for other big box stores and online retailers. Amazon and Walmart make for an interesting study as they operate within the same retail space, sell to the same customer base, and boast a wide product repertoire.
Origins & Expansions
Operating in the global space of e-commerce, cloud computing, and digital streaming, the American multinational technology company was founded under another name, Cadabra, Inc. in the year 1994. The founder was Jeff Bezos, who had left his job as a Vice-President at D. E. Shaw & Co., a wall-street firm. He renamed his company Amazon within a few short months. Amazon was established with the original idea of making it the biggest bookstore in the world.
Slow company growth, along with no expectations of turning a profit for initial four to five years was making investors edgy and the dot-com bubble burst of the year 2001, did not increase investor confidence as many e-companies were destroyed in its wake. Amazon, however, did not only survive but recorded its first profit in the fourth quarter of the same year. This proved to be Amazon’s turning point as it grew swiftly expanding its product repertoire and becoming one of America’s Big Five technological companies.
In a bid to challenge Walmart’s supremacy in the brick-and-mortar retail space, Amazon acquired Whole Foods in the year 2017. Amazon’s e-commerce business model grew exponentially in the year 2020 when it recorded a 38% rise over 2019.
Originally a brick-and-mortar store format, Walmart was founded in the year 1962 as a single store in Rogers that expanded outside Arkansas by 1968. The decision to lower the sale price of the products and reduce profit margins to boost sales volume was taken by founder Sam Walton. By the year 1978, Walmart branched out into new markets and also launched its pharmacy, auto service center, and jewelry divisions. Expanding quickly, Walmart had successfully opened and was operating a store in every state of the United States and also opened its first store in Canada in the year 1995.
At the turn of the century, Fortune magazine ranked Walmart at number five on its Global Most Admired All-Stars List and by the years 2003 and 2004, Walmart was named as the most admired company in America. Over the years, Walmart has expanded its global presence as well as acquired many businesses. By the year 2022, the company operated stores in Botswana, Canada, Chile, China, Costa Rica, El Salvador, Ghana, Guatemala, Honduras, India, Kenya, Lesotho, Malawi, Mexico, Mozambique, Namibia, Nicaragua, Nigeria, South Africa, Swaziland, Tanzania, Uganda, and Zambia.
The company launched its e-commerce portal Walmart.com in the year 2000. However, it was only in the year 2016, that the management seriously considered online selling.
Comparison Between the Two Giants
The difference in business operations was highly visible a few years ago between these two retail giants. One operated in the physical world of retail through brick-and-mortar stores while the other, a more recent business, navigated the online retail space. Undoubtedly though, both have been leading the retail space through their business operations.
In the last few years, especially post the pandemic period, both these giants have made successful attempts at foraying into the other’s playground. They have responded to the changes within the retail industry. This is a comparison between them to ascertain who leads the retail space.
The Number’s Game
The financial year of 2020 saw Walmart’s revenue increase by 6.7% to reach a total of USD 559 billion. Walmart also saw an increase of 6.2% in quarterly revenue in the first quarter of the year 2021 to reach 138.31 billion. On the other hand, Amazon’s revenue in the year 2020 was USD 93.4 billion and it witnessed a 43.8% increase in the quarterly revenue to reach 108.5 billion in the first quarter of 2021. That year, Amazon’s annual revenue saw a growth of USD 100 billion to reach a total of USD 386 billion. In terms of the number of employees, Walmart leads with 2.3 million as opposed to Amazon’s 1.3 million.
Investing in Innovation & Technology
In this particular field, Amazon has a clear advantage being a technology company itself. However, both these companies have taken giant leaps by adopting technologies benefitting their business operations and making the user experience better during the pandemic period. Amazon introduced biometric payments, Amazon Fresh Grocery Stores, FAA-approved drone deliveries, and even a hair salon. The company has also strengthened its pharmaceutical offerings as well as its smart home devices.
On the other hand, Walmart’s efforts in innovation are in streamlining order fulfillment and enhancing customer experience. It introduced the Alphabot platform in the year 2020, which can pick, pack, and deliver online grocery orders faster and more accurately than humans. It has also re-designed its 1000 stores in an effort to create a more streamlined and faster shopping experience.
Being primarily an online company, Amazon is better positioned for an increased focus on customer satisfaction. In fact, the company is known for its culture of customer obsession. It has an unparalleled system for product recommendations and personalization that generates approximately 35% of its total sales.
Walmart, on the other hand, while understanding the importance of being customer-centric has only just recently begun making many changes with this in mind. Its new store layouts are designed for easy and quick access to customer needs and the company has also renewed its focus on mobile and online shopping to meet customer demands.
Digital growth, for most companies, saw a substantial increase during the pandemic period. Walmart and Amazon were leading the pack with Walmart reporting a 79% e-commerce growth and Amazon leading with 40% of the total e-commerce sales in the US. Walmart has successfully blurred the lines between in-person and online shopping making the smartphone an important part of the shopping experience. Its Walmart+, unveiled in the year 2020 was in direct response to Amazon Prime, offering unlimited free grocery delivery, Scan and go in-store shopping, and gas discounts among many others. On the other hand, Amazon found success with Prime streaming video with more than 175 million subscribers in 2020 recording an increase of 70% in streaming hours.
Physical Retail Presence
In this category, Walmart leads by a large margin, being that it has been in business for far longer than Amazon. It has more than 5000 stores in the US alone and 90% of its customer base resides within a 10-mile radius of a Walmart outlet. In the last few years, Amazon has also increased its physical presence with its own grocery stores. Its acquisition, Whole Foods is already present in more than 500 locations and Amazon is also opening full-size fresh grocery stores across the country.
Supply Chain Logistics
In this category, Amazon clearly leads the pack with quick shipping and same-day and next-day shipping for its Prime members. The company maintains complete control over its logistics with its own fleet of trucks and planes. In the year 2020, it also got the FAA approval for delivery drones ensuring a delivery time of 30 minutes or less. Walmart is closely following Amazon’s footsteps with one-day shipping. It has also expanded its Alphabot system to automatically fulfill grocery orders while also converting more stores into automated fulfillment centers. It also unveiled Express in the year 2020, which is its new two-hour delivery service.
Both Amazon and Walmart have shown commitment by investing in environmental initiatives. Jeff Bezos of Amazon has introduced USD 10 billion Bezos Earth Fund and also is investing USD 2 billion in sustainable companies and technology. The company’s public goals include 100% usage of renewable energy by 2025 and achieving net-zero carbon by the year 2040. Walmart bought and installed more solar than any other company in the US in the year 2019. It also diverted 80% of its global waste from landfills and incineration. Walmart aims to achieve zero waste in US and Canada operations by 2025, 100% recyclable packaging by 2025, and 100% renewable energy by 2035.
Both these companies are retail giants and leaders in their sectors. Both conglomerates are operating and expanding with speed while also being environmentally conscious. Each of them has had its own journey in introducing innovation and technology to better consumer engagement and experience. With that said, it isn’t an easy win for either of them. The best judge is time and it will show which one of them stands strong.
When was Walmart founded?
Walmart was founded in the year 1962.
When was Amazon founded?
Jeff Bezos founded Amazon in 1994.
What is Jeff Bezos's initiative for sustainability?
Jeff Bezos has introduced USD 10 billion Bezos Earth Fund and also is investing USD 2 billion in sustainable companies and technology.