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AMAZON VS WALMART: CLASH OF BUSINESS MODELS
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With sales of US$567.7 billion in 2021, Walmart continued its dominance as the world’s largest
company by revenue, a position that it first achieved in 2002. In contrast, the ecommerce pioneer
Amazon, founded only in 1997, but with revenues of US$469.8 billion in 2021 became for the first
time the world’s second largest corporation. 1 The surge in online shopping over 2020-2021 on
account of the Covid-19 pandemic had enabled the e-retailer to considerably shrink the gap between
itself and Walmart. Despite Walmart’s lead in revenues, on 1 March 2022, Amazon’s US$1539
billion valuation dwarfed the US$382 billion market capitalisation of Walmart (refer to Exhibit 1
for a comparison of the retailers’ performances).
As two of the most successful retailers in history, Amazon and Walmart had transformed the retail
industry by redefining customer orientation, supplier-retailer relationships, and the use of
information technology. Both retailers had tremendous power over their suppliers, and leveraged it
effectively to offer prices as low as possible. Historically, the two did not compete directly because
of their differing focus. While Walmart dominated the brick-and-mortar retail that comprised 86.8%
of the US retail industry, Amazon led the ‘growing’ ecommerce sector that contributed the remaining
13.2% in 2021.2
tC
Over the years, the two firms had optimised contrasting business models to enable their dominance
of the respective offline and online retailing. Walmart’s model was based on offering the lowest
prices on everyday goods for its in-store shoppers from over 10,500 stores worldwide. By developing
strategic partnerships with its largest suppliers, Walmart had redefined supply chain practices and
lowered system costs through the adoption of information technology. Amazon’s online model was
based on offering the convenience of shopping from anywhere, anytime. It focused on developing a
high-quality user-friendly platform, which comprised a large product catalogue, and a widespread
and reliable fulfilment infrastructure to deliver the orders quickly to the shopper. The success of these
two retailers was reflected in the fact that in 2016, 95% of all US consumers had shopped at a
Walmart store and 42% had shopped at Amazon.3
Do
No
However, the changing customer preference for omni-channel retailing, an integrated experience that
seamlessly comprised digital and physical retail, had compelled the two companies to make
substantive investments for developing capabilities and acquiring resources in what was hitherto the
other’s domain. With Walmart and Amazon racing to add online and offline retail respectively, would
their distinctive business models morph to become similar to each other? Or should each focus on its
core strength, while offering the other service (online for Walmart and offline for Amazon) as
complementary? Were online and offline retail more suited to different customers and product
categories? And did their respective future prospects truly justify the dramatic difference in market
capitalisation between the two retailers?
This case was written by Professor Nirmalya Kumar and Dr Sheetal Mittal at the Singapore Management University. It is an
update of the authors’ previous case, "Amazon and Walmart on Collision Course” (SMU-18-0013). The case was prepared
solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of
a managerial situation. The authors may have disguised certain names and other identifying information to protect
confidentiality.
Copyright © 2022, Singapore Management University
Version: 2022-02-14
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The battle between Amazon and Walmart was a bellwether for the retail industry. The rise of online
shopping combined with the pandemic had resulted in iconic US retailers like J.C. Penney, Lord &
Taylor and Neiman Marcus filing for bankruptcy in 2020. They were following Circuit City, Sears,
and Toys R’Us as retailers who had failed the digital transformation challenge.
The Growth of Ecommerce
Ecommerce in the US had grown rapidly, and was predominantly led by Amazon, whose online sales
were not only the highest in the country, but in 2021, more than the online sales of the next 49 retailers
put together (refer to Exhibit 2A for details on the growth of ecommerce over 2011-2021 and Exhibit
2B for the share of retailers).4,5 A 2020 survey indicated that US consumers’ favourite online store
was Amazon (48%) followed by Walmart (13%).6,7
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Shoppers’ growing preference for online shopping had led to the shrinking of the number of brickand-mortar stores. 2019 was a record year of closures in the US with 9,832 stores shut down, followed
by 8,741 in 2020.8 The outbreak of Covid-19 in early 2020 further accelerated the transition to online
buying. Many traditional retailers such as Walmart, Nordstrom, Target and Gap adopted the digital
model and embarked on an omni-channel fulfilment strategy by leveraging their store locations. In
the holiday quarter in 2021, Nordstrom generated 54% of its total sales online, while Macy’s did 44%.
Gap’s online sales for the fiscal year were close to 50%.9
tC
Despite its seemingly widespread presence, the e-retail penetration differed significantly across
product categories. In February 2021, music, videos, books and magazines commanded the highest
online share at 69% of the total category sales, followed by consumer electronics at 53%, apparel at
38%, and food & beverage at only 4.8%.10,11 Despite their lower online penetration, apparel (total
market estimated at US$317 billion) and groceries (approximately US$1.1 trillion) were two of the
largest categories in the US.12,13 Observing this discrepancy, Jeff Bezos, founder and chief executive
officer of Amazon, had remarked early in Amazon’s history, “In order to be a two hundred billion
dollar company, we have got to learn how to sell clothes and food.”14
Ecommerce for Grocery
No
Accelerated by Covid-19, the share of grocery ecommerce sales in the total US grocery sales had
risen from 3.5% in 2019 to 8% in 2020.15 Although, by end-2021, grocery delivery had shrunk to
below pre-pandemic levels as customers began to return to brick-and-mortar stores, the convenience
of online shopping and an ingrained buying behaviour were expected to ensure that ecommerce sales
would reach 20.5% of the total grocery sales by 2026 (refer to Exhibit 3A for the top retailers’ share
of grocery market).16
Do
For the consumers shopping online, freshness and quality of the food items as well as prices were
paramount, followed by timely and frequent availability of delivery. The grocery basket, while large
in terms of volume and weight, had a relatively low dollar value. The average order size for someone
purchasing online groceries was US$85 in 2021, up from US$82 in 2017.17
The low margins, average order size of the industry and the nature of grocery products in addition to
consumer price sensitivity and delivery preferences led to significant economic and logistic
challenges for retailers in their efforts to offer an attractive, but profitable, online proposition. Yet,
given the size of the opportunity, retailers were continuing to experiment with alternative delivery
models in their search for a sustainable model for online grocery retail.
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Although belated, the leading grocery retailers in the US had significantly ramped up their
investments to provide customers with two key online grocery fulfilment models: the click-andcollect model, whereby the online shoppers picked up groceries from a neighbourhood store, and the
home-delivery model that provided the last mile connectivity. For last mile connectivity, the two
favoured models were ship from store and ship from warehouse. While retailers with extensive
physical store networks usually relied on ship from store and in-store picking by employing additional
staff, Amazon invested in developing shipping from warehouse and automated dark store picking.18
The ship from warehouse model allowed for higher inventory as well as lower cost of storage as
warehouse space was cheaper due to its no-frill basic ambience, and lesser rent due to location.
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Traditionally, the major operating costs for offline retailers were staff, rental, utilities, and
advertising. These costs were relatively fixed in the near term. Shoppers who came to the store bore
the costs of assembling their basket from the shelves and transporting it home. In contrast, for online
orders with home delivery, the retailer needed to pick, assemble and deliver the order. Estimates
varied, but picking and delivering to homes cost the retailer, on average, US$12-20 per order.19 The
fulfilment costs varied with the mix of products comprising the order. For example, large bulky items
or frozen items were more expensive to deliver for the retailer. Therefore, while both multipack
carbonated drinks and fresh fish yielded similar high gross margins for the retailer, the fulfilment
costs for the bulky carbonated drinks multipack were considerably higher. Similarly, while yoghurt
and frozen vegetables generated relatively smaller gross margins for the retailer, the cost of handling
and shipping the latter was higher.
No
tC
As someone had to be home to receive the order, customers preferred either faster delivery (e.g., same
day or within 4 hours) or certainty of delivery (e.g., a predefined one-hour slot within a few days).
The more retailers accommodated customer delivery preferences, the higher the order fulfilment costs
were. Faster delivery and promised delivery slots made route planning less efficient for delivery
trucks and also had a detrimental impact on the utilisation of picking staff. Hence, it was not surprising
that retailers with a large physical network preferred their online shoppers to click and collect from
the store. This also created in-store opportunities for cross-selling. Some retailers experimented by
offering pick up discounts to consumers who ordered online or increasing prices for some items
purchased online. For example, in 2017, at Walmart, a bag of tortilla chips sold for US$3.83 if
delivered, but only US$1.74 if picked up at the store. 20 After consumers complained about the
differential pricing, Walmart began displaying on its website both the lower in-store as well as the
higher online prices if delivered to the home. Since 2020, it matched prices for the same products,
irrespective of the channel (refer to Exhibit 3B for top retailers’ share of US online grocery sales).
Do
To cover the cost of fulfilment, most online grocery retailers charged a fixed fee per order and
specified a minimum order size. Some retailers also limited the number of bulky items (e.g., a
maximum of 12 one litre bottles of water) per order. Several delivery options were offered, which
variously combined minimum order quantity, fixed fee per delivery, and subscription models (refer
to Exhibit 4 for grocery delivery options). Over 2020 and 2021, pick-ups at the store and curb-side
comprised the dominant share of online grocery sales in the US on account of lower service fees
besides the convenience of picking up while on the road.21
Even consumers who preferred the convenience of shopping for groceries online tended to dislike
paying the shipping charges. Typically, higher delivery charges increased the average order size as
consumers were able to justify the shipping fee for larger orders but reduced the frequency of orders
and the overall demand from the market.
Ecommerce for Apparel
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In 2021, the US apparel market was the largest worldwide, and poised to grow annually by 2.1% over
the next four years.22 Online sales were expected to grow at a much higher rate, increasing their share
in total retail sales of apparel to more than 50% by 2024.23
Unlike groceries, the apparel market’s high profit margins, non-perishable nature, and high value–
low volume ratio made it more conducive for the online model. The big apparel players in the US —
Walmart, Target, TJX, Kohl’s, Macy’s, and Gap — faced a significant threat from online, and
especially from Amazon (refer to Exhibit 5A and 5B for share of apparel sales of top retailers).
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A 2019 survey on online buying of apparel indicated that more than 50% of respondents preferred
Amazon, followed by nearly 34% opting for Walmart and about 25% for brands’ own websites (refer
to Exhibit 6 for the top selling apparel items on Amazon).24 When asked for reasons why they
shopped for apparel on Amazon, 54% of consumers mentioned free and fast shipping, 20% lower
prices and discounts, 16% customer reviews, and 13% ability to make easy returns.
Ecommerce sales of apparel did however present some challenges for retailers, including the inability
to provide the shoppers with a tangible experience whereby they could see the colours, touch the
fabric, or try on the garment for fit. Another challenge was the significantly high return rate in online
sales. In 2020, the average ecommerce return rate was 30% versus 8-10% for brick-and-mortar stores,
and was particularly worse for the apparel category, which had the highest return rates at 30-40%
(refer to Exhibit 7 for details on returns of different products categories).25,26
tC
Returns of online purchases often entailed customers having to go through a tedious process of
repackaging the unwanted item, printing up a label, waiting for it to be collected and finally getting
the refund. The time and the hassle involved in the process represented a paradox for e-retailing that
was centred on the promise of ease, convenience and flexibility. 73% of online shoppers indicated
that the return experience affected their choice to purchase from a retailer again.27 For the retailers,
not only did the returns increase the logistical complexity of their online operations, but also added
considerably to the costs incurred. Since 62% of the customers preferred in-store returns, retailers
with omni-channel presence were at an advantage.28
Walmart: The Low-Cost Leader29
No
Help people save money so they could live better… I think one of the greatest strengths of
Walmart’s ingrained culture is the ability to drop everything and turn on a dime.30
Sam Walton, Founder and Former CEO
Do
Sam Walton opened his first Walmart Discount store in Arkansas in 1962. Based on a low-price/highvolume business model, with a vast selection of non-perishables, it expanded into smaller towns and
rural areas of the US. Compared to the small existing mom and pop stores, the much lower priced
30,000 to 80,000 square feet stores with a large assortment (except for perishables) drew shoppers
from as far as 50-100 miles. The strategy of locating stores primarily in towns with population of
5,000 to 25,000 people allowed Walmart to benefit from the lower real estate costs (3.0% versus 3.3%
of the direct competitors)31 and limited competition from other big box retailers. It pursued an ‘insideout’ radial expansion32 strategy in locating its stores and warehouses contiguous to existing locations.
As it grew, the company continued with its core philosophy of offering the lowest prices possible,
minimising operating costs, and developing economies of scale. It offered ‘everyday low prices’
(EDLP) to all its customers with a price matching guarantee — a pricing strategy that was the
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cornerstone of Walmart’s success. On average, Walmart prices were substantially lower, 20-30%
lower than mom and pop stores or supermarkets, and 2-4% lower than its closest competitors on
‘price’ such as Kmart and Target. Walmart’s store managers had the authority to lower the price of
any item immediately to meet local competition.
Consistent with EDLP, consumer promotions were relatively infrequent, averaging 13 events
annually compared to around 50-100 at other department stores and supermarkets. Advertising
focused on conveying the message of “Always low prices, Always” with Walmart spending
considerably less (1.5% versus 2.1%)33 on advertising compared to its direct competitors.
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It drove a corporate culture based on frugality in which its employees as well as vendors were
ingrained with the need to create efficiencies in operations to minimise costs. Walmart had, from the
onset, invested heavily in technology. For example, RetailLink, its proprietary intranet that linked it
with its suppliers, enabled immediate and transparent information sharing (inventory and sales
performance data) between the suppliers and the company. Combined with a supply chain initiative
called Vendor Managed Inventory (VMI) — whereby manufacturers were responsible for managing
their merchandise in the retailer’s warehouses (called distribution centres or DCs) and they were paid
45-60 days after the inventory was replenished, Walmart managed to achieve almost 100% order
fulfilment with the lowest distribution costs in the industry.
tC
The retailer also established strategic partnerships with most of its vendors based on ‘long-term, highvolume orders for the lowest possible prices’. Furthermore, Walmart’s adoption of cross docking –
the direct transfer of products from inbound trucks to outbound trucks — eliminated the need for
storage and thus helped keep the inventory and transportation costs down while also considerably
reducing the delivery time. Walmart’s inbound logistics costs (included in the costs of goods sold)
were 3.7% compared to 4.8% for its direct competitors, and store space devoted to inventory 10%
versus 25% for the industry.34
Walmart’s relentless focus on process and costs led to dramatic growth over the 1980s, achieving
dominance over the US retail by the early 1990s (refer to Exhibit 8 for Walmart’s performance over
1980-1990s). By 1992, when Walton passed away, Walmart was recording net sales of US$44 billion,
employed 371,000 employees across 1,928 stores and clubs, was present in more than 45 states across
the US, and had gone international with its first overseas store in Mexico.
No
Walmart’s growth from the 1990s was based on two new store formats – Sam’s Club and Walmart
Supercenters. Sam’s Club served small businesses and individuals on a membership basis. They had
limited SKUs of around 3,500 compared to 30,000 at the discount store and sold large pack sizes in
a no-frills environment. This enabled Sam’s Club to work on gross margins of 9-10%. Walmart
Supercenters combined the original discount store with perishables, especially groceries.
Supercenters averaged 125,000 square feet with the largest ones reaching 200,000 square feet and
50,000 SKUs across 36 departments. The new formats required Walmart’s efficient supply chain,
which had focused on ambient products, to accommodate perishables and chilled products.
Do
In grocery, Walmart enhanced its customer reach by expanding into smaller format stores such as
neighbourhood markets (introduced in 1998) that were one-fifth the size of Supercenters. These stores
primarily stocked food, were conveniently located near urban centres, and offered significantly lower
pricing than the local competition. Additionally, with ecommerce taking off, the retailer entered the
digital space in 2000 through the launch of its website Walmart.com for American customers to shop
online, and followed it up with a number of ‘site-to-store’ services that incentivised shoppers to buy
online and pick up from its stores.
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By end January 2022, Walmart comprised over 10,500 stores and clubs globally, serving 230 million
customers a week under 46 banners across 24 countries and ecommerce websites. Its net sales grew
by 2.4% and 7.6% in 2021 and 2020 respectively (refer to Exhibit 9 for Walmart’s financial
performance from 1998-2021).35
Walmart US
In the US, Walmart was the undisputed market leader with net sales of US$393.2 billion for 2021,
which grew by 6.3% over the previous year. It had 4,600 pickup locations and more than 3,500 sameday delivery locations in the country, and its stores and clubs were located within 10 miles of
approximately 90 percent of the US population. Its distribution network in the country, one of the
largest in the world, comprised 157 distribution centres.
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Walmart was the country’s largest employer. Its staff was non-unionised, with half of them working
on a part-time basis. To empower the store employees, Walmart shared with them information about
store sales, profits, inventory turns, markdowns, and shrinkage. In addition, its store within store
concept encouraged departmental employees to take responsibility for the merchandise under their
control. The employees demonstrated high commitment to the company and constantly offered
suggestions to improve operations and lower its costs.
Among the large assortment of products peddled by Walmart, groceries (perishables, frozen foods,
beverages, dry groceries and non-perishable household, and personal care products) accounted for
the largest share at 56%, followed by general merchandise (entertainment, apparel, home furnishing,
hardware, and horticulture) at 32.3%, and health and wellness range (pharmacy, optical services,
clinical services, over-the-counter drugs, and medical products) at 10.4%.
tC
Initially, Walmart focused on selling national brands at low prices to enable consumers to make price
comparisons with other retailers. Over time, it began introducing private labels in those categories
where the appropriate price/value combination for shoppers was absent and the opportunity to
increase margins and have greater control existed. According to McMillon, given the level of
competition,
Having a private brand from a margin mix point of view and product-driven loyalty have become
even more important than in the past.36
No
Besides, acquisitions of private brands such as Hayneedle in 2016, and Moosejaw (outdoor apparel),
ShoeBuy (Zappos-style shoe retailer), Modcloth (indie and vintage clothing) and Bonobos
(menswear) in 2017 had helped Walmart expand its range of online apparel and accessories
merchandise in order to include fashion, a category in which the retailer had struggled to make its
mark in the past. Walmart also tied up with the department store operator Lord & Taylor to offer their
products on the Walmart website.
Do
Walmart’s other successful private-label brands included Equate (health & wellness products), Great
Value (grocery), Sam’s Choice (food products) and Freshness Guaranteed (food products). It also
rolled out Uniquely J (coffee, olive oil, laundry detergent and paper towels), which offered quality
ingredients at low prices with bold packaging to attract young customers. Some of the introductions
in its private apparel brands portfolio were Athletic Works (active wear), Time and Tru (women
apparel), Terra & Sky (plus-sized women’s clothing), Eloquii (plus-sized women’s clothing), Wonder
Nation (kid’s clothing) and George (men’s clothing).
Reinventing Retailing: Picking up the Pace of Change
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With limited success in ecommerce over 2000-2014, Walmart recognised the need to develop the
essential e-capabilities it lacked. And to that end, since 2015 it increasingly reduced spend on opening
new stores and clubs, and instead focused on the remodelling of existing stores to make them more
customer-oriented and on e-initiatives such as online grocery, pick-up towers, expansion of grocery
delivery locations, technology and supply chain to facilitate an omni-channel model. In 2016,
Walmart acquired Jet.com, an innovative ecommerce company in the US, for US$3.3 billion, and
retained its highly experienced leader, Marc Lore, as the CEO of Walmart’s ecommerce business.
Through the years, Walmart introduced a variety of online grocery services such as Walmart Pickup
that allowed customers to order online and pick up at one of its stores, or Pickup Today that allowed
customers to pick up their online orders at a store within four hours for free. In the former case, the
order was serviced from one of the distribution centres, and in the latter, from the store itself.
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To implement in-store picking, 18,000 employees, hired as “personal shoppers,” had to undergo a
three-week training program in order to pick the best produce and meats. As specialists, they were
paid more than entry-level workers. Walmart also installed pick-up towers near the entrance of many
of its stores that served as vending machines for non-grocery online orders. These 16 feet tall and 8
feet wide towers allowed the customers to scan the barcode on the online order receipt (or enter the
order number) and collect their parcel in less than 45 seconds. By 2019, Walmart had these towers
available across 1,500 stores.37
For those customers who preferred home delivery, Walmart rolled out free shipping in two days for
orders larger than US$35, without any membership fees (unlike Amazon Prime). To address the ‘last
mile connectivity’ issue (considered to be the most expensive part of the fulfilment process) in a costeffective manner, the retailer enlisted its store employees to deliver online orders on their way home
from work, for extra pay.
tC
In September 2017, Walmart acquired New York-based Parcel, a technology-based, 24/7 operation
that delivered packages the same-day, overnight and in scheduled two-hour windows. Leveraging
Parcel’s expertise, Walmart planned to deliver both general merchandise as well as fresh and frozen
groceries to customers in New York City. And, to address one of the key customer concerns
associated with online grocery shopping, Walmart provided a 100 percent money back guarantee if
the quality and freshness of the fruits and vegetables were not found to be satisfactory.
No
In 2020, it offered Walmart+, a membership-based program to US consumers for a streamlined omnichannel shopping experience, which included unlimited free shipping on eligible items with no
minimum order requirement, unlimited delivery from stores, fuel discounts, and mobile scan-and-go
option. To the online marketplace sellers, the retailer offered in-house advertising services via
Walmart Connect, and supply chain and fulfilment capabilities via Walmart Fulfilment Services.
Do
Building on the Technical Prowess
Walmart’s mobile shopping platform was instrumental in creating an omni-channel experience at its
physical stores. Inside the store, the Walmart mobile app, once turned on, slipped into the ‘store
assistant’ mode, providing shoppers access to up-to-date information about the products, where they
were stocked in the store, how much their shopping carts would cost when they check out, and an
automated checkout process. The scan-and-go feature allowed shoppers to completely bypass the
checkout lanes in-store. They could simply scan the barcodes of their selected items on the mobile
app, bag them and pay directly through the app. Besides, customers buying pharmacy products or
availing money services could just order prescription refills or fill out the necessary paperwork from
their phone after having entered their personal information in the app. The app enabled the customers
to track their order status, view pricing, and manage pick-up details. Moreover, the express lanes in
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the stores for the pickup made the process even faster.
Walmart also launched a simplified return process through its mobile express returns service,
whereby customers would initiate the process of return on the app by selecting the online transaction
and finish it at the physical store where they returned the item using the express lanes. The refunds
were credited to the customer’s account soon afterwards. The retailer also introduced personalised
voice shopping (in partnership with Google) to offer hundreds of thousands of items that could be
purchased by the customers by simply speaking on the mobile app or on the Google Express website.
According to McMillon,
We can begin to envision a whole new way of delivering customised products to customers when
and how they need them.38
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Walmart’s concerted efforts towards building an omni-channel presence, accelerated by the outbreak
of Covid-19, led it to achieve a high growth rate in its ecommerce sales, contributing US$73 billion
to Walmart’s sales in 2021. It had over 8,000 pick up and 6,000 delivery locations globally, its website
offered more than 170 million SKUs attracting 120 million monthly visitors, and its marketplace
comprised over 100,000 online sellers.39,40 The increasing ecommerce business also helped Walmart
generate advertising revenues of US$2.1 billion in 2021.
Amazon: The Everything Store41
We continue to aspire to be Earth’s most customer-centric company, and we recognise this to be
no small or easy challenge.
Jeff Bezos, Founder and CEO42
tC
Founded by Jeff Bezos as a company that sold books online, Amazon expanded extensively over the
years, and by 2021 retailed more than 36 product categories that included electronics, music, toys,
groceries, apparel, footwear, appliances, and books and magazines (refer to Exhibit 10 for its
bestselling product categories). Over 1997-2021, ecommerce and Amazon shared a symbiotic
relationship, with growth in one fuelling the other (refer to Exhibit 11 for Amazon’s performance
over 1997-2021).43
No
From the very beginning, Amazon’s key decisions and plans had been firmly and consistently driven
by a focus on developing long-term market leadership through customer orientation, rather than
accruing short-term profitability — a promise that was reiterated to its shareholders every year. This
approach allowed Amazon to continuously experiment with its business model and launch innovative
services.
Do
In 2000, it launched ‘Marketplace’, allowing third-party sellers on the platform. By 2020, it had more
than 1.9 million active sellers worldwide (including about 500,000 US-based small and medium
businesses), who made up 60% of Amazon’s gross merchandise value (GMV).44 From 5.5 million
SKUs in 2000, the company expanded to having 350 million by 2020. In 2021, commissions charged
to third parties for their sales on the Amazon platform as well as services charged to these third parties
accounted for more than US$100 billion of Amazon’s US$470 billion revenues (refer to Exhibit 12
for the segment breakdown of Amazon’s total revenue).
Despite criticism from markets that it would dilute Amazon’s focus on its core online retail business,
Amazon web services (AWS), an on-demand cloud computing platform for individuals, companies,
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and governments, continued to gather momentum from its initial hesitant launch in the early 2000s.
By 2021, it was Amazon’s most profitable business segment, generating an operating income of
US$18.5 billion on revenues of US$62 billion.
Amazon Prime
Recognising that the real impediment to greater adoption of the online model was the cost of delivery
and the delivery time, in 2005, the company introduced Amazon Prime. For an annual subscription
of US$79, members in the US could have unlimited free two-day delivery on a large number of
items.45 Over time, Amazon added a host of other benefits to sweeten the pot, beginning with free
access to a certain number of books, Prime Video (movies, soaps and music), an unlimited cloud
photo storage space and the annual Prime Day sales event.
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In order to boost its share specifically in the grocery and apparel categories, Amazon introduced many
prime services that significantly enhanced customer value. Its ‘Prime Now’ service provided
members free two-hour delivery on a large selection of grocery items. And, to facilitate trials during
online clothes shopping, in 2017 it launched ‘Prime Wardrobe’ that allowed shoppers to try clothes
at home before paying. Members could order multiple items of clothing (up to eight items), keep
whatever they wanted and send the rest back. They were charged only for the items that were kept.
Shipping was free both ways.
tC
Amazon Prime membership globally grew from four million in 2011 to 65 million in 2016, and in
2021, boasted over 200 million subscribers. This generated over US$32 billion as subscription fees
for the retailer. On average, Amazon Prime customers spent US$1,968 per year on the ecommerce
site, almost four times as much spent by non-members.46 In 2021, Prime shoppers in the US received
more than six billion free deliveries.47 Amazon planned to raise Prime’s annual subscription price to
US$139 from US$119, the first increase since 2018. However, annual fees in other countries were
substantially lower.
Private Label Brands
No
In 2009, Amazon began its private label program by introducing batteries under its brand
AmazonBasics, which targeted cost-conscious consumers. With AmazonBasics quickly grabbing a
one-third share of the market, the company not only expanded it to over 14 categories from
electronics to home necessities, but also launched multiple in-house brands across various product
categories to help boost thin retail margins.
Do
Access to data on customers’ product and price preferences helped Amazon develop its brands
accordingly, and in some cases by simply mimicking the bestselling products in the category and
selling them at a lower price. Visibility into what consumers were searching for helped it understand
gaps in the market and in its own assortment. For example, it introduced Amazon Essential, its
affordable clothing line for various occasions. When Ralph Lauren was unwilling to list its polo shirts
on the Amazon site, customers searching for them were instead presented Amazon Essential polos
in 12 different colours at US$12 each. Amazon also had the ability to mine customer reviews to
understand the pain points of the customers, such as a shirt fading after five washes. In 2017, it
acquired Body Labs to gain the technology that created 3D models for shoppers for trying on clothes
online.
With increased focus on apparel, Amazon had over the years launched a number of labels that
spanned across women, men, children and infant clothing, and catered to a wide spectrum from basics
(e.g., Amazon Essentials) to those with more fashion content (e.g., Lark & Ro, Goodthreads and
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Focus on the Last Mile and Physical Expansion
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Core10). The retailer also had exclusive lines like Spotted Zebra for children’s clothing and Buttoned
Down for men’s business wear. In 2020, in terms of online sales, Amazon commandeered over 35%
of all US online apparel sales, seven times more than Macy’s, the second-largest online apparel seller
in the country.48
op
yo
Evidently, Amazon’s ability to grow and drive its share further in product categories like grocery and
apparel was contingent upon the retailers’ extent of control and presence during the last mile of
connectivity with its customers. Consequently, Amazon made considerable investments towards
developing innovative solutions for pick up, delivery and return of items, and establishing a physical
footprint in the domain through strategic acquisitions and partnerships with other players. By 2021,
it had 110 active fulfilment centres in the US, and exceeded 293 million square feet of space in North
America.49
Out of Box Services
In 2000, Amazon introduced a locker system, installing self-service kiosks in public places, such as
retail stores and office buildings, in big cities in the US, for pick up or return of packages at a time
and place convenient to the shoppers. Later, in 2017, the retailer extended this service by launching
the hub locker delivery system for apartment blocks and other housing complexes so that residents
could receive and pick up packages at flexible times. This 24x7 service obliterated the need for the
shopper to be at home at the time of delivery, or the presence of a doorman or a concierge, hence
allowing the retailer a certain amount of control over the logistics of the last mile delivery.
tC
Amazon also introduced the concept of Prime Air – a delivery service using drones (unmanned aerial
vehicles) in 2013. While unfavourable FAA (Federal Aviation Administration) regulations had earlier
limited this initiative in the US, in 2020, FAA designated Amazon Prime Air as an ‘air carrier’,
allowing the retailer to begin commercial deliveries under a trial program.50
No
To reduce its dependence on third parties such as UPS, FedEx and USPS for making deliveries in the
future, Amazon invested in building a US$1.5 billion air cargo hub in 2017 to deliver items from
third-party sellers directly to customers, bypassing the traditional cargo carriers.51 After four years of
planning and construction, the 800,000 square feet hub was opened in August 2021, with plans to
connect a network of 40 sites, operate a dozen flights per day, and process millions of packages every
week.52
Do
Amazon Key was yet another innovative service proposed by the retailer, which enabled Prime
members to receive and view the delivery being made inside their front door, when the customers
were not at home. However, to do so, they needed to buy a compatible smart lock and a security
camera specially made for the program. According to Rohit Shrivastava, General Manager of
Amazon Key, the customer benefits of the service extended beyond it being a delivery mechanism,
It’s a great service for busy families; you no longer have to worry about giving keys to service
providers like house cleaners; instead, you can give them their own code right from your Amazon
Key App.53
In 2021, the company rolled out Amazon's ‘Key for Business’ service that required building
complexes to install a device on the front door which would allow delivery drivers to get into the
lobby at all hours, without having to be buzzed inside.54 This would make deliveries faster and reduce
theft.
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Brick-and-Mortar Presence
Amazon invested towards creating an offline presence through a variety of access points in order to
provide shoppers a physical browsing experience. For example, over 2015-2021, it opened 24
bookstores across the US.55 Amazon had also rolled out 87 pop-up stores/kiosks, which housed an
assortment of Amazon hardware products. However, these concepts did not find resonance with
customers and the company decided to discontinue them by 2022.
op
yo
In 2017, Amazon acquired Whole Foods, a premium grocery chain with 470 stores, for US$13.7
billion. The acquisition allowed it to broaden its physical footprint, own a reputed high quality private
label brand (365), and acquire a better understanding of shoppers’ grocery buying behaviour through
access to rich customer data. As its first step, Amazon slashed the prices at Whole Foods by 25-50%
on select products to lure customers from the competition, made Whole Foods products available on
its website, and included them in its Prime Now service.56 It was now able to offer customers high
quality groceries, which included thousands of natural and organic products as well as locally sourced
favourites, at low prices, delivered fresh. According to Jeff Wilke, CEO Amazon Worldwide
Consumer,
We’re determined to make healthy and organic food affordable for everyone. Everybody should
be able to eat Whole Foods Market quality – we will lower prices without compromising Whole
Foods Market’s long-held commitment to the highest standards... and continuously lower prices
as we invent together.57
Amazon also planned to use the Whole Food stores’ parking lots to drive offline cross-selling by
parking its treasure trucks 58 there and offering merchandise that Whole Food shoppers might be
interested in.
No
tC
In January 2018, after five years of research and testing, Amazon came up with another retail
invention that appeared to be the future of brick-and-mortar stores. It opened Amazon Go, a fully
automated convenience store with no checkout required, in Seattle, US. The ‘just walk out’ shopping
experience allowed shoppers to pick up items from the shelves and simply walk out. A custom-built
combination of computer vision, sensor fusion, and deep learning tracked the shoppers, tallied up
their bill, and charged it to the customers’ Amazon account. While the customers benefitted by
controlling the amount of time they spent at a store irrespective of how crowded it was, there were
concerns about whether they would be interested in such a solution in which there was no human
interaction at all. The retailer believed that while it might take a little while for people to get used to
simply walking out, over time it could become practically indispensable. As Bezos said,
Even when they don’t yet know it, customers want something better, and your desire to delight
customers will drive you to invent on their behalf. No customer ever asked Amazon to create the
Prime membership program, but it sure turns out they wanted it. 59
Do
In August 2020, Amazon launched Amazon Fresh, its first brick-and-mortar supermarket, and
expanded it to 29 stores in the US by April 2022.60 Amazon Fresh offered a seamless omni-channel
experience in grocery shopping using a smart shopping cart called the Amazon Dash Cart, and the
‘just walk out’ technology. In 2022, it planned to open Amazon Style, its first-ever physical store for
Apparel, which would use machine learning algorithms to make tailored recommendations to
customers in real time and have items sent to a fitting room with the tap of a button in the Amazon
app.
Advertising
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Over the years, consumers in the US increasingly used Amazon to search for products (refer to
Exhibit 13 for more details). By 2016, Amazon had overtaken Google as the site on which internet
users typically began product searches.61 However, Jeff Bezos was a late convert to the potential of
advertising as a source of revenue for Amazon. In 2019, the company integrated Amazon Media
Group, Amazon Marketing Services and the Amazon Advertising Platform into one category, as
Amazon Advertising.
Future Prospects
op
yo
In 2022, for the first time, Amazon revealed its revenues from advertising for the FY 2021 as over
US$31 billion, up 32% from the previous year, but did not divulge its profitability. Amazon was now
a serious player in the online advertising industry against well-established competitors such as Meta
and Google, and the trio accounted for over 74% of global ad spending (refer to Exhibit 14 for shares
in advertising revenue).62 The algorithms of these three companies, which optimised the placement
of advertisements, relied on different variables, based on their respective user data.
Do
No
tC
The outbreak of Covid-19 not only quickened the pace of ecommerce but also the comeback of
physical stores. The most successful retailers during the pandemic were those that could combine the
benefits of physical and digital, as evident through the robust performances of both Walmart and
Amazon. However, had the two retailers’ focus on building omni-channel capabilities brought them
dangerously close in trying to beat the other at its own game? So far it was the rest of the retail
industry that had borne the brunt of their aggressive market warfare. But for now, the two had their
biggest fight on their hands. While the market seemed to currently favour Amazon, the advantage
could change.
12/26
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2100
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EXHIBIT 1A: MARKET CAPITALISATION OVER 1998-2021 (IN US$ BILLION)
1547*
1800
Walmart
1539
Amazon
1500
1200
876.2
972.9
279.8
321.8
700.6
900
600
300
2.1
113.81 228.2
0
1998
2003
*March values
121.2
29.7
262.5
op
yo
10.2
208
2008
382.4
372.3*
246.4
2013
2018
2019
2020
2021
2022
Do
No
tC
Source: Data from Yahoo Finance, https://ycharts.com/companies/WMT/market_cap, and
https://ycharts.com/companies/AMZN/market_cap, accessed December 2021.
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Amazon*
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EXHIBIT 1B: AMAZON AND WALMART 2021 RESULTS
In US$ million
2021
Revenues
2016
Revenues
2021
Operating
Income
2016
Operating
Income
North America / USA
279, 833
79,785
7,271
2,361
International
127,787
43,983
-924
-1,283
Amazon Web Services
62,202
12,219
18,532
3,108
TOTAL
469,822
135,987
22,899
4,186
Walmart**
USA
Sam’s Club (USA only)
International
Miscellaneous ***
TOTAL
2021
Revenues
2016
Revenues
2021
Operating
Income
2016
Operating
Income
393,247
307,833
21,587
17,745
73,556
57,365
2,259
1,671
100,959
116,119
3,758
5,758
4,992
4,556
-1,662
-2,410
572,754
485,873
25,942
22,764
op
yo
In US$ million
tC
* Financial year ends 31 December 2021
** Financial year ends 31 January 2022
*** For revenues, it is the difference between total revenues and net sales; and for operating income, it is the cost of
corporate support
Source: Amazon.com Inc. and Walmart Inc. Annual Reports
No
EXHIBIT 2A: TOTAL AND ECOMMERCE VALUE OF US RETAIL
In US$ Billion
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Total retail trade
sales
Retail
ecommerce sales
4100
4300
4460
4640
4720
4830
5050
5260
5410
5580
6588
199
231
261
297
338
383
443
507
570
812
960
Do
Source: Data from Oberlo, “US Retail Sales”, https://www.oberlo.com/statistics/us-retail-sales; and Oberlo, “US
E-commerce Sales”, https://www.oberlo.com/statistics/us-ecommerce-sales, accessed June 2022.
14/26
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EXHIBIT 2B: LEADING RETAIL ECOMMERCE COMPANIES IN THE US
% Share 2021
Amazon
41.0%
Walmart
6.6%
eBay
4.2%
Apple
4.0%
The Home Depot
2.2%
Target
2.0%
Best Buy
1.8%
Costco
1.6%
Kroger
1.4%
Wayfair
1.3%
op
yo
Retailer
Source: Stephanie Chevalier, “Leading Retail Online Companies in the US”, Statista, October 29, 2021,
https://www.statista.com/statistics/274255/market-share-of-the-leading-retailers-in-us-e-commerce,
accessed June 2022.
EXHIBIT 3A: SHARE IN TOTAL US GROCERY MARKET
% Share 2021
Walmart/Sam’s Club
21.6%
Kroger
8.8%
Costco
6.4%
Albertsons
4.7%
Ahold Delhaize
4.3%
Publix
3.7%
Target
2.4%
Amazon/Whole Foods
2.4%
Aldi
2.3%
H-E-B
1.9%
Dollar General
1.5%
Trader Joe’s
1.0%
Dollar Tree
0.8%
BJ’s
0.8%
Do
No
tC
Retailer
Source: Annie Palmer, “Amazon’s Sprawling Grocery Business has become an ‘Expensive Hobby’ with a
Cloudy Future”, CNBC, 19 February 2022, https://www.cnbc.com/2022/02/19/amazons-sprawlinggrocery-business-has-become-an-expensive-hobby.html, accessed June 2022.
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EXHIBIT 3B: SHARE OF US ONLINE GROCERY MARKET 2020
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32.1%
28.9%
26.4%
Walmart
op
yo
12.6%
Amazon
Kroger
All others
Source: James Melton, “Online Grocery Sales More than Double in 2020”, Digital Commerce 360, 5 November
2021, https://www.digitalcommerce360.com/article/online-food-report/, accessed February 2022.
EXHIBIT 4: GROCERY DELIVERY OPTIONS 2021
Retailer
Orders above US$35 are delivered free or available for pick up on same
day for Walmart+ members. If order is under $35, then they pay the
below order minimum fee of US$5.99. For non-members, for minimum
order of US$35, delivery fee of $7.95 or $9.95.
tC
Walmart
Grocery Delivery Options
Amazon Fresh
Free delivery of groceries if the order is above US$35 for Prime
members, anything less costs an extra US$2.99. For non-prime
members, delivery cost is US$9.99 for any order value. Delivery can be
same-day or next-day. It can be either a one-hour window for pick up
or two-hour delivery window (available in more than 2,000 US cities
and towns). Contact-free options are available for delivery with an
option to receive groceries delivered inside customers’ garage with Key
by Amazon (available in select regions).
Whole Foods
Grocery is delivered for US$9.99 to Prime members within two hours
for purchases over US$35, with additional rush fees for one-hour
delivery orders. It automatically adds a tip but is optional. Click-andcollect, as one-hour grocery pick-up at Whole Foods, is free for Prime
members on orders of US$35.
Do
No
Express service is for US$10 (on top of the delivery charges if they
apply) for rush delivery. InHome membership for annual fees of
US$148 offers free in-your fridge-grocery delivery service and free
pickup of returns.
Source: Companies’ websites/press releases
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EXHIBIT 5A: SHARE IN TOTAL US APPAREL AND FOOTWEAR MARKET
Retailer
% Share 2020
Amazon
11.0%
Walmart
8.8%
TJX
4.4%
Macy’s
4.3%
Target
4.0%
op
yo
Source: Anne Stych, “Amazon Far Outpaces Second-place Seller as Top Apparel Retailer in U.S.”, bizwomen,
March 19, 2021, https://www.bizjournals.com/bizwomen/news/latest-news/2021/03/top-seller-of-apparel-inus.html?page=all, accessed June 2022.
EXHIBIT 5B: SHARE OF US ONLINE APPAREL MARKET 2020
52.7%
37.6%
2.4%
1.9%
Macy's
Target
Walmart
tC
5.4%
Amazon
All others
Do
No
Source: April Berthene, “Ecommerce is 46.0% of All Apparel Sales”, Digital Commerce 360, 28 June 2021,
https://www.digitalcommerce360.com/article/online-apparel-sales-us/; and
Anne Stych, “Amazon Far Outpaces Second-place Seller as Top Apparel Retailer in U.S.”, bizwomen, March 19,
2021, https://www.bizjournals.com/bizwomen/news/latest-news/2021/03/top-seller-of-apparel-in-us.html?page=all,
accessed June 2022.
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EXHIBIT 6: AMAZON US TOP SELLING APPAREL ITEMS
Men’s Apparel
Women’s Apparel
Kid’s Apparel
Sleep & Lounge Wear
Sleep & Lounge Wear
Sleepwear
Jeans
Inner wear
Girl’s basics
tC
2017
Top Sub-category
Top selling item
op
yo
2021
Top Sub-category
Top Selling Item
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Do
No
Source: Amazon Website; and
Lauren Thomas, “Amazon and Target are in a War over Apparel”, CNBC, 15 February 2018,
https://www.cnbc.com/2018/02/15/amazon-and-target-are-in-a-war-over-apparel.html, accessed June 2022.
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EXHIBIT 7: RETAIL RETURNS OF DIFFERENT PRODUCT CATEGORIES
Survey: Which types of products have you returned in the past?
Product Category Returned
Clothing
% of Respondents
88%
Shoes
44%
Electronics
43%
Home & Garden
24%
Health & Beauty
21%
Toys
19%
18%
op
yo
Appliances
Groceries
14%
Baby products
11%
Computers
8%
Based on a survey of 7,688 consumers
Source: Power Reviews, “Consumer Survey: Returns in Retail in 2021”,
https://www.powerreviews.com/insights/consumer-survey-retail-returns-2021/, accessed February 2022.
EXHIBIT 8: PERFORMANCE OF WALMART OVER 1982-1991*
1983
1984
1985
1986
1987
1988
1989
1990
1991
4,667
6,401
8,451
11,909
15,959
20,649
25,811
32,602
43,887
3,418
4,722
6,361
9,053
12,282
16,057
20,070
25,500
34,786
893
1,181
1,485
2,008
2,599
3,268
4,070
5,152
6,684
tC
1982
(US$ millions)
Total Sales
3,376
Cost of Goods
Sold (1)
Operating
Expenses (2)
Net Income (3)
2,458
124
196
271
327
450
628
837
1,076
1,291
1,608
No. of Stores
551
645
756
882
1,029
1,198
1,364
1,525
1,721
1,928
Retail Sq. footage
(in Millions)
27.7
34.4
41.9
51.2
63.3
77.8
90.6
106.0
122.0
136.7
No
677
Do
*The year 1982 refers to fiscal year ending 31 January 1983 as Walmart closes its books on 31 January of each year
(applicable to all years).
1. Cost of goods sold includes amount paid to suppliers plus inbound logistics costs.
2. Operating expenses includes cost of operating the stores, selling, and general and administrative expenses.
3. To arrive at net income, after deducting cost of goods sold (COGS) and operating costs, interest costs and taxes are
also deducted
4. In 1991, for Walmart’s most direct competitor, Kmart, sales revenues, COGS, operating expenses, and net income
were US$34,580, US$25,930, US$7,015 and US$859 million respectively and their total retail space was 188 million
square feet.
Source: Walmart Inc. Annual Reports
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In US$ million, except for the
calculated values
2001
2006
Net Sales
217,799
344,992
Cost of Sales
171,562
264,152
Operating, SG&A Expenses
36,173
64,001
Operating Income
12,077
20,497
Net Income
6,671
11,284
Dividends Declared per
Common Share
0.28
0.67
22,749
Property, Equipment, Capital
Lease and Financing Obligation
Assets, Net
Total Assets
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EXHIBIT 9: FINANCIAL PERFORMANCE OF WALMART 2001 - 2021
2011
2016
2021
443,854
481,317
567,762
335,127
361,256
429,000
85,265
101,853
117,812
26,558
22,764
25,942
15,699
13,643
13,673
1.46
2.00
2.20
33,685
40,714
43,046
56,511
45,750
88,440
112,324
114,178
112,624
83,451
151,193
193,406
198,825
244,860
8.5%
8.8%
8.8%
7.2%
5.6%
35,102
61,573
71,315
77,798
83,253
20.1%
22.0%
18.6%
15.2%
14.9%
Diluted Earnings per Share
(Adj)
2.07
2.71
4.52
4.38
6.46
Free Cash Flow*
NA
NA
10,745
20,911
11,075
Walmart U.S. Segment
2,744
3,443
3868
4672
4742
Walmart International Segment
1,170
2,757
5651
6363
5251
Sam's Club Segment (US)
500
579
611
660
600
Total Count
4,414
6,779
10,130
11,695
10,593
Retail Sq. Feet at Period End (in
Millions) *
NA
NA
1,037
1,164
1,060
No of Employees (Worldwide)
1,383,000
1,900000
2,000000
2,300000
2,300000
Financial Position
Inventory
Return on Assets
Total Sstockholders' Equity
tC
Return on Equity/Investment
op
yo
Operating Results
Do
No
Stores Count
Financial year ends on January 31 of subsequent year; *not available for all the years
Source: Walmart Inc. Annual Reports
20/26
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EXHIBIT 10: LEADING PRODUCT CATEGORIES OF AMAZON IN 2019
% of Amazon Shoppers
Baby
Other
Automotive parts and Accessories
Grocery and Gourmet Food
Sports and Outdoors
Pet Supplies
Movies and TV
Cell phone and Accessories
Books
Beauty and Personal Care
Home and Kitchen
Clothing, Shoes and Jewellery
Electronics
9
9
13
15
17
20
25
28
op
yo
33
0
10
20
36
39
43
44
30
40
50
Do
No
tC
Source: Statista, “Leading Product Categories Purchased by Amazon Shoppers in the United States as of
February 2019”, https://www.statista.com/statistics/639155/popular-amazoncom-sales-by-category/, accessed
December 2021.
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Amazon Vs Walmart: Clash Of Business Models
In US$ million except for
the calculated values/ratios
2001
2006
Net Sales
3,122
10,711
Total Operating Expenses
3,534
Operating Income (Loss)
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EXHIBIT 11: FINANCIAL PERFORMANCE OF AMAZON 2001-2021
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2016
2021
48,077
135,987
469,822
10,322
47,215
131,801
444,943
(412)
389
862
4,186
24,879
2,324
8,255
37,288
88,265
272,344
374
937
4,576
17,619
75,111
138
263
1,630
7,233
32,551
Technology and Content (c)
241
662
2,909
16,085
56,052
General and Administrative
89
195
658
2,432
8,823
Others
367
10
154
167
62
3,534
10,322
47,215
131,801
444,943
144
877
4,992
11,461
32,640
Operating Results
Cost of Sales (a)
Fulfilment (b)
Marketing
Total
Financial Position
tC
Inventory
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Operating Expenses Break-Up
2011
1,637
4,363
25,278
83,402
420,549
Return on Assets
-
4.4%
2.5%
2.8%
7.9%
Diluted Earnings per Share
(1.56)
0.45
1.37
4.90
64.81
Total Stockholders’ Equity
(Deficit)
(1,440)
431
7,757
19,285
138,245
Return on Equity
-
44%
8.1%
12.4%
24.1%
Free Cash Flow
NA
486
2,092
9,706
(9,069)
Shipping Costs (Included in
Cost of Sales)
376
884
3989
16200
76700
No. of Employees
(worldwide)
7,800
13,900
56,200
341,400
1,600,000
No
Total Assets
Do
Financial year ends on December 31; *including stock based and goodwill compensation; NA: data unavailable
a: Includes both inbound and outbound shipping costs
b: Comprises the operating and staffing cost of fulfilment centres, customer service centres and physical stores, and
payment processing costs
c: Includes the cost of technical staff, technical equipment and infrastructure required to support Amazon Web Services
(AWS)
Source: Amazon.com Inc. Annual Reports
22/26
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Amazon Vs Walmart: Clash Of Business Models
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EXHIBIT 12: BREAKDOWN OF AMAZON’S TOTAL REVENUE
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2021 Revenues
2016 Revenues
Net Product Sales
241,787
94,665
Net Service Sales
228,035
41,322
TOTAL
469,822
135,987
MIX B (USD million)
2021 Revenues
2016 Revenues
Online Stores
222,075
91,431
Physical Stores (a)
17,075
NA
Third Party Seller Services (b)
103,366
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MIX A (US$ million)
22,993
Subscription Services (c)
31,768
6,394
Other (advertising, credit card) (d)
33,336
2,950
AWS (e)
62,202
12,219
469,822
135,987
MIX C (US$ million)
2021 Revenues
2016 Revenues
USA
314,006
90,349
37,326
14,148
31,914
9,547
23,071
10,797
Rest of world
63,505
11,146
TOTAL
469,822
135,987
TOTAL
Germany
United Kingdom
tC
Japan
No
a: Acquisition of Whole Foods August 2017, 3% international sales
b: Amazon’s revenues from third parties includes only the commissions (Amazon collects, on an average, a
15% commission of third-party sales) generated and any other third-party seller charges for services Amazon
renders to these third parties like shipping and fulfilment; in 2021, marketplace sellers estimated to have sold
56% of the unit sales and 60% of the Gross Merchandise Value on Amazon.
c: Monthly and annual fees associated with Amazon Prime, audiobook, e-book, digital video and digital
music
d. For 2021, US$31,160 million was advertising and 2,176 was “other”
e: AWS includes amounts earned from global sales of computers, storage, database, and other AWS service
offerings for start-ups, enterprises, government agencies, and academic institutions
Do
Source: Amazon.com Inc. Annual Reports 2016 and 2021
23/26
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Amazon Vs Walmart: Clash Of Business Models
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0%
10%
Amazon
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EXHIBIT 13: PLATFORMS SEARCHED BY US INTERNET USERS WHEN DIGITALLY
SHOPPING
20%
30%
40%
50%
60%
53%
Search Engine (Google, Bling etc.)
23%
Brand/Retailer Website
16%
Other Marketplace
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8%
% of Respondents, 2020
Source: eMarketer Editors, “Where do US Consumers Begin their Product Searches?”, eMarketer, November 29,
2020, https://www.emarketer.com/content/where-do-us-consumers-begin-their-product-searches, accessed June
2022.
EXHIBIT 14: ADVERTISING REVENUE 2021
Advertising Revenue (USD Billion)
70
60
50
40
31.6
28.8
28.8
26
10
No
30
tC
69.4
20
4.12
2.58
10
0
Do
Source: Geri Mileva, “Amazon Ad Revenue Statistics That will Blow Your Mind”, Influencer Marketing Hub,
February 23, 2022, https://influencermarketinghub.com/amazon-adrevenue/#:~:text=In%202018%2C%20the%20company%20made,chunk%20of%20the%20advertising%20mark
et, accessed June 2022.
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Endnotes:
1
Walmart reports fiscal 2022 as the year ending on 31January 2022, and fiscal 2021 as the year ending on 31 January 2021.
US Census Bureau News, “Quarterly Retail E-Commerce Sales”, November 19, 2022,
https://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf, accessed November 2022.
3
Krystina Gustafson, “Nearly Every American Spent Money at Wal-Mart Last Year”, CNBC, 12 April, 2017,
https://www.cnbc.com/2017/04/12/nearly-every-american-spent-money-at-wal-mart-last-year.html, accessed June 2022.
4
Statista Research Department , “Retail E-commerce Revenue in the United States from 2017 to 2027”, Statista, January 3, 2022,
https://www.statista.com/statistics/272391/us-retail-e-commerce-sales-forecast/, accessed June 2022.
5
Ibid.
6
Stephanie Chevalier, “Market Share of Leading Retail E-commerce Companies in the United States as of June 2022”, October 29,
2021, Statista, https://www.statista.com/statistics/274255/market-share-of-the-leading-retailers-in-us-e-commerce/, accessed June 2022.
7
D.
Tighe,
“Favorite
Online
Shops
in
the
United
States
2020”,
Statista,
November
15,
2021,
https://www.statista.com/statistics/1192734/favorite-online-shops-in-the-us/, accessed December 2021.
8
Phil Wahba, “UBS Sees Another 80,000 U.S. Stores Closing by 2026”, Fortune, April 6, 2021, https://fortune.com/2021/04/05/retailreal-estate-brick-and-mortar-stores-online-shopping-malls-store-closures-ubs/, accessed June 2022.
9
Ibid.
10
Marina Pasquali, “Online Share of Total U.S. Retail Sales in 2021, by Product Category”, Statista, March 28, 2022,
https://www.statista.com/statistics/203043/online-share-of-total-us-retail-revenue-projection/, accessed June 2022.
11
Blake Droesch, “US Ecommerce by Category 2021”, eMarketer, April 27, 2021, https://www.emarketer.com/content/us-ecommerceby-category-2021, accessed June 2022.
12
Milos Djordjevic, “25 Awe-Inspiring Apparel Industry Statistics”, SaveMyCent, June 11, 2022, https://savemycent.com/apparelindustry-statistics/, accessed June 2022.
13
Russell Redman, “E-commerce to Account for 20% of U.S. Grocery Market by 2026”, Supermarket News, October 22, 2021,
https://www.supermarketnews.com/online-retail/e-commerce-account-20-us-grocery-market-2026, accessed June 2022.
14
Anna Nicolaou and Leslie Hook, “Now Amazon is Disrupting Fashion Retail Too”, Financial Times, January 2018,
https://www.ft.com/content/795935ac-0205-11e8-9650-9c0ad2d7c5b5, accessed June 2022.
15
Mercatus Technologies Inc., “The Evolution of the Grocery Customer”, https://info.mercatus.com/online-grocery-shopper-consumerbehavior, accessed June 2022.
16
Russell Redman, “E-commerce to Account for 20% of U.S. Grocery Market by 2026”, Supermarket News, October 22, 2021,
https://www.supermarketnews.com/online-retail/e-commerce-account-20-us-grocery-market-2026, accessed June 2022.
17
Sam Silverstein, “Online Grocery Reaches New Heights in April”, Grocery Dive, April 29, 2020,
https://www.grocerydive.com/news/online-grocery-reaches-new-heights-in-april/576993/, accessed June 2022.
18
Dark store refers to a retail or distribution centre which caters exclusively for online shopping.
19
Vishwa Chandra., et al., “Achieving Profitable Online Grocery Order Fulfilment”, McKinsey & Company, May 18, 2022,
https://www.mckinsey.com/industries/retail/our-insights/achieving-profitable-online-grocery-order-fulfillment, accessed June 2022.
20
John Matarese, “Walmart.com Online Prices May be Higher Than In-Store”, WCPO, 9 November 2017,
https://www.wcpo.com/money/consumer/dont-waste-your-money/walmartcom-online-prices-may-be-higher-than-in-store, accessed July
2018.
21
Bill Aull, Steven Begley, Vishwa Chandra, and Varun Mathur, “Making Online Grocery a Winning Proposition”, McKinsey &
Company, July 2, 2021, https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/making-online-grocery-awinning-proposition, accessed June 2022.
22
Statista, “Apparel-United States”, https://www.statista.com/outlook/cmo/apparel/united-states#revenue, accessed June 2022.
23
Ibid.
24
Greg Swan, “Everything You Need to Know About Amazon Apparel”, tinuiti, 12 June 2019, https://tinuiti.com/blog/amazon/amazonapparel/, accessed December 2021.
25
Lionel Valdellon, “Must-Know Ecommerce Return Rate Statistics and Trends in 2021”, CleverTap, March 22, 2022,
https://clevertap.com/blog/ecommerce-return-rate-statistics/, accessed June 2022.
26
Courtney Reagan, “That Sweater You Don’t Like is a Trillion-Dollar Problem for Retailers. These Companies Want to Fix it”, CNBC,
January 12, 2019, https://www.cnbc.com/2019/01/10/growing-online-sales-means-more-returns-and-trash-for-landfills.html, accessed
June 2022.
27
Lionel Valdellon, “Must-Know Ecommerce Return Rate Statistics and Trends in 2021”, CleverTap, March 22, 2022,
https://clevertap.com/blog/ecommerce-return-rate-statistics/, accessed June 2022.
28
Khalid Saleh, “E-commerce Product Return Rate – Statistics and Trends [Infographic]”, invesp,
https://www.invespcro.com/blog/ecommerce-product-return-rate-statistics/, accessed June 2022.
29
Annual Reports
30
Doug McMillon, “Picking up the Pace of Change for the Customer”, Walmart Newsroom,
https://corporate.walmart.com/_news_/executive-viewpoints/picking-up-the-pace-of-change-for-the-customer, accessed May 2022.
31
Sharon Foley et al., “Wal*Mart Stores, Inc.”, Harvard Business School, August 6, 1996, accessed June 2022.
32
The diffusion of store openings radiating out from a central point (previous store) in all directions. With its stores close to each other,
it allowed Walmart to facilitate and economise the logistics for shipments, for example optimal use of a single truck to make multiple
deliveries, and to easily transfer experienced managers and other personnel from existing stores to the new stores.
33
Sharon Foley, “Wal*Mart Stores, Inc.”, Harvard Business School, August 6, 1996, accessed June 2022.
34
Ibid.
35
Walmart Annual Report 2022
36
Donna Boss, “Walmart CEO Cites Growing Importance of Private Label”, Supermarket News, 14 March 2017,
http://www.supermarketnews.com/walmart/walmart-ceo-cites-growing-importance-private-label, accessed June 2022.
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Amazon Vs Walmart: Clash Of Business Models
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Hayley Peterson, “Walmart is Unleashing 2 Key Weapons Against Amazon in 700 stores”, Business Insider, 5 April, 2018,
https://www.businessinsider.sg/walmart-online-pickup-tower-review-2017-8/?r=US&IR=T, accessed June 2022.
38
Doug McMillon, “Picking up the Pace of Change for the Customer”, Walmart Newsroom,
https://corporate.walmart.com/_news_/executive-viewpoints/picking-up-the-pace-of-change-for-the-customer, accessed June 2022.
39
Tricia McKinnon, “6 Reasons Walmart’s eCommerce Strategy is Winning”, Indigo Digital, February 24, 2022,
https://www.indigo9digital.com/blog/4-secrets-to-walmarts-ecommerce-sucess#:~:text=... 20CEO, accessed June 2022.
40
Omer Riaz, “The Benefits of Selling on Walmart Marketplace, and how to get Started”, Forbes, January 3, 2022,
https://www.forbes.com/sites/forbesagencycouncil/2022/01/03/the-benefits-of-selling-on-walmart-marketplace-and-how-to-getstarted/?sh=20dbbc0c7196, accessed June 2022.
41
The information in the section is from the company website and annual reports unless specifically stated otherwise.
42
Amazon.Inc Annual Report 2018
43
Tracey Wallace, “How Amazon and Independent Ecommerce Brands Grew Online Sales 18,233% in 20 Years [Infographic]”,
BigCommerce, https://www.bigcommerce.com/blog/amazon-timeline-infographic/, accessed May 2018.
44
Yaqub M., “20+ Eye-opening Amazon Third Party Seller Statistics in 2022”, Renolon, May 29, 2022,
https://www.renolon.com/amazon-third-party-seller-statistics/, accessed June 2022.
45
Samantha B. Gordon, “Pros and Cons of Amazon Prime”, Consumer Reports, April 7, 2022, https://www.consumerreports.org/onlineshopping/pros-cons-amazon-prime-a7384439028/, accessed June 2022.
46
Marc Bain, “Prime has never been more Important to Amazon”, Quartz, May 3, 2021, https://qz.com/2004369/the-pandemic-madeprime-even-more-valuable-to-amazon/, accessed June 2022.
47
Markets Insider, “Amazon to Raise the Price of Prime for First Time Since 2018”, February 4, 2022,
https://markets.businessinsider.com/news/stocks/amazon-to-raise-the-price-of-prime-for-first-time-since-2018-11002150, accessed June
2022.
48
Tonya Garcia, “Amazon is the Biggest Apparel Seller in the U.S. as Questions Arise about Whether the Business should be Broken
up”, MarketWatch, September 8, 2021, https://www.marketwatch.com/story/amazon-is-the-biggest-apparel-seller-in-the-u-s-asquestions-arise-about-whether-the-business-should-be-broken-up-11631120043, accessed June 2022.
49
Tara Johnson, “The Ultimate List of All Amazon Fulfillment Centers”, tinuiti, October 18, 2021,
https://tinuiti.com/blog/amazon/amazon-fulfillment-centers-map/, accessed June 2022.
50
Steve Banker, “Amazon Supply Chain Innovation Continues”, Forbes, April 1, 2021,
https://www.forbes.com/sites/stevebanker/2021/04/01/amazon-supply-chain-innovation-continues/?sh=20dee95977e6, accessed June
2022.
51
Jeffrey Dastin, “Amazon to Spend $1.49 Billion on Air Cargo Hub, Fans Talk of Bigger Ambitions”, Reuters, 1 February 2017,
https://www.reuters.com/article/us-amazon-com-shipping/amazon-to-spend-1-49-billion-on-air-cargo-hub-fans-talk-of-biggerambitions-idUSKBN15G3GI, accessed May 2018.
52
Kirsten Korosec, “Amazon’s $1.5 billion US Air Cargo Hub is Open for Business”, TechCrunch, August 11, 2021,
https://techcrunch.com/2021/08/11/amazons-1-5-billion-u-s-air-cargo-hub-is-open-for-business/, accessed June 2022.
53
Amazon Press Room, “Amazon Key Features—Keyless Entry, Guest Access, and Ability to Monitor and Lock/Unlock Your Door
from Anywhere—Now Available Nationwide”, Business Wire, April 5, 2018, https://press.aboutamazon.com/2018/4/amazon-keyfeatures-keyless-entry-guest-access-and-ability-to-monitor-and-lock-unlock-your-door-from-anywhere-now-available-nationwide,
accessed June 2018.
54
Isobel Asher Hamilton, “Amazon is Offering Building Managers $100 Gift Cards as an Incentive to Install 'Key' Devices, which Let
Delivery Drivers Get into the Lobby at All Hours”, Insider, July 26, 2021, https://www.businessinsider.com/amazon-key-for-businessdelivery-drivers-packages-building-managers-2021-7, accessed June 2022.
55
Russell Redman, “Amazon Go Draws High Interest from U.S. Shoppers”, Supermarket News, February 24, 2021,
https://www.supermarketnews.com/retail-financial/amazon-go-draws-high-interest-us-shoppers, accessed June 2022.
56
Jordan Valinsky, “5 Ways Amazon has already Changed Whole Foods”, CNN Business, 9 February 2018,
http://money.cnn.com/2018/02/09/news/companies/amazon-whole-foods-changes/index.html, accessed May 2018.
57
Amazon Press Room, “Amazon and Whole Foods Market Announce Acquisition to Close this Monday, will Work Together to Make
High-Quality, Natural and Organic Food Affordable for Everyone”, Business Wire, 24 August 2017,
https://www.businesswire.com/news/home/20170824006124/en/Amazon-and-Whole-Foods-Market-Announce-Acquisition-to-CloseThis-Monday-Will-Work-Together-to-Make-High-Quality-Natural-and-Organic-Food-Affordable-for-Everyone, accessed May 2018.
58
In 2017, Amazon launched its treasure truck fleet and within two years it had tripled its product volume and comprised more than 100
vehicles (trucks, vans and kiosks) across 25 US cities and millions of text message subscribers. The trucks carried select ‘must-have’ items
and sold them at discounted prices.
59
Amazon.com Inc. Annual report 2017.
60
Russell Redman, “Amazon Fresh Grows from Concept to Competitor”, Supermarket News, May 3, 2022,
https://www.supermarketnews.com/retail-financial/amazon-fresh-grows-concept-competitor, accessed June 2022.
61
eMarketer, “Where do US Consumers Begin their Product Searches?”, November 29, 2020,
https://www.emarketer.com/content/where-do-us-consumers-begin-their-product-searches, accessed June 2022.
62
Geri Mileva, “Amazon Ad Revenue Statistics that will Blow your Mind”, Influencer Marketing Hub, February 23, 2022,
https://influencermarketinghub.com/amazon-adrevenue/#:~:text=In%202018%2C%20the%20company%20made,chunk%20of%20the%20advertising%20market, accessed June 2022.
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