How will Amazon overtake Walmart as the largest American retailer by 2025?


May 4, 2021 | By RetailME Bureau

Amazon.com Inc. will supplant Walmart Inc. as the biggest U.S. retailer by 2025, according to a new report, suggesting the e-commerce giant has too much momentum for Walmart to stop despite big investments in its own e-commerce offerings.

By 2025, U.S. shoppers will buy $632 billion worth of products at Amazon and retail affiliates including Whole Foods Market, surpassing Walmart’s $523 billion, according to the report by Edge by Ascential, which measured the value of all goods sold by each company online and in stores with the exception of gasoline. Edge by Ascential helps brands sell products online and in stores.

To assess the relative size of Amazon and Walmart, Edge used gross merchandise volume, which measures how much money shoppers spend at each company. Traditionally company size is measured by comparing revenue, but doing so in this case doesn’t capture the full picture because the two companies have different models.

Amazon generates most of its sales from the approximately 2 million third-party merchants on its site, charging these sellers a commission that is typically 15% of a given product’s price. What the merchants collect doesn’t show up on Amazon’s income statement.

While Walmart has a growing online operation and third-party marketplace, it remains mostly a traditional retailer, buying products from wholesalers and marking them up. Most products Walmart sells show up as revenue, so by that measure Walmart will outstrip Amazon for several years.

The report doesn’t include revenue from Amazon’s cloud computing division or advertising sales. It includes sales from both retailer’s affiliates, including Whole Foods for Amazon and Sam’s Club for Walmart, but doesn’t include fees for subscriptions like Amazon Prime or Sam’s Club.

Bottom of Form

“The pandemic has permanently shifted consumer habits from in-store to e-commerce,” said Deren Baker, CEO of Edge by Ascential. The main beneficiary is Amazon because Walmart is still playing catch-up even though it’s been spending to add features to its online store, including launching a Prime-style subscription service last year. Amazon, meanwhile, continues to build fulfillment centers around the country in an attempt to speed up delivery and erase the advantage Walmart enjoys with curbside pickup at its more than 5,000 locations.

For Edge’s prediction to pan out, Amazon will have to keep appealing to consumers. The company’s recent victory over a union bent on organizing a warehouse in Bessemer, Alabama, left many Americans with the impression that Amazon treats its workers poorly despite paying them more than twice the federal minimum wage. There also are concerns that Amazon is hurting the environment and small businesses.

Younger consumers in particular are wary of spending too much on the site. Generation Z shoppers, aged roughly 15 to 25, are most likely to feel guilty about shopping on Amazon and are most eager to reduce their spending on the site, according to a survey of 2,000 shoppers by the San Francisco firm Sitecore. The survey found that 53% of Gen Z shoppers were eager to cut back on their Amazon shopping, followed by 49% of Millennials, 36% of Gen X’ers and 25% of Baby Boomers.

Almost 70% of those surveyed were Amazon Prime members and more than half said they typically go to Amazon first for online purchases before search engines such as Google, Sitecore said.

 

Previous Article Next Article

SHARE

YOU MAY ALSO LIKE /


Rajiv Warrier, Chief Executive Officer, Choithrams

Since the launch of its first store in the UAE five decades 

Continue Reading

March 20, 2024 | By RetailME Bureau
Dr. Dhananjay Datar Chairman & Managing Director ADIL Trading Co. LLC

Dr. Dhananjay Datar Chairman & Managing Director ADIL Trading Co. LLC holds 

Continue Reading

February 29, 2024 | By Rupkatha B
Hani Weiss, Chief Executive Officer, Majid Al Futtaim Retail

In 1995 regional retail conglomerate Majid Al Futtaim introduced Carrefour to the 

Continue Reading

February 26, 2024 | By RetailME Bureau
Prashant Parameswaran, Managing Director and Chief Executive Officer of Tata Consumer Soulfull

Tata Soulfull, a leading name in the ‘good-for-you’ snacks and breakfast cereals 

Continue Reading

February 22, 2024 | By Rupkatha B
Jean-Luc Graziato, Chief Commercial Officer of Majid Al Futtaim – Retail and Alia Al Harmoodi, Acting CEO of the Environment, Health and Safety Agency

Majid Al Futtaim – Retail, which holds the exclusive franchise to operate 

Continue Reading

February 20, 2024 | By RetailME Bureau
Krishna Dhanak, Managing Director, Alpen Capital

In an exclusive interview Krishna Dhanak, Managing Director, Alpen Capital shared insights 

Continue Reading

February 19, 2024 | By Rupkatha B
Majed M. Al-Tahan, Co-founder & Managing Director, Danube Online

As digital transformation across the retail industry continues to accelerate, the expectations 

Continue Reading

December 19, 2023 | By RetailME Bureau
Frederic Levy-Perrault, CEO, Al Raya Supermarket

Saudi Arabia-based grocery retail chain Al Raya Supermarket serves over 100,000 customers 

Continue Reading

December 15, 2023 | By RetailME Bureau
Ahmad AR. BinDawood, Chief Executive Officer, BinDawood Holding

BinDawood Holding has a rich Saudi heritage, spanning over 50 years, 38 

Continue Reading

December 13, 2023 | By RetailME Bureau
Majid Al Futtaim Retail commits to Collaborative Impact Goals at COP28

Majid Al Futtaim Retail, which owns the exclusive rights to operate Carrefour 

Continue Reading

December 8, 2023 | By Rupkatha B
BinDawood Holding Company earns Honorary Shield for Compliance Excellence

BinDawood Holding Company has earned an Honorary Shield, a distinguished recognition by 

Continue Reading

December 6, 2023 | By RetailME Bureau
First Movers Coalition for Food to create up to $20-bn value chain for sustainable farming

The World Economic Forum, with support from the Government of the United 

Continue Reading

December 5, 2023 | By RetailME Bureau




Download Images RetailME Magazine