Managing Partner @ Bondo Advisors | M&A, Corporate Finance in the Tech Vertical. I sell your company!
🏆 Amazon is probably only a couple of years away, at current growth rates, from becoming the leader 🥇in revenue rankings worldwide, overtaking Walmart, the current leader. 📉 If you look at trailing twelve months revenue, #Amazon is only 10% below #Walmart, but it grew twice as fast in the past year: 12% versus 6%. 🏪 The two companies operate fundamentally in the same space (retail), although Amazon has a more diversified revenue split, with one-third of its business coming from non-retail sources, while Walmart's revenue is almost entirely retail. 📊 When you compare the revenue of the two companies, some interesting differences arise: 💵 TTM Total #Revenue: Walmart leads by 11% Walmart: 💲657B Amazon: 💲591B 🛒 #Retail Revenue: Walmart leads by 62% Walmart: 💲650B Amazon: 💲400B 💻 #ECommerce Revenue: Amazon is almost 4X Walmart Amazon: 💲375B Walmart: 💲100B 🏢 Physical Retail: Walmart is almost 30 times larger than Amazon Walmart: 💲550B Amazon: 💲20B 🔍 Where is Amazon a lot larger than Walmart to justify it being almost 4 times the market cap of Walmart❓ 📈 Growth: 23% CAGR in the past decade versus 3.5% for Walmart 💰 Gross Margin (TTM): Amazon $270B and Walmart $158B (+77%) 💼 EBITDA: Amazon $96B versus Walmart $40B (almost 2.5X) 📊 Net Profit: Amazon $38B versus Walmart $19B (2X more profit) 📈 On the other hand, Walmart is a very profitable retail business with almost $28B of operating profit on its $650B retail business. 💸 Amazon does not have a profitable $400B retail business, possibly because it has prioritized growth. Over two-thirds of Amazon's operating profit comes from its cloud business (Amazon Web Services), and probably the rest from its $47B advertising business (Walmart's ad business is barely $4B). Obviously, the ads business would not exist without the retail business and to an extent could be considered just another way to make money on retail. But then again, it is quite remarkable that Amazon is not profitable through the direct margin generated by the $375B of products they deliver to people's homes. 📚 A few more interesting numbers: 🔬 Amazon is super R&D intensive: it spent $85.5 billion on R&D in the past 12 months. 🏬 Walmart, being fundamentally a brick-and-mortar retailer, owns over 60% of its premises worldwide and 85% of its premises in the US. That is over 6,000 stores, $219 billion in property and equipment at cost (probably worth a lot more, since a lot of the real estate they bought was decades ago). 📏 Walmart stores have a total of 1,053,064,756 square feet, which translates to an average revenue per square foot TTM of $617. 🌐 Amazon, as I explained, is a much more diversified business. The split of revenue for 2023 was: #Online Stores: 40% 3rd Party Retail: 24% Amazon Web Services (AWS): 16% #Advertising: 8% #Subscriptions: 7% Physical Stores: 3.5% 🌍 Finally, both companies are still super US-centric. Amazon only has 27% of its revenue from outside the US. Walmart: 18%
Very interesting insights into the performance of the two retail giants #walmart and #amazon. Thanks for sharing this Joshua Novick. While Walmart is a pioneer in physcal retail, Amazon is a trend setter in online retail.
Great insights! Thanks for sharing the breakdowns!!
Ben Smith
1mo
Great analysis, do you know how much money Amazon loses on DTC retail? Do you know if the £100bn of Walmart E-commerce is profitable?
Sohail Sadiq
1mo
Great analysis. Both are leading the retail in their own way and both are massive. They have left all those Oil companies and banks way behind.
Thanks for sharing Joshua! 👏🏻👏🏻👏🏻
Impresionante
Very interesting. As you say the AWS business is where Amazon is getting better margins. I think the comparison should be Amazon Retail vs. Walmart to get a clear picture, as for example I think I read that Amazon's retail business if (for example) Europe is still losing money. Having said that, the fact that they have AWS as a company maybe provides them with deeper pockets to invest behind their overall business. I would assume the difference in market cap is driven by AWS; and probably reasonable.