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April 25, 2019 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Walmart and Amazon by the Numbers 2019
bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Distribution Digest/Green Supply Chain
bullet Cartoon Caption Contest Continues bullet Trivia      bullet Feedback
bullet Expert Columns bullet On Demand Videocasts


Supply Chain Solutions Built by Supply Chain Professionals

first thought


Supply Chain Graphic of the Week
US Warehouse Lease Rates Still Headed Higher


Google Parent Gets Jump on Amazon on Drones

UPS Spending Big on Parcel Network
Elon Musk Says Autonomous Taxis Here Soon
Kohl's Cozies Up to Amazon



April 10, 2019 Contest

See The Full Cartoon and Send in Your Entry Today!



Feature Story: Engine Maker Cummins Doubling Down on 3D Printing


pic GSC Feature Story: Below the Surface, Movement Afoot to Remove Plastics from Food Supply Chain - but It's not Easy

Weekly On-Target Newsletter:
April 24, 2019 Edition

Cartoon, Best of ProMat, RFID Breakthrough, Getting Rid of Plastic, More

How Supply Chain Companies Can Achieve Decision-Centric Optimization

The Most Important Outcome of Implementing an Algorithm-Based Supply Chain Optimization Solution

Featuring Dan Gilmore, Editor along with along with Dr. Z. Caner Taskin - ICRON's Chief Technology Officer and a Professor in the Department of Industrial Engineering at Bogaziçi University.

Data Visibility and the Supply Chain Ecosystem

by Richard Wilhjelm
VP, Sales & Marketing
Traverse Systems

From "Rules of Thumb" to Non-Linear Algorithmic Optimization

by Henry Canitz
Product Marketing & Business Development Director

The Chainmail Effect: How Globalization Impacts the Supply Chain

by Daniel Smith
Product Marketing Specialist
Amber Road



What year was the first real-time WMS thought to have been first implemented?

Answer Found at the
Bottom of the Page

Walmart and Amazon by the Numbers 2019

For several years I have been doing some analysis and comparisons between Walmart and Amazon, the two most important retailers in the world.

Walmart earns that place due to its stature as the world's largest merchant (and company) and one that represents an often substantial share of many consumer goods companies' total sales. Amazon obviously earns a spot as the dominant ecommerce company - at least in North America and Europe - and ecommerce is where all the action is right now, sucking most of the oxygen out of the retail room. Amazon is also now probably the second largest overall US retailer, passing Kroger last year, but you can't be sure based on how it reports the number.


Amazon's actual or potential threat to a growing number of retail sectors is often existential, and it is taking that to ever more product areas, such as drug stores/pharmaceuticals with its acquisition of on-line pharmacy Pillpack last year.


You can make an argument I should throw China's Alibaba and maybe even into this mix as other ecommerce giants - maybe next year I will. They both remain China-centric - for now.


By our measure, Walmart had an 10.9% of US retail sales in 2018, basically flat over the past 5 years, and down from a peak of 12% in 2009.


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Feedback here

So we've been looking at both of these retail giants "by the numbers" in recent years, and it has become one of our most popular columns of the year, forwarded by many SCDigest readers to others in their companies.

But as I will explain in a second, getting your arms around the numbers is often harder than you might think.


What Walmart and Amazon are doing is obviously of interest to most other retail and consumer goods manufacturers, and I hope others as well, as in the end almost every company is connected to the retail supply chain.

So let's start with Walmart, based on its its full fiscal year 2018, ending this past January.

As can be seen in the chart below, Walmart's US sales grew very rapidly in the beginning years of the 2000s, primarily by adding new superstores carrying groceries at a rapid pace into new markets.

But that growth soon decelerated, and in the recession year of 2009 started a pattern of mostly very low growth (2012 being an exception) for five years that was not much above inflation on average, meaning real growth was almost flat or up a percent or so at best. But the news is better in the past two years, with Walmart US showing strong growth of 4.1% in 2018.

Total Walmart US sales (Walmart US + Sam's Club) reached $389.5 billion last year, well more than double the $188 billion the company had in 2002, but the pace of that growth has obviously slowed substantially down. The Cumulative Average Growth Rate (CAGR) for Walmart US has averaged 5.2% since 2002, but has slowed to 3.1% since 2010.


Walmart's international growth continues to plateau, despite an lot of attention and investment there in the past. Walmart international sales last year were $120.8 billion, up 2.2%, after a 1.7% . increase the previous year. Still, international is clearly not the Walmart growth engine once imagined, though Walmart did acquire a majority stake in Indian ecommerce site Flipkart in April 2018.

Walmart still doesn't provide much detail on its ecommerce numbers, but says it saw 40% growth in on-line sales in the US in 2018. Analyst estimates put its ecommerce sales in the $12 billion or so range in 2018, still a small fraction of Amazon's on-line revenues.

Not all that many years ago, there were concerns (I think legitimately at the time) about Walmart gobbling up a giant, monopolistic share of the US retail market. That fear has simply faded. With the recent modest sales growth, Walmart's share of US retail has flatlined. SCDigest developed a methodology several years ago, where we compare Walmart's US sales versus relevant US retail figures - total retail minus autos and parts, gas stations and other fuel sales, and restaurants/bars.

It's not quite perfect because Walmart does sell some gasoline, but it doesn't break it out in a way we can use. Nevertheless, I think what we have is pretty good - and does reflect a higher share of US retail for Walmart than if you do not exclude those categories, which is how it is usually reported. When you hear all these numbers, make sure you understand how they are calculated.

By our measure, Walmart had an 10.9% of US retail sales in 2018, basically flat over the past 5 years, and down from a peak of 12% in 2009. It simply does not appear any more that Walmart will take over the retail industry. That is an interesting and important change - and its share seems unlikely to go much higher to me, absent an acquisition. Would the FTC now let Walmart buy say Kroger or CVS? Probably not, but hard to say for sure.


Now let's turn to Amazon, a company that provides a lot of numbers to analysts but getting the best insight from them takes some work. That is because of its several business units and how it computes certain ratios, and (unfortunate) changes it has made in the past couple of years in what  numbers it provides.

Total sales in 2018 were up 31% for the second straight year to an incredible $232.8 billion, but that includes digital media sales, subscriptions, and its rapidly growing and highly profitable web services unit.

For a number of years I thought it was more interesting to look to look at what Amazon called "merchandise" sales, almost all on-line, since that included a close analog to traditional retail sales and were most connected to a physical supply chain.


But Amazon no longer provides the merchandise sales numbers. It now provides "product" sales, but that includes, for example, sales at its Whole Foods grocery unit. Product sales were up 20% to $141.9 billion last year on a global basis. You can get global product sales, and North American sales, but what you can't get is North American product sales, among other limitations.


So I made up my own metric. I took what Amazon reports as sales from "on-line stores," then added revenues from what Amazon calls third-party services. That latter number includes commissions the company gets from its marketplace sellers (for which Amazon does not take inventory ownership), and revenues from Amazon's third-party logistics services, including Fulfilled by Amazon (FBA).



Interestingly, on-line sales, while still up healthy 13%, have clearly slowed as the law of large numbers finally seems to actually apply to Amazon as well . But marketplace sales are growing much faster than Amazon's own on-line sales. So combining them, Amazon sales are up in the 15-16% range the last two quarters by this measure.

In the end, I am trying to adjust the numbers Amazon reports for things like shipping and fulfillment costs against the right denominator, using for many years the now unavailable merchandise sales. That's because including shipping in comparisons including say web services revenues doesn't make sense.

So the best I can do is compare the change in shipping costs to on-line sales revenue growth:



Shipping costs are obviously rising at a much higher rate, generally about double on-line sales growth. Though you can no longer directly calculate the number, Amazon is certainly still losing billions in shipping every year.


I am out of room, even though I have more. Will do a part 2 on this as I did last year in a week or two, including an interesting look at free cash flow.

Any reaction to these numbers from Amazon and Walmart? Any other data you would like to see? Let us know your thoughts at the Feedback button below.


New On Demand Videocast:

A Blueprint for WMS Implementation Success

If You Want a Successful WMS Project, You will Find the Blueprint in this Excellent Broadcast

This videocast lays out the keys to ensuring your WMS implementation goes smoothly, involves minimal pain, and accelerates time to value.

Featuring Dan Gilmore, Editor along with Todd Kovi of Radix Consulting and Dinesh Dongre of Softeon.

Now Available On Demand

On Demand Videocast:

How Supply Chain Companies Can Achieve Decision-Centric Optimization

The Most Important Outcome of Implementing an Algorithm-Based Supply Chain Optimization Solution

Featuring Dan Gilmore, Editor along with along with Dr. Z. Caner Taskin - ICRON's Chief Technology Officer and a Professor in the Department of Industrial Engineering at Bogaziçi University.

Now Available On Demand

On Demand Videocast:

Digital Transformation's Value to the Supply Chain

The Future of Order Management

This videocast breaks down what digital transformation is and how automated order management solutions equate to supply chain benefits.

Featuring Dan Gilmore, Editor along with Esker's Dan Reeve.

Now Available On Demand


More feedback on our recent piece on "The 3 V's of Supply Chain 20 Years Later."

Feedback on The 3 V's of Supply Chain 20 Years Later:


I agree the 3 V's is one of the most important frameworks in supply chain, highly relevant to today's world.


But I am afraid the new generation simply haven't been exposed to this thinking.


Thank you for re-publicizing this important thinking.

Rod Foxworthy
Athens, OH





I was frankly not familiar with the 3 V's. Very interesting.


I agree that Visibility has become something like tablestakes. Variaibility remains the biggest challenge for in the supply chain.


We continue to see more and more variability due to a wide number of factors.


Mary Patterson
Des Plains, IL






Outstanding article. Glad to see the 3 V's are still being promoted. Not sure if they have made into what they teach supply chain majors or not.

Stephen Moore
Reno, NV



Q: What year was the first real-time WMS thought to have been first implemented?

A: 1975.

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