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  First Thoughts

    Dan Gilmore


    Supply Chain Digest


Aug. 27, 2020

Supply Chain News: Walmart and Amazon by the Numbers 2021

Our Annual Review of the World's Two Most Important Retailers

For many years now I have been doing an annual analysis and comparison of Walmart and Amazon, the two most important retailers in the world.

Walmart has of course deserves 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. But is Walmart still the world's largest retailer?


After the posting of Q2 2021 results this summer, a firm called FactSet declared that on a trailing 12-month basis, Amazon outsold Walmart by about $44 billion. Walmart achieved $566 billion in revenue for the 12  months that ended in July, while Amazon reached $610 billion for the 12-months that ended in June.


It appears a changing of the guard has taken place. Before that, we had naturally included Amazon in our analysis as the game changing and hyper growth ecommerce giant that has transformed the retail industry - and the supply chain.

Gilmore Says....

I am sure shipping still is a big loss leader for Amazon, almost surely several billion dollars per year at minimum.

What do you say?

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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.

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

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

While Walmart is an incredible giant, its growth had been slowing in recent years- until lately, during the pandemic. 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 an exception) for a few years. As can be seen, growth since 2015 has been a solid 3-4% (solid for a company that size that isn't Amazon) until falling to 1.8% in 2019, before leaping back up to a robust 8.7% growth last year in the stay at home economy.

Total Walmart US sales (Walmart US + Sam's Club) reached $433.8 billion last year,  157% growth versus the $186.5 billion the company had in 2001, but as noted above pace of that growth has obviously slowed substantially down. The Cumulative Average Growth Rate (CAGR) has averaged 5.3% since 2001, but has slowed to 3.8% since 2015.

Walmart's International's growth continues to plateau, despite an awful lot of attention and investment there for a time. Walmart International sales last year were $121.3 billion, basically flat as they been for several years running. They were at $125 billion all the way back in 2011. International is clearly not the Walmart growth engine once imagined.

Walmart still doesn't provide much detail on its ecommerce numbers, but it says it saw 79%% growth in on-line sales in the US in calendar year 2021, versus 37% growth the year before. Amazon's ecommerce growth in globally in 2020 was 46%, probably in just the US.

Not all that many years ago, there were concerns (I think legitimately at the time) about Walmart gobbling a giant, monopolistic share of the US retail market. That fear has simply faded, in the face of declining share and the rise of Amazon. With the recent very modest sales growth, Walmart's share of US retail has been trending slowly down, with a small jump last year.

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 station 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 sales for Walmart than if you do not exclude those categories, which is how it often reported. When you hear numbers like this, make sure you understand how they are calculated.

By our measure, as seen in the chart below, Walmart had an 11.2% of US retail sales in 2020, down from a peak of 12.2% in 2009. And now as noted above Amazon may have overtaken Walmart for the top US retail spot.

As an aside, Amazon does not break out its sales in a way that would allow me to do the same analysis on Amazon's share of total US retail sales.




No one is worried any more that Walmart will take over the retail industry. Amazon is now in the cross hairs.


Would the FTC now let Walmart (or Amazon) buy say Kroger or CVS? Hard to say. I think No for Amazon, which as we reported this week is said to be planning a roll out of new small format department stores. Walmart now maybe Yes.


By the way, I have seen various estimates, but the eMarketer web site estimated Amazon's share of US ecommerce sales at 40.4%.

Turning to Amazon, the 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 few years in what numbers it provides.

Total sales in 2020 were up 37.6% to an incredible $386 billion, but that includes digital media sales, subcriptions, its web services unit, and growing advertising revenue. It also includes revenue from commissions from sellers on its marketplace sites, and logistics services, none of which is broken out in detail.

That said, the chart below shows Amazon's recent growth in what it categorizes as "product sales" - but this is on a global basis, not US only. Amazon once broke out product sales in more detail by business segment, but it no longer does.





As briefly noted above, it used to be easier to track Amazon's logistics costs, which include fulfillment (distribution center costs, including amortization of all those expensive FCs, plus some inbound transportation costs), and shipping expense, which is accounted for separately from fulfillment.


Amazon used to report net shipping expense (shipping costs minus any shipping revenues, including an allocation of Prime subscription sales), but it no longer does. That said, I am sure shipping still is a big loss leader for Amazon, almost surely several billion dollars per year at minimum.


But as a quick calculation, Amazon spent $58.6 billion globally on fulfillment in 2020, and $21.4 billion on shipping, for a total logistics spend of an incredible $80 billion. That was up 45% over 2019 - versus growth in product sales of 34.6%. By my way of thinking, that means logistics costs as a percent of sales are continuing to rise at Amazon.


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.

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 or section below.

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