Walmart finally fell behind Amazon in revenue
Despite being giant retailers, their overall businesses are very different.
Well, it finally happened: Amazon’s top-line numbers beat Walmart’s. Amazon brought in a record $187.8 billion in sales last quarter, surpassing the $180.6 billion Walmart reported today.
Walmart stock is selling off ferociously, down 8% premarket, on expectations of slowing growth even though overall, the company saw a strong holiday season.
The two giant retailers have been battling it out for ages. But while the e-commerce everything store that’s picked up some brick-and-mortar locations along the way is still a huge retail competitor with the brick-and-mortar everything store that built a substantial online marketplace, the comparison doesn’t go much deeper these days.
While their headline revenue figures are tight, Amazon’s revenue sources are much more varied. Walmart sells goods at its Walmart and Sam’s Club stores around the world. Memberships to Sam’s Club and subscriptions to Walmart+ provide a much smaller second source. (Walmart also has a small but growing advertising business that brought in $4.4 billion last year.)
Meanwhile, Amazon, in addition to revenue from online and physical stores, also makes money from a wide variety of subscription services; its cloud computing platform, Amazon Web Services; and advertising, among others.
Amazon’s online and physical store sales (Amazon Fresh, Whole Foods) have similar margins to Walmart, which has an e-commerce business in addition to its 10,500 stores.
Where Amazon really sets itself apart from Walmart is in its large, high-margin divisions, including AWS and its advertising business.
Amazon brought in $59 billion in profit last year, for a net profit margin of more than 9%. Meanwhile, Walmart brought in $19.4 billion in profit last year, for razor-thin margins of 2.9%.
That gulf in margins really shows up in the value of the companies.
Amazon, which a decade ago was worth less than Walmart, now has a market cap of three Walmarts.
