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Is Walmart More Of A Threat To Amazon Than Many Think?


Image via Knowledge@Wharton - University of Pennsylvania

In 1994, a company named Amazon began operating as an online marketplace for selling books. As the internet became a part of everyday life, e-commerce took off while many brick-and-mortar retailers failed to adapt, even leading to the "retailpocalypse."


Amazon has always been the front-runner in e-commerce, with its share of the U.S. e-commerce market hitting 49% last year, accounting for 5% of all U.S. retail spending. There's a long list of retailers who have undoubtedly been affected by Amazon's dominance and Walmart is no different. For years, Walmart struggled to keep pace with Amazon in e-commerce.


Amazon, which has less than half the amount of revenue as Walmart, even passed Walmart as the most valuable retailer in the U.S. by market capitalization in 2015. Walmart, which is the largest company in the world by revenue, appears to be finally catching up with Amazon.


According to a recent survey by First Insight, Amazon is losing ground to Walmart pretty quickly. First Insight conducted the survey for the third time last month, after previously doing so in December 2017 and September 2018.


The frequency of consumers shopping on Amazon six times or more per month has fallen from 80% in 2017 to just 40% this year. Conversely, the frequency in which consumers shop on Amazon less than two times per month has gone from 10% to 40% over the same period.


The survey shows consumers now have a new favorite this year when asked if they prefer to shop at Walmart or Amazon - either online, in-store or both. The percentage of people who prefer Walmart increased from 47% to 55% over the last year. Meanwhile, the percentage of people who prefer Amazon fell to 45% from 53% last year.


When asked if the number of purchases they make on Amazon has increased or decreased, 12% of respondents said decreased, up from just 6% in 2017.


"The excitement of the Amazon box coming to your house is kind of dwindling off," First Insight CEO Greg Petro said in an interview. "I think the novelty of Amazon is wearing off."


Amazon currently has a market capitalization of roughly two and a half times that of Walmart, approximately $893 billion versus $338 billion. It will be worth keeping an eye on these two as they continue to fight each other to become the go-to retailer for consumers, and if these trends persist, what the effect will be on the two company's share prices.


Leftover Crumbs

  • They may not have to wait another 14 years. SoftBank, which continues to try and clean up the disaster at WeWork, reported its first quarterly loss in 14 years. The company's $100 billion Vision Fund contributed an operating loss of $8.9 billion for the quarter. "My investment judgment was poor in many ways and I am reflecting deeply on that," said SoftBank CEO Masayoshi Son. SoftBank wrote down the value of its WeWork investment by $3.4 billion during the quarter. Son appears to have confidence in his WeWork investment, saying "The logic is simple. Time will resolve . . . and we will see a sharp V-shaped recovery."

  • You don't see this too often. Xerox, the company known for printers and copiers, has reportedly made a cash-and-stock acquisition offer for personal computer and printer maker HP. Xerox, which has a market capitalization of about $8 billion, is making a play for much larger HP, which has a market value of about $27 billion. Xerox reportedly already has funding lined up for the deal. Both companies declined to comment on the rumor. 

  • We'll see about that. Fresh off reporting quarterly results, which included a net loss of $1.16 billion, Uber CEO Dara Khosrowshahi said "We are very, very, very different from WeWork." Speaking at a conference, he explained "Fundamentally the rideshare market is of scale, is global, is an attractive business, and it’s only going to get better in a competitive market." Shares of Uber are now down more than 40% from their high with the company still sporting a market capitalization above $47 billion. 

  • This perfectly sums up the IPO market in 2019. Française des Jeux, the state-owned lottery operator in France, is valued at €3 billion, or $3.32 billion, according to its IPO prospectus released yesterday. France, which owns 72% of the lottery operator, will maintain a 20% stake following the IPO. The sale of the stake could generate as much as €1.7 billion for France, which is part of President Emmanuel Macron's plan to privatize state-owned entities to improve the country's economy. The final pricing will be determined on November 21.

  • This isn't the first, and won't be the last. An open letter by Google employees is the latest example of employees calling on companies to give up profits to solve bigger issues. More than 1,100 Google employees are calling on the company to cancel its contracts with the oil and gas industry. The employees want Google, which has contracts with some of the largest oil-related companies, to create a stronger plan to address climate change. Some of the demands from the letter call for "Zero contracts to enable or accelerate the extraction of fossil fuels" and "Zero funding for climate-denying or -delaying think tanks, lobbyists, and politicians."