In this Supply Chain Matters retail industry specific commentary we highlight a report that is sure to garner the attention of retail supply chain and customer fulfillment teams.
Specifically, we reference what The New York Times reported this week (Paid subscription or metered view), namely that: “Amazon has eclipsed Walmart to become the world’s largest retail seller outside China.”
The basis for this designation was the citing of a FactSet calculation of total retail sales for the 12-month period ending in June of this year. Reportedly, customers spent more than $610 billion on Amazon compared to $566 billion at Walmart during the comparable period.
The qualifier for outside of China is a recognition that online retail platform provider Alibaba remains top dog in retail sales volume because of the sheer scope of the China and adjacent Southeast Asia retail demand as well as traditional and widely promoted shopping events such as China’s Singles Day shopping holiday.
The above stated, comparisons of Amazon and Walmart come with qualifiers. They relate to Amazon’s primary and relentless focus on online retail and B2B platform growth, a concerted effort to recruit large numbers of third-party sellers that utilize its platform as well as associated advertising, customer fulfillment and last mile delivery capabilities.
The report specifically observes: “Amazon has ascended in part because it opened its website to let third-party sellers list their products alongside items that Amazon buys and sells itself.” Because Amazon only reports the services fees it charges third-party sellers, and refrains from reporting gross merchandise value, a calculated measure of the value of all goods sold on a retail platform, the inference is that it’s much more challenging to determine the online platform provider’s true market influence.
Upwards of two million sellers account for 56 percent of items sold on the Amazon platform. Alibaba and its retail affiliates have a similar business model, and this online provider readily reports GMV, especially in reporting on shopping festival results.
Regarding which retailer is the largest employer across the United States, the Times indicates that Walmart retains that recognition with a reported 1.6 million workers. Others peg Amazon’s retail headcount at upwards of one to 1.3 million workers but that is a rough estimate since full-time and part-time employees are difficult to discern, not to mention the believed high worker turnover rates among customer fulfillment and logistics facilities. The online provider further leverages contractors in many areas including trucking, distribution and air freight capabilities.
The overarching takeaway themes in the Times report is stated that: “Amazon has dethroned one of the most successful-and feared-companies of recent decades.” Supply Chain Matters would add the ascendence of another feared company that is increasingly garnering the attention of global wide regulators and legislative bodies.
Notice that the recognition does not delineate between physical store and online retail. That is because the retail industry has now fostered a multi-channel shopping and customer fulfillment experience.
Of more pertinence is that while Walmart amassed its industry influence via a significant physical big box presence and a relentless focus on saving pennies on all facets of operating and labor costs, Amazon instead invested huge sums in online retailing, Cloud based operations technology and its own logistics and last mile delivery capabilities that have resulted in a greater variety of merchandise options and a loyal and dedicated customer base.
Both of these retailers managed to grow revenues and profits during the pandemic as each became the go-to retailer for essential needs and timely delivery. Their overall business and supply chain agility provided literal dividends for loyal shoppers and shareholders, including making Jeff Bezos among the wealthiest individuals. Each of their successes came at the peril of other retailers and the landscape of competitors continues to whittle.
One year from today, who knows which of these retailers will be crowned king of the hill, or whether federal and local government regulators decide to weigh in on market dominance. China’s government leaders are already reigning in the power and influence of certain Internet retailers including Alibaba.
The one certain is that the battle for retail dominance is ongoing and that includes the industry’s supply and customer fulfillment influence.
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