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On 20 February 2018 Walmart made history by becoming the first corporation to record annual
revenues of half a trillion dollars, almost at par with the GDP of the 25th largest economy in the
world. Its ecommerce sales were also on a promising upswing, having grown by 63% in 2016 and
44% in 2017. Despite these successes, the company’s stock price dropped by 15% in the first quarter
of 2018 as investors worried about stagnant sales and declining operating margins.

In contrast, Amazon, the largest online retailer world-wide, at one-third the size of Walmart in terms
of revenues, and less than 2% of Walmart’s operating income in 2017, had recorded double-digit
growth in sales over the last 20 years. Its stock price had risen by 24% over the first quarter of 2018.
On 31 March 2018, Amazon’s US$700 billion market capitalisation dwarfed the US$262 billion
market value of Walmart (refer to Exhibit 1 for Amazon and Walmart 2017 financials).

As two of the most successful retailers in history, Amazon and Walmart had transformed the retail
industry by redefining customer orientation, supplier-retailer relationships, and the use of
information technology. Both retailers had tremendous power over their suppliers, and leveraged it
effectively to offer prices as low as possible.

Historically, the two did not compete directly because of their differing focus. While Walmart
dominated the ‘shrinking’ brick & mortar retail that comprised 90% of the US retail industry,
Amazon led the ‘growing’ ecommerce sector that contributed the remaining 10% in 2018. The unique
value chain networks of the two retailers were optimised to enable their dominance of the respective
offline and online retail channels in the US. In 2016, 95% of all US consumers had shopped at a
Walmart store, and 42% had shopped at Amazon. 1

However, the changing customer preference for omni-channel retailing, an integrated platform that
seamlessly comprised digital and physical retail, was compelling the two companies to making
substantive investments for developing capabilities and acquiring resources in what was hitherto the
other’s domain. Walmart hoped that online expansion and ability to leverage its massive physical
network (offering flexible delivery and pick-up/return services on online orders) would fuel its
growth. Amazon, on the other hand, was driven towards establishing a brick & mortar presence in
order to sustain its high rate of growth. The inherent limitations of an online model had so far
hindered Amazon’s ability to penetrate deeper into the two large retail categories of grocery and
apparel that favoured a hybrid approach. Consequently, every step towards omni-channel by the two
retail giants saw them increasingly confront each other head-on.

This case was written by Professor Nirmalya Kumar and Dr Sheetal Mittal at the Singapore Management University. The
case was prepared solely to provide material for class discussion. The authors do not intend to illustrate either effective or
ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information
to protect confidentiality. This case was developed with the support of Retail Centre of Excellence (RCoE).

Copyright © 2018, Singapore Management University Version: 2018-06-14

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SMU-18-0013 Amazon and Walmart on Collision Course

Would this race towards an integrated retail platform make Walmart and Amazon clones of each
other, or would one emerge as a clear winner? The challenge for Walmart would be to embrace the
lower-margin online model while retaining investor confidence; and for Amazon it would be to
establish a capital-intensive physical footprint without eroding its marginal profitability any further.
Would their respective existing world-class capabilities help or hinder them in effectively evolving
towards an omni-channel model? And, how could other US retailers survive in the face of what some
saw as a “knock-down, drag out clash of the two retail titans, with no end in sight?” 2

The Growth of Ecommerce

In 2017, ecommerce sales worldwide grew to US$2.3 trillion, a 24.8% increase over the previous
year, and made up 10.2% share of the total retail sales (US$22.6 trillion). Over the next four years,
through 2021, the annual average growth rate of global retail sales was expected to be 5.3%, while
that of ecommerce was estimated to be 20%, signifying a continued increase in the share of online
sales. 3

The US had exhibited rapid growth in ecommerce, with the share of online sales in the country’s total
retail projected to grow from 10% in 2017 to around 14% (US$779.5 billion) in 2021 (refer to Exhibit
2 for details on growth of ecommerce over 2001-2017). Ecommerce in the US was predominantly led
by Amazon, whose online sales were not only the highest in the country, but in 2016, more than the
online sales of the next 49 retailers put together (refer to Exhibit 3 for details on shoppers’ preferred
online platforms). 4 A 2018 survey indicated that US consumers, when shopping online, started the
search most frequently on Amazon (54.3%), Google (14.5%) and Walmart (5.5%). 5

Shoppers’ preference for online stores because they were open 24/7 (72%), saved time (71%), offered
larger selection (63%) and lower prices (50%) led to the shrinking of the brick & mortar presence.6
In 2017, more than 8600 stores were shut down in US (JCPenney, Macy's, Sears, and Kohl’s closed
15 to 20% of their stores) with at least 3800 more to follow in 2018 (refer to Exhibit 4 for financial
performance of top US retailers). 7,8 Many traditional retailers such as Walmart, Nordstrom, Target
and Gap had adopted the digital model and embarked on an omni-channel fulfilment strategy by
leveraging their store locations and in-store inventory.

Despite its seemingly wide-spread presence, the e-retail penetration differed significantly across
product categories, with music, videos, books and magazines commanding the highest online share
at 49-55% of the total category sales, followed by consumer electronics at 25-30%, apparel at 18-
20%, and the grocery at only at 1-2%. 9 Despite their low online penetration, apparel (around US$328
billion) and groceries (approximately US$1.5 trillion) were two of the largest categories in the US.
Observing this discrepancy, Jeff Bezos, founder and chief executive officer of Amazon, had remarked
early in Amazon’s history: “In order to be a two hundred billion dollar company, we have got to learn
how to sell clothes and food.” 10

Ecommerce for Grocery

The US grocery market was expected to grow at 3.6% per annum to reach a forecasted US$1.7 trillion
in 2022. 11 In 2017, the bulk of grocery sales took place via customers’ weekly trips to physical stores.
According to an online survey, 97% customers preferred to buy in stores, with only 18% buying


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SMU-18-0013 Amazon and Walmart on Collision Course

online too. 12 Yet online grocery sales were expected to grow at CAGR of 18%, until 2022 (refer to
Exhibit 5 for the share of grocery market by channel type). 13

For the consumers shopping online, freshness and quality of the food items as well as prices were
paramount, followed by timely and frequent availability of delivery. The grocery basket, while large
in terms of volume and weight, had a relatively low dollar value. The average order size for someone
purchasing online groceries was US$82 in 2017.

The low margins, average order size of the industry and the nature of grocery products in addition to
consumer price sensitivity and delivery preferences led to significant economic and logistic
challenges for retailers in their efforts to offer an attractive, but profitable, online proposition. Yet,
given the size of the opportunity, retailers were continuing to experiment with alternative delivery
models in their search for a sustainable model for online grocery retail.

Although belated, the leading grocery retailers in the US had significantly ramped up their
investments to provide customers two key online grocery fulfilment models: the click-and-collect
model, whereby the shoppers picked up groceries from collection points (e.g., neighbourhood stores),
and the home-delivery model that provided the last mile connectivity. For last mile connectivity, the
two favoured models were ship from store and ship from warehouse. While retailers with extensive
physical store network usually relied on ship from store and in-store picking by employing additional
staff, Amazon invested in developing shipping from warehouse and automated dark store picking. 14

Traditionally, the major operating costs for offline retailers were staff, rental, utilities, and advertising.
These costs were relatively fixed in the near term. Shoppers who came to the store bore the costs of
assembling their basket from the shelves and transporting it home. In contrast, for online orders with
home delivery, the retailer needed to pick, assemble and deliver the order. Estimates varied, but
picking and delivering to homes cost the retailer, on average, US$10-15 per order. The fulfilment
costs varied with the mix of products comprising the order. For example, large bulky items or frozen
items were more expensive to deliver for the retailer. Therefore, while both multipack carbonated
drinks and fresh fish yielded similar high gross margins for the retailer, the fulfilment costs for the
bulky carbonated drinks multipack were considerably larger. Similarly, while yoghurt and frozen
vegetables generated relatively smaller gross margins for the retailer, the cost of handling and
shipping the latter was higher.

As someone had to be home to receive the order, customers preferred either faster delivery (e.g., same
day or within 4 hours) or certainty of delivery (e.g., a predefined one-hour slot within a few days).
The more retailers accommodated customer delivery preferences, the higher the order fulfilment costs
were. Faster delivery and promised delivery slots made route planning less efficient for delivery
trucks and also had a detrimental impact on the utilisation of picking staff. Hence, it was not surprising
that retailers with a large physical network preferred their online shoppers to click and collect from
the store. Some retailers experimented by offering pick up discounts to consumers who ordered online
or increasing prices for some items purchased online. For example, at Walmart, a bag of tortilla chips
sold for US$3.83 if delivered, but only US$1.74 if picked up at the store. 15 After consumers
complained about the differential pricing, Walmart began displaying on its website both the lower in-
store as well as the higher online prices if delivered at home.

By 2018, to cover the cost of fulfilment, most online retailers charged a fixed fee per order and


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SMU-18-0013 Amazon and Walmart on Collision Course

specified a minimum order size. Some online grocery retailers also limited the number of bulky items
(e.g., maximum 12 one litre bottles of water) per order. Several grocery delivery options were being
trailed, which variously combined, minimum order quantity, fixed fee per delivery, and subscription
models (refer to Exhibit 6 for grocery delivery options).

Even consumers who preferred the convenience of shopping for groceries online tended to dislike
paying the shipping charges. Typically, higher delivery charges increased the average order size as
consumers were able to justify the shipping fee for larger orders, but reduced the frequency of orders
and the size of the target market.

Ecommerce for Apparel

In 2017, the US apparel market at US$328 billion was the largest worldwide, and poised to grow
annually by 2.3 % over the next three years. Online sales were expected to grow at a much higher
rate, increasing their share in total retail sales of apparel from 18% in 2017 to 24% in 2021. 16

Unlike groceries, the apparel market’s high profit margins, non-perishable nature, and high value–
low volume ratio made it more conducive for the online model. The erstwhile big apparel players in
the US - Walmart, Target, TJX, Kohl’s, Macy’s and Gap - faced a significant threat from e-tailing,
and especially from Amazon (refer to Exhibit 7 for apparel sales of top retailers) 17. A 2017 survey
indicated that about 25-30% of Target, Macy’s and JCPenney’s shoppers had switched some of their
apparel spending to Amazon; and that nearly 24% of customers preferred to buy apparel online either
on the brands’ own websites or on Amazon (refer to Exhibit 8 for details on customers preferences
for different retail formats and Amazon, and Exhibit 9 for the details on the types of apparel
customers prefer to buy on Amazon). 18,19

Ecommerce sales of apparel did however present some challenges for retailers, including the inability
to provide the shoppers a tangible experience whereby they could see the colours, touch the fabric, or
try the garment for fit, style and comfort. A survey indicated that 49% of all Amazon apparel shoppers
bought from the e-retailer largely due to its lower prices and discounts.20

Another challenge was the significantly high return rate of 30% in online sales, as compared to only
9% for in-store sales. 21 Returns of online purchases often entailed customers having to go through a
tedious process of repackaging the unwanted item, printing up a label, waiting for it to be collected
and finally getting the refund. The time and the hassle involved in the process represented a paradox
for e-tailing that was centred on the promise of ease, convenience and flexibility. For the retailers,
not only did the returns increase the logistic complexity of their online operations, but also added
considerably to the costs incurred.

Since 62% of the customers preferred in-store returns, retailers with omni-channel presence were at
an advantage. 22 However, third-party services such as ‘Happy Returns’, a company that operated
physical ‘return bars’ in shopping malls, enabled customers to return items bought from ecommerce
players, and collect refunds. Additionally, the e-tailers too aimed to facilitate the returns process by
providing shoppers innovative, faster and easier alternatives such as Amazon offering lockers that
could be used by shoppers for both pick up and return of items, or collection of returns from home
fronts under its Prime Wardrobe initiative.


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SMU-18-0013 Amazon and Walmart on Collision Course

Ecommerce in general, and especially in grocery and apparel was also buoyed with the industry’s
move towards private label brands. Private label brands allowed the retailers (though both online and
brick & mortar) greater margins, higher flexibility and the ability to innovate, and most importantly
more control over the value-chain.

Walmart: The Low Cost Leader 23

Help people save money so they could live better…I think one of the greatest strengths of
Walmart’s ingrained culture is the ability to drop everything and turn on a dime. 24
Sam Walton, Founder and Former CEO

Sam Walton opened his first Walmart Discount store in Arkansas in 1962. Based on a low-price/high-
volume business model, with a vast selection of non-perishables, it expanded into smaller towns and
rural areas of the US. In the 1980s, Walton experimented with new store formats such as Sam's Club
that served small businesses and individuals on a membership basis, and the Walmart Supercenter
that combined a supermarket with general merchandise. By 1992, when Walton passed away,
Walmart was recording net sales of US$44 billion, employed 371,000 employees across 1,928 stores
and clubs, was present in more than 45 states across the US, and had gone international with its first
overseas store in Mexico.

Over the next twenty five years (1992-2017), successive leadership in the company continued with
Walton’s core philosophy of offering the lowest prices possible, minimising operating costs, and
developing economies of scale. It drove a corporate culture based on frugality in which its employees
as well as vendors were ingrained with the need to create efficiencies in operations to minimise costs,
and pursued an ‘inside-out’ radial expansion 25 strategy in locating its stores and fulfilment centres.

Walmart had, from the onset, invested heavily in technology. For example, RetailLink, its proprietary
intranet that linked it with its suppliers, enabled immediate and transparent information sharing
(inventory and sales performance data) between the suppliers and the company. Combined with a
supply chain initiative called Vendor Managed Inventory (VMI) whereby manufacturers were
responsible for managing their merchandise in the retailer’s warehouses, Walmart managed to
achieve almost 100% order fulfilment with the lowest distribution costs in the industry. The retailer
also established strategic partnerships with most of its vendors based on ‘long-term, high volume
orders for the lowest possible prices’. Furthermore, Walmart’s adoption of cross docking – the direct
transfer of products from inbound trucks to outbound trucks - eliminated the need for storage and thus
helped keep the inventory and transportation costs down while also considerably reducing the
delivery time.

Such practices enabled the company to imbibe an ‘everyday low cost’ (EDLC) philosophy and offer
‘everyday low prices’ (EDLP) to all its customers on a wide assortment of merchandise and services
- a pricing strategy that was the cornerstone of Walmart’s success. Promotions were relatively
infrequent, averaging thirteen events annually relative to more than fifty at competitors.

In grocery, Walmart enhanced its customer reach by expanding into smaller format stores such as
neighbourhood markets (introduced in 1998) that were one-fifth the size of Supercenters. These stores
primarily stocked food, were conveniently located near urban centres, and offered significantly lower


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SMU-18-0013 Amazon and Walmart on Collision Course

pricing than the local competition. Additionally, with ecommerce taking off, the retailer entered the
digital space in 2000 through the launch of its website for the American customers to
shop online, and followed it up with a number of ‘site-to-store’ services that incentivised shoppers to
buy online and pick up in stores.

By the end of 2017, Walmart comprised 11,700 stores globally (serving 270 million customers a week
across 28 countries), and employed a 2.3 million strong workforce. It reached a milestone with its
total sales climbing to US$500 billion (y-o-y growth of 3%), although its operating income at
US$20.4 billion declined by 10.4% over 2016 (refer to Exhibit 10 for Walmart’s financial
performance from 1998-2018). The company increased its dividend to the shareholders for the 45th
consecutive year (refer to Exhibit 11 for stock performance over 1998–2018).

Walmart US

In the US, Walmart was the undisputed market leader, with its closest competitor Kroger clocking a
third of Walmart’s revenues (US$123 billion in 2017). By end 2017, it had 4761 stores and 597 clubs
in the country that were located within 10 miles of approximately 90 percent of the US population
(refer to Exhibit 12 for a breakdown of the stores based on format over 2013-2018). Its distribution
network in the country, one of the largest in the world, comprised 157 centres (other than 30 dedicated
ecommerce centres), a fleet of 6,100 tractors, 61,000 trailers and more than 7,800 drivers.

Among the large assortment of products peddled by Walmart, groceries (perishables, frozen foods,
beverages, dry groceries and non-perishable household and personal care products) accounted for the
largest share at 56%, followed by general merchandise (entertainment, apparel, home furnishing,
stationary, hardware, horticulture, etc.) at 33%, and health and wellness range (pharmacy, optical
services, clinical services, over-the-counter drugs and other medical products) at 11%.

Reinventing Retailing: Picking up the Pace of Change

With limited success in ecommerce over 2000-2014, Walmart recognised the need to develop the
essential e-capabilities it lacked. And to that end, since 2015 it increasingly reduced its spend on
opening new stores and clubs, and instead focused more on e-initiatives such as online grocery, pick
up towers, expansion of grocery delivery locations, technology and supply chain to facilitate an omni-
channel model, and remodelling of existing stores to make them more customer-oriented (refer to
Exhibit 13 for details on capital expenditure allocation).

In 2016, Walmart acquired, an innovative ecommerce company in the US, for US$3.3 billion,
and retained its highly experienced leader, Marc Lore, as the CEO of Walmart’s ecommerce business.’s access to a growing base of urban and millennial customers (400,000 new shoppers added
every month, 25,000 daily processed orders) and a selective and distinctive assortment of
merchandise (2400 retailers and brand partners), along with its expertise in technology that enabled
it to reward customers in real time on bulk buying, were some of the strengths that Walmart sought
to give itself a jump start in the domain. According to Doug McMillon - president and chief executive


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SMU-18-0013 Amazon and Walmart on Collision Course

If Wal-Mart were starting today and we were building an ecommerce business, some of the things
that Jet designed into their approach would have been things we would have thought of and we
would have wanted to do, and they've just done it from scratch. 26

Private-label Brand Portfolio

Walmart, known for selling national brands at low prices, increasingly looked at growing its private
label brands portfolio (especially for apparel and grocery) in order to drive customer loyalty and better
margins. According to McMillon, given the level of competition,

Having a private brand from a margin mix point of view and product-driven loyalty have become
even more important than in the past. 27

Besides, acquisitions of private brands such as Hayneedle in 2016, and Moosejaw (outdoor apparel),
ShoeBuy (Zappos-style shoe retailer), Modcloth (indie and vintage clothing) and Bonobos (menswear)
in 2017 had helped Walmart expand its range of online apparel and accessories merchandise in order
to include fashion, a category in which the retailer had struggled to make its mark in the past. Walmart
also tied up with the department store operator Lord & Taylor, to offer their products on the Walmart

Walmart’s other successful private-label brands included Equate (health & wellness products), Great
Value (grocery), and Sam's Choice (food products). It also rolled out Uniquely J (coffee, olive oil,
laundry detergent and paper towels) which offered quality ingredients at low prices, with bold
packaging to attract young customers. Some of the other introductions in its private apparel brands
portfolio were Time and Tru (women apparel), Terra & Sky (plus-sized women’s clothing), Wonder
Nation (kid’s clothing) and George (men’s clothing).

Beefing up the Last Mile

Through the years, Walmart introduced a variety of online grocery services such as Walmart Pickup
that allowed customers to order online and pick up at one of its stores, or Pickup Today that allowed
customers to pick up their online orders at a store within four hours for free. In the former case, the
order was serviced from one of the distribution centres, and in the latter, from the store itself.

In 2017, the retailer allowed online grocery pickup at more than 1,100 locations, with plans to double
the number by next year. To implement in-store picking, 18,000 employees as “personal shoppers”
had to undergo a three-week training program in order to pick the best produce and meats. As
specialists, they were paid more than the entry-level workers.

Walmart also installed pick-up towers near the entrance of many of its stores that served as vending
machines for non-grocery online orders. These 16 feet tall and 8 feet wide towers allowed the
customers to scan the barcode on the online order receipt (or enter the order number), and collect their
parcel in less than 45 seconds. By the end of 2018, Walmart planned to make the towers available
across 700 stores and to 40% of the US population. 28

For those customers who preferred home delivery, Walmart rolled out free shipping in two days for
orders larger than US$35, without any membership fees (unlike Amazon Prime). To address the ‘last
mile connectivity’ issue (considered to be the most expensive part of the fulfilment process) in a cost
effective manner, the retailer enlisted its store employees to deliver online orders on their way home
from work, for extra pay. According to Lore,


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SMU-18-0013 Amazon and Walmart on Collision Course

Those same trucks could be used to bring ship-to-home orders to a store close to their final
destination, where a participating associate can sign up to deliver them to the customer’s house. 29

In September 2017, Walmart acquired New York-based Parcel, a technology-based, 24/7 operation
that delivered packages the same-day, overnight and in scheduled two-hour windows. Leveraging
Parcel’s expertise, Walmart planned to deliver both general merchandise as well as fresh and frozen
groceries to customers in New York City. And, to address one of the key customer concerns
associated with online grocery shopping, Walmart provided a 100 percent money back guarantee if
the quality and freshness of the fruits and vegetables were not found satisfactory.

Building on the Technical Prowess

In addition to physically remodelling many of its stores - wider aisles, shorter shelving, new signs
and flooring, interactive displays - Walmart recognised technology as a critical enabler for enhancing
the customer experience. Set up in 2011, its technological arm, Walmart Labs, comprising more than
2,500 engineers, programmers and data scientists, carried out big data analytics (about 30 petabytes
of shopping information) to inform business decisions, develop innovative solutions for search,
supply chain and last mile issues, deliver operational efficiency by optimising business processes
irrespective of the platform used, provide customers a seamless experience across different channels
(digital, physical and mobile), and empower its employees through access to secure digital solutions.

Walmart’s mobile shopping platform was instrumental in creating an omni-channel experience at its
physical stores. Inside the store, the Walmart mobile app, once turned on, slipped into the ‘store
assistant’ mode, providing shoppers access to up-to-date information about the products, where they
were stocked in the store, how much their shopping carts would cost when they check out, and an
automated checkout process. The scan-and-go feature allowed shoppers to completely bypass the
checkout lanes in-store. They could simply scan the barcodes of their selected items on the mobile
app, bag it and pay directly through the app. Besides, customers buying pharmacy products or availing
money services could just order prescription refills or fill out the necessary paperwork from their
phone after having entered their personal information in the app. The app enabled the customers to
track the order status, view pricing, and manage pick-up details. Moreover, the express lanes in the
stores for the pickup made the process even faster.

Walmart also launched a simplified return process through its mobile express returns service,
whereby customers initiated the process of return on the app by selecting the online transaction and
finished it at the physical store where they returned the item using the express lanes. The refunds were
credited to the customer’s account soon afterwards. The retailer also introduced personalised voice
shopping (in partnership with Google) to offer hundreds of thousands of items that could be purchased
by the customers by simply speaking on the mobile app or on the Google Express website. The
company was also engaged in performing experiments with 3D printing and envisaged a time when
small household items or replacement parts could be printed at home, in stores or at distribution
centres. According to McMillon,

We can begin to envision a whole new way of delivering customized products to customers when
and how they need them. 30

Walmart’s concerted efforts towards building an omni-channel presence led it to achieve high growth
rate in its ecommerce sales, recording US$11.5 billion in 2017. Its website offered close to 75 million
SKUs (double of the previous year), and included ‘Marketplace’ that permitted online selling of


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SMU-18-0013 Amazon and Walmart on Collision Course

merchandise by third parties.

Amazon: The Everything Store 31

We continue to aspire to be Earth’s most customer-centric company, and we recognise this to be

no small or easy challenge.
Jeff Bezos, Founder and CEO 32

Founded in 1997 by Jeff Bezos as a company that sold books online, Amazon expanded extensively
over the years, and in 2017 retailed 17 product categories (143 sub-categories) that included
electronics, music, toys, groceries, apparel, footwear, appliances, books and magazines, etc. (refer to
Exhibit 14 for its bestselling product categories). In addition, it offered third-party retail seller
services, retail subscription services, and Amazon web services, an on-demand cloud computing
platform to individuals, companies and governments (refer to Exhibit 15 for the segment wise
breakup of Amazon’s total revenue).

Over the two decades (1997-2017) ecommerce and Amazon shared a symbiotic relationship, with
growth in one fuelling the other. As the number of people using the Internet in the US multiplied
(from 40 million in 1997 to 287 million in 2017) and the online sales grew by almost 200 times (from
US$2.4 billion to US$440 billion), Amazon’s sales and stock prices too grew in equal measure (refer
to Exhibit 16 for Amazon’s performance over 1997-2017). 33 In addition, the retailer enjoyed a robust
free cash flow of US$8.3 billion to support further expansion and investment plans.

From the very beginning, Amazon’s key decisions and plans had been firmly and consistently driven
by a focus on developing long-term market leadership through customer orientation, rather than
accruing short-term profitability - a promise that was reiterated every year to its shareholders. To this
end, the retailer undertook many innovative steps to drive greater ecommerce adoption. In 1999, the
company patented the one-click checkout system to help streamline online purchasing. In 2000, it
launched ‘Marketplace’ and allowed third-party sellers on the platform. This helped the company
expand the SKUs that sold on its platform to 5.5 million, and by 2017 to 562 million (the sellers
included more than 300,000 US-based small and medium businesses). Of this, apparel, at 166 million
items, comprised the largest product category available on Amazon. 34

However, the real impediment to greater adoption of the online model was the cost of delivery and
the delivery time. To overcome this bottleneck, in 2005, the company introduced Amazon Prime, a
breakthrough service.

Amazon Prime

Amazon Prime was a fees-based annual subscription program that allowed the members unlimited
free two-day delivery on a large number of items (more than 100 million different items in the US in
2017). Over time, Amazon added a host of other benefits to sweeten the pot, beginning with free
access to a certain number of books, movies and music, and an unlimited cloud photo storage space,
to positioning it as an all-inclusive package of streaming entertainment, e-lending and exclusive
access to a growing stable of Amazon services and products.


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SMU-18-0013 Amazon and Walmart on Collision Course

In order to boost its share specifically in the grocery and apparel categories, Amazon introduced many
prime services that significantly enhanced customer value. Its ‘Prime Now’ service provided
members free two-hour delivery on a large selection of grocery items (25 categories at the time of
launch in 2014, which were subsequently expanded). And, to facilitate trials during online clothes
shopping, in 2017 it launched ‘Prime Wardrobe’ that allowed shoppers to try clothes at home before
paying. Members could order multiple items of clothing (up to eight items), keep whatever they
wanted and send the rest back. They were charged only for the items that were kept. Shipping was
free both ways, with the customers having the option to have the returns picked up from their home

Prime redefined the industry’s value-proposition by making faster shipping a core customer
expectation. Furthermore, shoppers no longer had to place sufficiently large orders to minimise the
delivery costs. According to Bezos, “Prime was an all-you-can-eat, physical-digital hybrid that
members loved.” By the end of 2017, the retail giant had more than 90 million Prime subscribers in
the US, who spent on an average US$1,300 per year on the ecommerce site, almost double the
US$700 per year spent by non-members. 35 Compared to 40% of the Prime members, only 8% of non-
members spent more than US$1000 annually on Amazon (refer to Exhibit 17 for the amount of
money spent by prime versus non- prime members). 36 Moreover, these shoppers offered steady and
predictable revenue streams.

Private Label Brands

In 2009, Amazon began its private label program by introducing batteries under its brand
AmazonBasics. It quickly grabbed a one-third share of the category, which led to the launch of in-
house brands across a range of product categories to help boost thin retail margins.
Access to data on customers’ product and price preferences helped Amazon develop its brands
accordingly, and in some cases by simply mimicking the bestselling products in the category and
selling at a lower price. Visibility into what consumers were searching for helped it understand gaps
in the market and in its own assortment. For example, since Ralph Lauren was unwilling to list its
polo shirts on the Amazon site, customers searching for them were instead presented Amazon
Essential polos in twelve different colours at US$12 each. Amazon also had the ability to mine
customer reviews to understand the pain points of the customers, such as a shirt fading after five

Amazon’s private label business, with a portfolio of more than 100 brands, was estimated to be
between US$10-12 billion in 2017 and anticipated to double over the next four years. Its in-house
brands covered different price points. AmazonBasics included a wide range of home necessities from
electronics accessories to office accessories, fitness equipment, travel accessories, home furnishings,
pet accessories, kitchen tools and dinnerware. Some of its other brands were Amazon Elements (baby
care & vitamins), Wag (dogfood), and Pinzon (bedding & bath).

With increased focus on apparel, Amazon launched a number of labels that spanned across women,
men, children and infants clothing, and catered to a wide spectrum from basics (e.g., Amazon
Essentials) to those with more fashion content (e.g., Lark & Ro, Goodthreads and Core10). Amazon
Essentials outperformed national brands like Nike, Adidas and Calvin Klein by accounting for 3%
of best sellers across all clothing categories on its platform. 37 Lark & Ro, the retailer’s fastest
growing fashion brand (90% growth over 2016) offered reasonable prices for commonly searched


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SMU-18-0013 Amazon and Walmart on Collision Course

for items. 38 Having grown by 25% in its apparel sales in US in 2016, Amazon was expected to
become the biggest apparel seller in US by 2021 at US$62 billion in sales, overtaking Macy’s at
US$23 billion and TJ Maxx at US$26 billion. 39, 40 In 2017, it acquired Body Labs to gain the
technology that created 3D models for shoppers for trying clothes online.

To establish itself as a fashion brand, the retail giant also hired talent with experience in the fashion
industry, advertised on fashion-centric platforms such as Vogue magazine, sponsored fashion events,
offered premium designer names such as Zac Posen and Stuart Weitzman, and introduced new
collections from celebrities such as Drew Barrymore and Dwyane Wade on its website. In addition,
it enabled thousands of designers and artists to present their exclusive work on Amazon. According
to a spokesperson of the company,

Amazon wants to become the number one online shopping destination for fashion customers. 41

Focus on the Last Mile and Physical Expansion

Evidently, Amazon’s ability to grow and drive its share further in product categories like grocery and
apparel was contingent upon the retailers’ extent of control and presence during the last mile of
connectivity with its customers. Consequently Amazon made considerable investments towards
developing innovative solutions for pick up, delivery and return of items services, and establishing a
physical footprint in the domain through strategic acquisitions and partnerships with other players.
By 2017, it had 330 fulfilment centres in US that exceeded 145 million square feet of space.

Out of Box Services

In 2000, Amazon introduced a locker system, installing self-service kiosks in public places, such as
retail stores and office buildings, in the big cities in the US, for pick up or return of packages at a time
and place convenient to the shoppers. Later, in 2017, the retailer extended this service by launching
the hub locker delivery system for apartment blocks and other housing complexes so that residents
could receive and pick up packages at flexible times. This 24x7 service obliterated the need for the
shopper to be at home at the time of delivery, or the presence of a doorman or a concierge, hence
allowing the retailer a certain amount of control over the logistics of the last mile delivery.

Amazon also introduced the concept of Prime Air – a delivery service using drones (unmanned aerial
vehicles) in 2013. Over the years, it set up development and testing centres in the US, the UK, Austria,
France and Israel, and in 2016 made its first commercial delivery using a drone in the UK. However,
unfavourable FAA (Federal Aviation Administration) regulations in the US had limited this initiative
in the country.

To reduce its dependence on third parties such as UPS and FedEx for making deliveries in the future,
Amazon invested in building a US$1.5 billion cargo hub in 2017, and was soon expected to roll-out
its services that delivered items from third-party sellers directly to customers, bypassing the
traditional cargo carriers.42

Amazon Key was yet another innovative service proposed by the retailer, which enabled Prime
members to receive and view the delivery being made inside their front door, when the customers
were not at home. However, to do so, they needed to buy a compatible smart lock and a security
camera specially made for the program. According to Rohit Shrivastava, General Manager- Amazon


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SMU-18-0013 Amazon and Walmart on Collision Course

Key, the customer benefits of the service extended beyond it being a delivery mechanism,

It’s a great service for busy families; you no longer have to worry about giving keys to service
providers like house cleaners, instead you can give them their own code right from your Amazon
Key App. 43

Brick & Mortar Presence

Amazon invested heavily towards creating an offline presence through a variety of access points in
order to provide shoppers a physical browsing experience. For example, since 2015, it had opened 13
bookstores in addition to more than 40 pop-up stores across the US. According to Jennifer Cast, then
vice-president of Amazon Books,

We’ve applied 20 years of online bookselling experience to build a store that integrates the
benefits of offline and online book shopping. 44

However, the bookstores did not find resonance with the larger audience, generating negligible
revenues for the retailer.

The pop up stores housed an assortment of Amazon hardware products, and served a dual purpose.
One, they aided the company in its marketing efforts to create and boost product awareness and drive
sales of the devices which were no longer being stocked by retailers such as Walmart and Target.
Two, the customer-product trials and interactions at the stores drove more traffic to Amazon’s online
store. In 2016, Amazon launched its treasure truck fleet and within two years it comprised 35 trucks
across 25 US cities and 12 UK cities. The trucks carried select ‘must-have’ items and sold them at
discounted prices. Customers could opt for the item through the mobile app, pay for it and fix a time
for pick up in person from the truck at the address sent by the retailer.

In 2017, Amazon acquired Whole Foods, a premium grocery chain with 470 stores, for US$13.7
billion. The acquisition allowed it to broaden the physical footprint, own a reputed high quality private
label brand (365), and acquire a better understanding of shoppers’ grocery buying behaviour through
access to rich customer data. As its first steps, Amazon slashed the prices at Whole Foods by 25-50%
on select products to lure customers from the competition, made Whole Foods products available on
its website, and included them in its Prime Now service. 45 It was now able to offer customers high
quality groceries, which included thousands of natural and organic products as well as locally sourced
favourites, at low prices, delivered fresh. According to Jeff Wilke, CEO Amazon Worldwide

We’re determined to make healthy and organic food affordable for everyone. Everybody should
be able to eat Whole Foods Market quality – we will lower prices without compromising Whole
Foods Market’s long-held commitment to the highest standards...and continuously lower prices
as we invent together. 46

Amazon also planned to use the Whole Food stores’ parking lots to drive offline cross-selling by
parking its treasure trucks there and by offering merchandise that Whole Food shoppers might be
interested in.

In January 2018, after five years of research and testing, Amazon came up with another retail
invention that appeared to be the future of brick & mortar stores. It opened Amazon Go, a fully


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SMU-18-0013 Amazon and Walmart on Collision Course

automated convenience store with no checkout required, in Seattle, US. The ‘just walk out’ shopping
experience allowed shoppers to pick up items from the shelves and simply walk out. A custom-built
combination of computer vision, sensor fusion, and deep learning tracked the shoppers, tallied up
their bill, and charged it to the customers’ Amazon account. While the customers benefitted by
controlling the amount of time they spent at a store irrespective of how crowded it was, there were
concerns about whether they would be interested in such a solution where there was no human
interaction at all. The retailer believed that while it might take a little while for people to get used to
simply walking out, over time it could become practically indispensable. As Bezos said,

Even when they don’t yet know it, customers want something better, and your desire to delight
customers will drive you to invent on their behalf. No customer ever asked Amazon to create the
Prime membership program, but it sure turns out they wanted it. 47

Battle for Omni-channel Supremacy

The writing on the wall was loud and clear. Omni-channel was increasingly the preferred choice of
the customers in US and world-wide. Failure to respond effectively to the changing shopping
behaviour could adversely affect the strong customer relationships enjoyed by the retailers, be it
Walmart or Amazon.

While it was evident that both retailers were focused on developing the requisite capabilities to
provide a seamless omni-channel shopping experience through technology investments, marketing
innovations and strategic acquisitions, this strategic shift had raised challenges on many fronts.
Foremost, the high investments by Walmart and Amazon could lead to adverse financial implications
for both retailers, especially in the short term, and possibly in the long term too. Second, a successful
online expansion for Walmart, and an offline expansion by Amazon, could result in cannibalising
their sales in the channels each was more proficient and profitable in.

Most importantly, this was the first time the two giants faced each other as fierce competitors. So far
it was the rest of the retail industry that had borne the blunt of their aggressive market warfare. But
for now, the two had their biggest fight on hand. While the market seemed to currently favour
Amazon, the advantage could change hands any day. The question was, how would it end?


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In USD million 2017 2016 2017 2016
Revenues Revenues Operating Operating
Income Income
USA 106,110 79,785 2,837 2,361
International 54,297 43,983 -3,062 -1,283
Amazon Web Services 17,459 12,219 4,331 3,108
TOTAL 177,866 135,987 4,106 4,186

In USD million 2017 2016 2017 2016
Revenues Revenues Operating Operating
Income Income
USA 318,477 307,833 17,869 17,745
Sam’s Club (USA only) 59,216 57,365 982 1,671
International 118,068 116,119 5,352 5,758
Miscellaneous *** 4,582 4,556 -3,766 -2,410
TOTAL 500,343 485,873 20,437 22,764

* Financial year end 31 December 2017

** Financial year end on 31 January 2018
*** For revenues, it is the difference between total revenues and net sales; and for operating income, it is the costs of
corporate support

Source: Inc. and Walmart Inc. Annual Reports


In USD billion 2001 2005 2009 2013 2017

Total retail trade sales 3062 3689 3612 4458 5030
Retail ecommerce 34 91 146 261 453

Source: Statista, “Total and ecommerce value of U.S. retail trade sales from 2000 to 2016”, https://www-
2000/,acessed July 2018.


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SMU-18-0013 Amazon and Walmart on Collision Course


1% 10% 100%

Amazon 44%

A search engine such as Google 33%

A specific online store website such as Walmart or


The brand's website or app that you are looking for 6%

An online marketplace such as eBay or Etsy 5%

Somewhere else 1%

NPR poll of 1,057 US adults

Source: Alina Selyukh, “What Americans Told Us about Online Shopping Says A Lot about Amazon”, NPR, 6
June, 2018,
about-amazon, accessed July 2018.


Retailers Market Cap Sales Operating Income Stores

(USD billion)* (USD billion) ** (USD billion) **
Home Depot 205.5 101 (6.7%) 14.7 (9.3%) 2200
Costco 82.7 126 (8.7%) 4.1 (12%) 741
CVS 65.97 185 (4.1%) 9.5 (7.7%) 9846
Walgreens Boots 64.9 118 (0.7%) 5.6 (7.4%) 13,200
Target 37.4 72 (3.3%) 4.3 (-12.2%) 1822
Kroger 20.5 123 (6.3%) 0.8 (-20.0%) 2782
Best Buy 19.8 42 (7.1%) 1.8 (-0.5%) 1509
Kohls 11.0 19 (2.7%) 1.4 (3.4%) 1158
Nordstorm 8.1 15 (4.1%) 0.9 (15.0%) 366
Macy’s 9.1 25 (-9%) 1.8 (37.4%) 852
JCPenney 0.9 12 (0.3%) 0.1 (-70%) 872
Sears 0.3 17 (-24.5%) -0.4 (78%) 940


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*as on 31 March 2018; ** percentage growth over previous year

Source: Annual Reports


Channel Type % Share 2017

Discounters (e.g. Aldi) 6%
Hypermarkets (e.g. Walmart) 24.2%
Supermarkets (e.g. Kroger) 38%
Convenience (e.g. CVS) 18.5%
Online (e.g. Amazon) 1%
Specialist stores & others (e.g. Whole Foods) 5.3%
Traditional (e.g. Mom & Pop stores) 7%
Total 100%

Source: IGD, “IGD: new US grocery forecasts reveal $20bn online growth opportunity”, 5 October,
reveal-20bn-online-growth-opportunity/i/17616, accessed July 2018.


Retailer Grocery Delivery Options

Walmart 800 stores to offer same day delivery to reach 40% of US households. Flat fee
of US$9.95 on orders above US$30, within four hours if ordered by 1 pm. Curb
side locations for convenient pick up targeted to reach 2200 stores by year-end.
Amazon Fresh US$14.99 per month additional fee for food delivery for Prime members who
pay US$99 annually for the membership. Free delivery of the groceries if the
order is above US$50, anything less cost extra US$9.99. Delivery can be same-
day or next-day. It can also be either “Doorstep Delivery,” a three-hour
delivery window where the customer doesn’t have to be at home, or “Attended
Delivery,” a one-hour window where the customer has to be available to take
the delivery.
Whole Foods Grocery in select cities delivered free to Prime members within two-hour for
purchases over US$35, and within one-hour for additional charge of US$7.99.
Automatically adds a tip but is optional.
Target Free delivery for orders above US$35 for Shipt members who pay $99 per year,
or $14 per month. Smaller orders cost a $7 delivery fee. Offers delivery within
one-hour after an order is placed provided the customer would be at home to
receive it. In select cities, for non-Shipt members, same day delivery available
for a $7 flat fee and does not require any subscription.
Costco For non-perishables, on orders above US$75, free 2 day delivery for Costco
members who pay US$60-120 a year for the membership. Offers same day


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SMU-18-0013 Amazon and Walmart on Collision Course

delivery of grocery including perishables through partnership with Instacart

that charges US$5.99 for orders below US$35 in addition to a 10% service

Source: Companies websites/press releases


Costco (softlines) 14

Target (US apparel) 14

Kohl's (excluding home) 15.5

Gap 16

TJX (clothing inc footwear) 18

Macy's (excluding home and
Walmart (US Apparel) 25

Amazon (clothing)* 3.4 Sales in USD billion

0 10 20 30

Source: Anna Nicolaou and Leslie Hook, “Now Amazon is disrupting fashion retail, too”, Financial
Times, January 26, 2018,, accessed
April 2018;
*Lauren Thomas, “The Amazon effect is hitting the apparel industry”, CNBC, 10 July 2017,,
accessed July 2018.


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Others Mall based

Sporting goods 7% speciality stores
stores 9%
5% Brand's website

Department 18%


Source: Hayley Peterson, “Amazon just got one step closer to crushing America's biggest clothing stores”,
Business Insider, 20 June 2017,
the-us-2017-6/?IR=T, accessed April 2018



Category Only shop Digitally more Digitally same Digitally less Only shop
digitally than in-store as in-store than in-store in-store
Male 4% 17% 16% 35% 28%
Male 4% 12% 16% 24% 45%
Female 3% 23% 18% 34% 21%
Female 3% 19% 14% 29% 36%

Source: E-marketer, “Most Consumers Shop for Footwear, Apparel In-Store”, 14 June, 2016,, accessed July


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0 10 20 30 40
Women's casual clothings - t-shirts, jeans, casual shirts
and skirts
Men's casual clothing 33.5%

Men or Women's undewear, socks or hosiery 25.6%

Men or Women's sports clothing 25%

Any children's clothing 17.5%

Men or Women's coats and jackets 11%

Men or Women's formal clothing 9.3%

Other clothing & footwear products 14.9%

Sample: 719 US internet users 18 + who have bought clothing items on 2017

Source: Coresight Research, “Deep Dive: Amazon Apparel—US Survey Reveals What Shoppers Buy, Which
Retailers They Have Switched from and Their Attitudes Toward Amazon as a Fashion Retailer”, January 2018,
retailers-switched-attitudes-toward-amazon-fashion-retailer/, accessed July 2018.


2017 Men’s Apparel Women’s Apparel Kid’s Apparel

Top Sub-category Jeans Inner wear Girl’s basics

Top selling item

Estimated Sales 370 150 25

(USD million)
Based on a report by One Click Retail

Source: Lauren Thomas, “Amazon and Target are in a war over apparel”, CNBC, 15 February 2018,, accessed May 2018.


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In USD million except for the 1997 2002 2007 2012 2017
calculated values
Operating Results

Net Sales 117,958 226,479 374,526 466,114 495,761

% change over last year 12% 12% 8.6% 5.0% 3%
Cost of Sales 93,438 191,838 286,515 352,488 373,396
Operating, SG&A expenses 19,358 41,043 70,288 88,873 106,510
Operating income 5,719 13,644 21,996 27,801 20,437
Dividends declared per common 0.27 0.30 0.88 1.59 2.04

Financial Position

Inventory 16,845 25,056 35,180 43,803 43,783

Property, equipment, capital 23,606 51,904 97,017 116,681 114,818
lease and financing obligation
assets, net
Total assets 45,384 94,685 163,514 203,105 204,522
Return on assets 8.5% 9.2% 8.4% 9.0% 5.2%
Total stockholders' equity 18,503 39,337 64,608 76,343 77,869
Return on equity 19.8% 21.6% 19.5% 18.2% 14.2%
Diluted earnings per share 0.76 1.79 3.16 5.02 3.28
Free cash flow* NA NA 5,417 12,693 18,286

Stores Count

Walmart U.S. segment 2,362 2875 3550 4,005 4,761

Walmart International segment 601 1288 3121 6,148 6,360
Sam's Club segment (US) 443 525 591 620 597
Total Count 3,406 4,688 7,262 10,773 11,718
Retail square feet at period end NA NA NA 1,072 1,158
(in millions)*
No of Employees (worldwide) 825,000 1,500000 2,000000 2,200000 2,300000
Financial year end on January 31 of subsequent year; *not available for all the years

Source: Walmart Inc. Annual Reports 1998-2018


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Walmart Amazon 700.6



10.2 29.7
2.1 246.4
228.2 208
1998 2003 2008 2013 2018

Source: Data from Yahoo Finance,, and, accessed July 2018.


Year* Supercenters Discount Stores Neighbourhood Sam’s Total

Markets & Others Club
2013 3288 508 407 632 4835
2014 3407 470 639 647 5163
2015 3465 442 667 655 5229
2016 3522 415 735 660 5332
2017 3561 400 800 597 5358
* Financial year end on January 31 of subsequent year

Source: Walmart Inc. Annual Report 2018


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Capital Expenditures 2017 2016 2015 2014 2013

(USD million)
New stores and clubs, including 914 2,171 3,194 4,128 5,083
expansions and relocations

Ecommerce, technology, supply chain 4,521 4,162 3,963 3,288 2,539

(distribution and digital retail) and other

Remodels 2,009 1,589 1,390 822 1,030

Total U.S. 7,444 7,922 8,547 8,238 8,652

Walmart International 2,607 2,697 2,930 3,936 4,463

Total capital expenditures 10,051 10,619 11,477 12,174 13,115

Financial year end on January 31 of subsequent year

Source: Walmart Inc. Annual Reports


Consumer Electronics

Home and Kitchen


Sports and Outdoors

0 5 10 15 20 25
Y-o-Y growth (%) Sales estimate (USD billions)

Source: Leo Sun, “Foolish Take: Amazon's best-selling product categories in 2017”, 10 January 2018, USA Today,
of-2017/109268720/, accessed July 2018.


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MIX A (USD million) 2017 Revenues 2016 Revenues

Net Product Sales 118,573 94,665
Net Service Sales 59,293 41,322
TOTAL 177,866 135,987

MIX B (USD million) 2017 Revenues 2016 Revenues

Online Stores 108,354 91,431
Physical Stores -Q3+Q4 (a) 5,798
Third Party Seller Services (b) 31,881 22,993
Subscription Services (c) 9,721 6,394
Other (advertising, credit card) 4,653 2,950
AWS (d) 17,459 12,219
TOTAL 177,866 135,987

MIX C (USD million) 2017 Revenues 2016 Revenues

USA 120,486 90,349
Germany 16,951 14,148
United Kingdom 11,372 9,547
Japan 11,907 10,797
Rest of world 17,150 11,146
TOTAL 177,866 135,987

a: Acquisition of Whole Foods August 2017, 3% international sales

b: Includes commissions, fulfilment and shipping fees, and other third-party seller services;
In 2017, marketplace sellers estimated to have sold US$91.4 billion worth of goods through Amazon;
Amazon collects, on an average, a 15% commission of third party sales
c: Monthly and annual fees associated with Amazon Prime, audiobook, e-book, digital video and digital
d: Amazon Web Services includes amounts earned from global sales of compute, storage, database, and other
AWS service offerings for start-ups, enterprises, government agencies, and academic institutions

Source: Inc. Annual Reports 2016 and 2017


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In USD million except for the 1997 2002 2007 2012 2017
calculated values/ratios

Operating Results
Net Sales 148 3,933 14,835 61,093 177,866
Total operating expenses 177 3,868 14,180 60,417 173,760
Operating Income (Loss) (29) 64 655 676 4,106

Operating expenses break-up

Cost of Sales (a) 119 2,940 11,482 45,971 111,934
Fulfilment (b) - 392 1,292 6,419 25,249
Marketing 39 125 344 2,408 10,069
Technology and content (c) 12 216 818 4,564 22,620
General Administration 7 79 235 896 3,674
Others - 116* 9 159 214
Total 177 3,868 14,180 60,417 173,760

Financial Position
Inventory 8.9 202 1,200 6,031 16,047
Total assets 149 1,990 6,485 32,555 131,310
Return on assets (1.8%) (7.5%) 7.3% (0.1%) 2.3%
Diluted earnings per share (1.27) (0.39) 1.12 (0.09) 6.15
Total stockholders’ equity 28 (1,353) 1,197 8,192 27,709
Return on equity (96.4%) (11%) 39.7% (0.5%) 11%
Free cash flow NA 135 1181 395 8,376
Shipping cost (% of net sales) NA (10.3%) (2.9%) (4.7%) (12.2%)

No. of Employees (worldwide) 614 7,500 17,000 88,400 5,60,000

Financial year end on December 31; *including stock based and goodwill compensation; NA: data not available
a: Includes both inbound and outbound shipping costs
b: Comprises the operating and staffing cost of fulfilment centers, customer service centers and physical stores, and
payment processing costs
c: Includes the cost of technical staff, technical equipment and infrastructure required to support AWS

Source: Inc. Annual Reports


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Prime Non-Prime












Survey by Morgan Stanley

Source: Eugene Kim, “Amazon just made thousands of books free for its Prime members — here's a simple
reason why”, Business Insider, 5 October 2016,

Krystina Gustafson, “Nearly Every American Spent Money at Wal-Mart Last Year”, CNBC, 12 April, 2017,, accessed February 2018.
Brian Deegan, “Amazon Vs. Walmart: Locking Horns In A Battle For Retail's Future”, IBD, 27 February 2018,, accessed May 2018
Corey McNair, “Worldwide Retail and Ecommerce Sales: eMarketer’s Updated Forecast and New Mcommerce Estimates for 2016—
2021”, e-marketer, January 2018.
Arthur Zaczkiewicz, “Amazon, Wal-Mart and Apple Top List of Biggest Ecommerce Retailers “, WWD, 7 April 2017,, accessed May 2018.
Allison Enright, “The Amazon Report”, Internet Retailer Research, July 2018.
Alan Wolf, “Half of Online Shoppers Start at Amazon”, 11 June 2018,
at-amazon, accessed July 2018.
Adam Hartung, “How The 'Amazon Effect' Will Change Your Life And Investments”, Forbes, 28 February 2017,,
accessed May 2018.
Daniel Keyes, “ECommerce Will Make Up 17% of All US Retail Sales by 2022 – And One Company is the Main Reason”, Business
Insider, 11 August 2017,, accessed May 2018.
Leslie Hook and Anna Nicolaou, “Amazon Debuts the Store Without a Checkout”, Financial Times, 21 January 2018,, accessed May 2018.
Anna Nicolaou and Leslie Hook, “Now Amazon is Disrupting Fashion Retail Too”, Financial Times, January 2018,, accessed May 2018.


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SMU-18-0013 Amazon and Walmart on Collision Course

IGD, “IGD: New US Grocery Forecasts Reveal $20bn Online Growth Opportunity”, 5 October 2017,
us/media/press-releases/press-release/t/igd-new-us-grocery-forecasts-reveal-20bn-online-growth-opportunity/i/17616, accessed May
Statista, “US Shoppers’ Primary Food Shopping Locations by Type”, https://www-statista-, accessed May 2018.
IGD, “IGD: New US Grocery Forecasts Reveal $20bn Online Growth Opportunity”, 5 October, 2017,
us/media/press-releases/press-release/t/igd-new-us-grocery-forecasts-reveal-20bn-online-growth-opportunity/i/17616, accessed July
Dark store refers to a retail or distribution centre which caters exclusively for online shopping
John Matarese, “ Online Prices May be Higher Than In-Store”, WCPO, 9 November 2017,, accessed July
Statista, “Revenue of the Apparel Market World-Wide by Country in 2017, https://www-statista-, accessed May 2018.
Anna Nicolaou and Leslie Hook, “Now Amazon is Disrupting Fashion Retail Too”, Financial Times, January 2018,, accessed May 2018.
Lauren Thomas, “Amazon and Target Are in a War Over Apparel”, CNBC, 15 February 2018,, accessed May 2018.
Hayley Peterson, “Amazon Just Got One Step Closer to Crushing America’s Biggest Clothing Stores”, Business Insider, 20 June
2017,, accessed May 2018.
Daniel Keyes, “Amazon is Taking Apparel Sales from Retailers”, Business Insider, 22 February 2018,, accessed May 2018.
Douglas Quenqua, “Many Unhappy Returns? Online Holiday Shopping’s Big Hangover”, The New York Times, 26 December 2017,, February 2018.
The information in the section is from the company website and annual reports unless specifically stated otherwise.
Doug McMillon, “Picking up the Pace of Change for the Customer”, Walmart Newsroom,
viewpoints/picking-up-the-pace-of-change-for-the-customer, accessed May 2018.
The diffusion of store openings radiating out from a central point (previous store) in all directions. With its stores close to each other,
it allowed Walmart to facilitate and economise the logistics for shipments, for example optimal use of a single truck to make multiple
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SMU-18-0013 Amazon and Walmart on Collision Course

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