Online shopping giant Amazon generated $187.8 billion in fourth-quarter revenues, while Walmart, a traditional retailer, lagged behind for the first time ever, with $180.5 billion. Walmart is still expected to lead in annual revenue next fiscal year, with sales projected at $708.7 billion, versus Amazon’s $700.8 billion.
While promising in absolute terms, Walmart’s outlook is actually quite cautious and left markets nervous. Given that Walmart is a bellwether for US consumer spending, its tepid forecast could signal a bumpy road ahead for the retail sector.
The multinational retailer’s CFO John Rainey confirmed that Walmart, considering its numerous imports from Mexico and China, won’t be “completely immune” to the new tariffs announced by President Trump.
For its part, Amazon’s future looks bright. The e-commerce conglomerate is on track to dethrone Walmart’ decades-long supremacy over the long term thanks to its ability to diversify. In addition to its core business, Amazon also incorporates its high-margin cloud storage service AWS, its advertising arm, and its Whole Foods grocery division, while Walmart, the largest brick-and-mortar retail conglomerate in the US with 10,500 stores, is expanding into e-commerce.
“Given the growth trajectories of the two companies, it has always been in the cards that Amazon would overtake Walmart’s revenue at some point,” says Neil Saunders, Managing Director of GlobalData Retail. “However, while Amazon is a powerhouse in retail, it is a diversified group that draws its sales from a wide variety of areas. By contrast, most of Walmart’s sales still come from retail.”
The two heavyweights have been competing for years. In less than a decade, Amazon reached a market capitalization three times that of Walmart, with $59 billion in profits last year, compared to its rival with $19.4 billion.
As the battle for retail dominance continues, shoppers could benefit from the competition between the two giants. “The retail market is very democratic and healthy,” added Saunders. “And big companies duking it out is ultimately very good for customers.”
