Amazon and Walmart run both retail business models. In contrast, Amazon started as a digital player, then expanded into the physical world, and Walmart instead successfully launched its e-commerce platform over the years.
In 2023, Amazon closed its divide in terms of total revenue, as it generated over $574.78 billion in revenue, compared to over $611.29 billion in revenue from Walmart.
While Amazon and Walmart are direct competitors in retail and now also e-commerce, at the core, the companies are pretty similar (both target variety and convenience, while Amazon obsesses over customer experience); in reality, Amazon is a company with many moving parts.
Indeed, by 2022, Amazon had various moving parts, such as advertising, and AWS.
Amazon generated over half a trillion dollars in revenue in 2023, of which $231.87B from online stores, over $140.05B from third-party seller services, $90.76B from AWS, $46.9B from advertising, $40.21B from subscription services, $20.03B billion in physical stores, and $4.96B from other sources.
AWS (cloud business), in particular, is a key element of Amazon’s business model today and also what contributes most to its profitability.
Amazon is subdivided into three operating profit segments: North America, International, and AWS. Amazon AWS is the most profitable segment, with almost $23 billion in operating profit in 2022. While Both the North American and International segments run at negative operating losses, with $2 billion and $7.74 billion in operating losses, respectively, in 2022.
Walmart (also building a successful e-commerce operation) has remained focused on its core business.
Walmart generated over $572 billion in revenue in 2022 and over $13.6 billion in net profits in the same year. Compared to over $559 billion in revenue in 2021 and over $13.5 billion in net profits.
Both target a wide range of customer segments, including online shoppers. Amazon has a cloud computing division. Walmart has a strong presence in physical retail and grocery.
Amazon’s significant focus on e-commerce and cloud computing. Walmart’s extensive network of physical stores and emphasis on traditional retail and grocery.
Convenience, vast product selection, Prime membership benefits
Low prices, one-stop shopping, physical store presence
Both emphasize convenience and value. Amazon offers a vast product selection and Prime membership benefits. Walmart’s value proposition centers around low prices and one-stop shopping.
Amazon’s online convenience and vast product selection. Walmart’s focus on affordability and a significant physical store presence.
Both use online platforms for sales. Amazon allows third-party sellers on its platform. Walmart operates physical stores and has an e-commerce website.
Amazon’s exclusive online presence and third-party seller platform. Walmart’s extensive network of physical stores and its expansion into online grocery ordering.
Digital interactions, customer reviews, Prime membership benefits
In-store interactions, loyalty programs, customer service
Both maintain customer relationships through digital interactions. Amazon relies on customer reviews and Prime membership benefits. Walmart fosters in-store interactions, loyalty programs, and customer service.
Amazon’s focus on digital customer interactions and reliance on Prime membership. Walmart’s emphasis on in-store relationships and traditional customer service.
Digital Engagement (Amazon), In-Store Relationships (Walmart).
Both engage in e-commerce operations. Amazon has a cloud computing division and content creation (e.g., Amazon Studios). Walmart focuses on retail operations, supply chain management, and private label brands.
Amazon’s diversification into cloud computing and content creation. Walmart’s core focus on traditional retail and supply chain management.
Cloud Computing and Content Creation (Amazon), Traditional Retail Expertise (Walmart).
Key Resources
E-commerce platform, data centers, content libraries
Both rely on e-commerce platforms. Amazon has data centers and content libraries. Walmart’s key resources include physical stores, supply chain infrastructure, and private label brands.
Amazon’s emphasis on digital resources, data centers, and content libraries. Walmart’s reliance on physical retail assets, extensive supply chain, and private label brands.
Digital Resources (Amazon), Physical Retail Assets (Walmart).
Suppliers, technology partners, delivery and logistics providers
Both collaborate with third-party sellers and delivery services. Amazon partners with content creators. Walmart collaborates with suppliers, technology partners, and logistics providers.
Amazon’s partnerships with content creators and its broader range of technology collaborations. Walmart’s focus on supplier relationships and logistics partnerships.
Both generate revenue through product sales and advertising. Amazon has subscription services (e.g., Prime). Walmart offers in-store services in addition to product sales.
Amazon’s diverse revenue streams, including subscription services and advertising. Walmart’s primary revenue source is product sales, both in-store and online.
Subscription Services (Amazon), In-Store Service Offerings (Walmart).
Cost Structure
Fulfillment and shipping costs, technology development expenses
Supply chain and operational costs, employee wages
Both manage costs related to fulfillment and technology. Amazon incurs significant costs for fulfillment and technology development. Walmart focuses on supply chain and operational costs.
Amazon’s higher technology development expenses and investment in fulfillment and shipping. Walmart’s cost structure centered around supply chain efficiency and employee wages.
Amazon has a diversified business model. In 2023, Amazon generated nearly $575 billion in revenues while it posted a net profit of over $30 billion. Online stores contributed over 40% of Amazon revenues. Third-party Seller Services and Physical Stores generated the remaining. Amazon AWS, Subscription Services, and Advertising revenues play a significant role within Amazon as fast-growing segments.
Amazon’s mission statement is to “serve consumers through online and physical stores and focus on selection, price, and convenience.” Amazon’s vision statement is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.”
In the Amazon Shareholders’ Letter for 2018, Jeff Bezos analyzed the Amazon business model, and it also focused on a few key lessons that Amazon as a company has learned over the years. These lessons are fundamental for any entrepreneur, of small or large organization to understand the pitfalls to avoid to run a successful company!
With 64,588,418 shares, Jeff Bezos is the primary individual investor. Owning 12.7% of the company. Other top individual investors include Amazon’s CEO Andy Jessy, who has 94,729 shares. Top institutional investors include mutual funds like The Vanguard Group (6.6% ownership) and BlackRock (5.7% ownership).
Amazon generated over half a trillion dollars in revenue in 2023, of which $231.87B from online stores, over $140.05B from third-party seller services, $90.76B from AWS, $46.9B from advertising, $40.21B from subscription services, $20.03B billion in physical stores, and $4.96B from other sources.
Amazon was profitable in 2023. On nearly $575 billion in revenue for 2023, Amazon generated a net profit of over $30 billion. Since 2014, Amazon hasn’t recorded a net loss, but it did record a net loss of over $2.7 billion in 2022, while it recouped that in 2023. Indeed, in 2014, Amazon reported a net loss of $241 million, and it would be profitable until 2021. In 2022, Amazon turned unprofitable again and highly profitable again in 2023.
Amazon AWS follows a platform business model that gains traction by tapping into network effects. Born as an infrastructure built on top of Amazon’s infrastructure, AWS has become a company offering cloud services to thousands of clients from the enterprise level, to startups. And its marketplace enables companies to connect to other service providers to build integrated solutions for their organizations.
Amazon subscription revenue in 2023 was over $40 billion, compared to over $35 billion in 2022 and nearly $32 billion in 2021. Amazon Prime grew from a $4.5 billion revenue segment in 2015 to an over $40 billion segment in 2023.
The Amazon Working Backwards Method is a product development methodology that advocates building a product based on customer needs. The Amazon Working Backwards Method gained traction after notable Amazon employee Ian McAllister shared the company’s product development approach on Quora. McAllister noted that the method seeks “to work backwards from the customer, rather than starting with an idea for a product and trying to bolt customers onto it.”
The Amazon Flywheel or Amazon Virtuous Cycle is a strategy that leverages on customer experience to drive traffic to the platform and third-party sellers. That improves the selections of goods, and Amazon further improves its cost structure so it can decrease prices which spins the flywheel.
In the letter to shareholders in 2016, Jeff Bezos addressed a topic he had been thinking quite profoundly in the last decades as he led Amazon: Day 1. As Jeff Bezos put it “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”
A regret minimization framework is a business heuristic that enables you to make a decision, by projecting yourself in the future, at an old age, and visualize whether the regrets of missing an opportunity would hunt you down, vs. having taken the opportunity and failed. In short, if taking action and failing feels much better than regretting it, in the long run, that is when you’re ready to go!
A network effect is a phenomenon in which as more people or users join a platform, the more the value of the service offered by the platform improves for those joining afterward.
A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model’s success.
Jeff Bezos was best known for founding eCommerce giant Amazon in 1994. However, the entrepreneur owns companies in several industries, including health care, retail, robotics, real estate, and media. Many of these companies have been acquired by Amazon over the years, but some have been the result of direct investment from Bezos himself (through his investment arm is called Bezos Expeditions).
Amazon is a consumer e-commerce platform with a diversified business model spanning across e-commerce, cloud, advertising, streaming, and more. Over the years Amazon acquired several companies. Among its 12 subsidiaries, Amazon has AbeBooks.com, Audible, CamiXology, Fabric.com, IMDb, PillPack, Shopbop, Souq.com, Twitch, Whole Foods Market, Woot! and Zappos.
The Amazon organizational structure is predominantly hierarchical with elements of function-based structure and geographic divisions. While Amazon started as a lean, flat organization in its early years, it transitioned into a hierarchical organization with its jobs and functions clearly defined as it scaled.
As of 2022, 2,751,779,629 Shares were outstanding for Walmart. The company’s major shareholder is the Walton family, whose mission is to “help people around the world save money and live better – anytime and anywhere – in retail stores and through eCommerce.” While its vision is to “make every day easier for busy families.” Walmart defines “busy families” as the bull’s eye of its business strategy. From humble beginnings just over 50 years ago, Walmart’s business model has become the world’s largest retail company.
With over $611 billion in net sales in 2023, Walmart operates a differentiated business model with three primary units: Walmart U.S., Walmart International, Sam’s Club (a membership-only warehouse club), and Walmart+. This subscription service includes free shipping, unlimited delivery from its stores, and discounts launched in 2021. The company reported a net income of $11.68 billion in 2023.
Walmart generated $611.29 billion in revenue in 2023 and $11.68 billion in profits, compared to $572 billion in revenue in 2022 and over $13.6 billion in net profits in the same year. Compared to over $559 billion in revenue in 2021 and over $13.5 billion in net profits.
In 2023, Walmart reported 240 million customers compared to 230 million global customers in 2022, 240 million customers in 2021, and 265 million customers in 2019.
Walmart had 2.1 million associates globally in 2023, compared to 2.3 million associates globally in 2022, the same number in 2021. In 2020, Walmart had 2.2 million associates globally.
Walmart’smission can be summarized as “helping people around the world save money and live better – anytime and anywhere – in retail stores and through eCommerce.” While its vision is to “make every day easier for busy families.” Walmart defines “busy families” as the bull’s eye of its business strategy.
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
From humble beginnings just over 50 years ago, Walmart has become the world’s largest retail company. A single small discount store in Arkansas has now expanded to over 11,000 stores in 28 countries. Some reports suggest that the company makes $1.8 million of profit every hour.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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