Amazon vs. Walmart - FourWeekMBA

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 2022, Amazon closed its divide in terms of total revenue, as it generated over $513 billion in revenue, compared to over $572 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-revenues — Amazon generated over half a trillion dollars in revenue in 2022, of which $220 billion from online stores, over $117 billion from third-party seller services, $80 billion from AWS, almost $38 billion from advertising, over $35 billion from subscription services, almost $19 billion in physical stores, and over $4 billion 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-operating-profit-breakdown — 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-revenue-vs-profit — 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.

Business Model Element	Amazon	Walmart	Similarities	Differences	Competitive Advantage
Customer Segments	Online shoppers, cloud computing clients, e-book readers	In-store shoppers, e-commerce customers, grocery shoppers	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.	E-commerce Dominance (Amazon), Extensive Physical Retail Presence (Walmart).
Value Proposition	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.	E-commerce Convenience (Amazon), Everyday Low Prices (Walmart).
Channels	Online platform, third-party sellers, Prime membership	Physical stores, e-commerce website, online grocery ordering	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.	Extensive Online Presence (Amazon), Physical Retail Footprint (Walmart).
Customer Relationships	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).
Key Activities	E-commerce operations, cloud computing, content creation	Retail operations, supply chain management, private label brands	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	Physical stores, supply chain infrastructure, private label brands	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).
Key Partnerships	Third-party sellers, content creators, delivery services	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.	Content Creation Partnerships (Amazon), Strong Supplier Relationships (Walmart).
Revenue Streams	Product sales, subscription services, advertising	Product sales, in-store services, advertising	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.	Technology Investment (Amazon), Supply Chain Efficiency (Walmart).