Is Amazon the New King of Retail?

From Brandchannel.

When Jeff Bezos founded Amazon as an online purveyor of books and then expanded the online giant into more and more verticals, he continually explained to investors that he wanted to forego short-term profits in favor of long-term diversification and domination of the businesses that Amazon entered. Has Amazon accomplished that? Check.

And obviously it’s not finished yet, as recent predictions indicate that Amazon will surpass Macy’s as America’s biggest apparel retailer in the next couple of years. And according to reports from Silicon Valley, it’s exploring more offline options for pickup and brick-and-mortar stores in the US, building on tests now underway in Europe and Canada.

When Amazon reported a quarterly breakthrough into the black on July 23rd, investors furiously bid up the stock. And in the process, Amazon crossed another historic threshold: It became worth more to investors than Walmart, the king of “old-fashioned” retailing.

Wall Street cognoscenti had predicted another loss and a more modest sales gain than the nearly 20 percent increase Amazon reported, which certainly helped its appeal. The 14 percent jump in its stock price on Thursday added more than $30 billion to Amazon’s market value and pushed its capitalization snapshot for the first time past Walmart’s, which ended the day at $230 billion versus Amazon’s $250 billion.

“The retail king has lost its crown,” declared Quartz. “The changing of the guard reflects the growing consensus that online retailing will play an increasingly central role in the global economy over the coming decades and underscores the high premium investors are placing on the growth they expect Amazon to deliver.”

That’s not the whole story, of course. Walmart is hardly giving up. Under new CEO Doug McMillon, it is fighting back furiously to become a true rival force to Amazon in e-commerce—witness Walmart’s attempts to echo the Amazon Prime Day promotion on July 15. And Walmart has recovered some of its mojo in the crucial bricks-and-mortar space, stemming sales declines and boosting wages for its lowest-paid workers.

Amazon is at a new sort of pinnacle vis-a-vis Walmart right now. But it promises to be a continuing game of king of the hill.

Author: Martin North

Martin North is the Principal of Digital Finance Analytics

Leave a Reply