On the retail front, Amazon’s purchase of the 431-store Whole Foods grocery chain last week (see “Amazon Stops Pretending It Doesn’t Want It All”) gives it a brick-and-mortar footprint in a business (groceries) that accounts for 55% of Walmart’s sales. And less reported, but perhaps just as significant, Walmart announced on the same day that it had acquired online men’s apparel retailer Bonobos, giving it a strong base in the online apparel business, one of Amazon’s major categories.
Walmart also acquired Jet.com, one of the fastest-growing multiple category online retailers, last year, as it uses acquisitions to supplement its growth in online sales under the Walmart brand, just as Amazon is using an acquisition to supplement its growth in brick-and-mortar under its own brand as it opens Amazon stores.
The fight has now been extended into the cloud, where Walmart is prohibiting at least some of its technology providers from using Amazon Web Services for cloud storage, according to the Wall Street Journal. AWS has accounted for the bulk of Amazon’s total profits in recent years, so taking some business away from the most profitable part of a competitor may be part of the satisfaction for Walmart. But the stated reason is to keep proprietary data off a competitor’s platform, a Walmart spokesperson told the Journal. An Amazon spokesperson fired back, describing the tactic as an attempt to “bully” tech companies.
This is truly a battle of two behemoths. Walmart sold nearly half a trillion dollars ($482 billion) worth of goods and services last year, over three times Amazon’s sales of $142 billion. But Amazon is still boasting blistering growth while Walmart is not and that’s reflected in the two companies’ valuations, with Amazon worth over twice as much as Walmart as this is written.
Both companies have been the bane of independent retailers and smaller chains over the years, but now they are taking on large, fearsome competitors in their core markets. Whichever company wins (and neither may), this is going to be one for the ages, fought on a global scale.
