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Perspectives On Amazon's E-Commerce Leadership

Summary

Amazon is clearly the leader for e-commerce in most geographies of the world.

Recent research has suggested that Wal-Mart Stores may be vying for the number two spot, with no potential to unseat Amazon over the long-term.

Regardless of long-term outcomes, e-commerce has continued to transform the physical retail world.

To put things into perspective, Amazon.com (NASDAQ:AMZN) generated around $111 billion in e-commerce revenue, of which over $71 billion was within North America, over the trailing twelve-month (TTM) period through June 2016. Wal-Mart Stores (NYSE:WMT) is estimated to have recently generated roughly $14 to $15 billion, of which $11 billion was within the U.S., in e-commerce revenue; while Target Corporation (NYSE:TGT) is estimated to have generated around $2 billion.

These three companies reflect the top U.S.-based e-commerce companies for domestic and global online sales. Amazon's lead is substantial, and is a primary driver which has led to Walmart's joint venture with JD.com (NASDAQ:JD) in China and the recent acquisition of Jet.com.

Recent research from Moody's has alluded to the possibility that Walmart may not be in a position to compete with Amazon.com for the top e-commerce title over the long-term, regardless of the Jet.com $3.3 billion acquisition. In fact, Moody's has stated that they do not believe that Walmart, let alone any brick-and-mortar retailer, will be able to catch up with Amazon from both a revenue and brand perspective.

Instead Moody's has suggested that Walmart's current moves have created an advantage over its competitors in the race to be the second largest e-commerce company based in the U.S. Let it be clear that physical retail is still the most dominant platform for retail purchases with 2014 retail sales excluding motor vehicles and parts dealers at around $3.6 trillion. The electronic shopping and mail-order houses category was just under $400 billion and reflected around 11 percent of the retail sales total. Walmart generated nearly $485 billion or around 13 percent of the 2014 retail sales total during this period.

With retail sales being mostly flat over the past year, Amazon's portion despite much more robust growth than Walmart, was at around 3 percent of the total, over four times lower than Walmart's market share. So just as Moody's believes that Walmart's chances of overtaking Amazon for e-commerce over the long-term are far-fetched, the same could be said for Amazon's ability to unseat Walmart's market share lead based upon the long-term evolution of physical retail.

A factor impacting expectations for...


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