It is not unknown that Amazon and Walmart, the two giant retailers have always been at war against each other. However, as per a report provided by JP Morgan, Amazon is all set to overtake Walmart as the largest U.S retailer in 2022.
Amazon’s U.S. retail business is the “fastest-growing at scale,” according to the company’s analysts. Between 2014 and 2020, Amazon’s U.S. gross merchandise volume, or GMV — a closely watched industry metric used to measure the total value of goods sold over a certain time period — has grown “significantly faster” than both U.S. adjusted retail sales and U.S. e-commerce, the analysts said.
Neither Amazon nor Walmart breaks out GMV in their quarterly earnings results, but JPMorgan estimated it for the companies and found that Amazon’s GMV is growing faster than its largest retail competitor. JPMorgan analysts said Amazon’s GMV in 2020 climbed 41% year over year to $316 billion, while Walmart’s GMV is estimated to have grown 10% year over year to $439 billion in 2020.
There are a few factors that can be given the credit that is driving Amazon’s growth and those are believed to be expansion into “large and under-penetrated categories” such as grocery and apparel, strong growth of third-party seller sales, and the “Prime flywheel.” Amazon CEO Jeff Bezos said in April the company now has more than 200 million Prime subscribers, up from 150 million at the beginning of 2020.
In addition, the onset of the global pandemic also contributed to the reason for the company’s success. The coronavirus pandemic rapidly accelerated the adoption of e-commerce and cemented Amazon’s dominance in the retail space. Consumers who were stuck at home for obvious reasons resorted to Amazon for a plethora of goods ranging from toilet paper to workout gear. They also relied on Amazon for services they might not have otherwise considered, such as online grocery delivery. Hence, Amazon’s pandemic-fueled sales surge has helped it grow its slice of the e-commerce market. JPMorgan estimates Amazon expanded its share of the U.S. e-commerce market to 39% in 2020, up from 24% in 2014.
Even for this year, Amazon is estimated to deliver 7 billion packages in 2021, surpassing the roughly 6 billion packages UPS is expected to deliver in the U.S. this year. Besides, n recent years, Amazon has quietly built a shipping operation that rivals the likes of UPS, FedEx, and the U.S. Postal Service. It maintains an ever-increasing network of warehouses and last-mile delivery stations, and a sprawling logistics operation with airplanes, trucks, and vans. This has enabled the company to deliver most of its own orders.
All this adds to that Amazon is on track to “become one of the largest delivery companies” in the U.S. as the analysts at Bank of America wrote in research published Tuesday.
