The King Of Retail Has Fallen: Amazon Overtakes Walmart In Revenue For The First Time

Walmart dominated the retail sector for decades, but the landscape has changed. The online giant Amazon has overtaken the brick-and-mortar retailer, surpassing Walmart in revenue for the first time.

Walmart has been the leading retailer in the US since surpassing Sears in 1993. For the past 12 years, no company in any industry has generated more revenue. However, market analysts predict that Amazon will soon surpass Walmart in both revenue and overall dominance.

Amazon's Revenue Triumph

Given America's – and indeed the world's – love of shopping, it is perhaps unsurprising that another retailer, rather than a tech giant, has overtaken Walmart in revenue.

CNBC reported that Amazon's revenue for the October-to-December quarter, released on 6th February, was expected to reach £150.81 billion ($187 billion).

Amazon's official news release confirmed a 10% jump in net sales for the fourth quarter, reaching £151.45 billion ($187.8 billion) compared to £137.10 billion ($170 billion) in the same period last year. This figure exceeds the £145.16 billion ($180 billion) that Walmart is projected to report later this month, signalling a potential change in the top revenue spot.

This key metric, distinct from sales, profits, or market capitalisation, is frequently used as a simple way to measure a retailer's scale. According to financial data provider LSEG, Walmart has held the quarterly revenue crown since 2012, when it surpassed oil giant Exxon Mobil.

Amazon's Diverse Revenue Streams

While Walmart maintains its dominance in traditional retail, Amazon also generates revenue from diverse sources, including Prime Video and its cloud computing division. 'Given the growth trajectories of the two companies, it has always been on the cards that Amazon would overtake Walmart's revenue at some point,' retail expert Neil Saunders told DailyMail.com.

'While Amazon is a powerhouse in retail, it is a diversified group that draws its sales from a wide variety of areas.' Saunders, managing director at GlobalData Retail and a retail expert, points out that each company has its strengths.

'Amazon struggles in grocery, whereas Walmart has that category sewn up. Amazon is better at e-commerce in general merchandise, although Walmart is investing heavily here,' he said. CNBC also reported that Walmart continues to lead in annual sales, exceeding £483.87 billion ($600 billion) in the last two years.

Revenue represents a company's total income before expenses are deducted, whereas sales reflect the proceeds earned from selling goods or services to customers. Amazon's e-commerce sales have surged, fueled by the Covid-19 pandemic.

How E-commerce Changed The Game

This significantly changed American shopping habits, driving consumers online instead of in physical stores. US sales have more than doubled since 2019, CNBC reports. Another major factor contributing to Amazon's revenue growth is its cloud computing division, Amazon Web Services, which offers servers, storage, remote computing, and other related services.

Revenue from its cloud business has more than doubled since 2020 and now makes up approximately 17% of its total revenue. Saunders acknowledged Amazon's impressive growth. 'It is still a young company but its innovation and good thinking around how to deliver value for its customers has allowed it to succeed.'

The $100 Billion Club And Its Future

Only a select few companies have generated £80.65 billion ($100 billion) in revenue in a single quarter. In addition to Amazon and Walmart, Apple and health insurance provider UnitedHealth have also reached this milestone.

Saunders predicts the £80.65 billion ($100 billion) club won't remain exclusive, anticipating continued growth in membership. 'What this shows, however, is that all the things spouted about monopolies and market dominance are off base,' he said.

'People used to claim Walmart was unassailable. Now, Amazon is a challenger. Many years from now, Amazon will probably be challenged by another player. The retail market is very democratic and healthy, and big companies duking it out is ultimately very good for customers,' he said.