Amazon Vs. Walmart And Google: Competitors For Every Vertical

A company that stretches across multiple sectors is bound to have a wide range of competitors, and this is certainly true of Amazon (AMZN). Its core online retail business may be the most well known segment to consumers, but it also has its fingers in cloud storage, video, and consumer electronic devices. Obviously it’s a clear competitor for Wal-Mart Stores (WMT) and other brick-and-mortar retailers, as many analysts have studied the continuing declines in department store sales in concert with Amazon’s sales increases.

However, one firm has now added another competitor to the table. It’s Google (GOOGL), and not because of the cloud storage segment. It has to do with online search.

Amazon takes a bite out of Walmart

Cowen & Company analyst Oliver Chen weighed Walmart’s strengths and weaknesses against Amazon to consider whether it could ever become great again. In order to rise back to the top, he said the big box retailer must change and speed up “innovation in pricing, assortment access, and experience.” If it fails to do these things, he believes it will keep ceding market share to Amazon.

He believes Amazon has made shopping more convenient for customers while also offering a “very compelling array of products and services” which also include Media and Prime offerings. He adds that the online retailer is set for double-digit growth, compared to Walmart’s low-single-digit growth.

Saving time and money

He also suggests that Walmart can leverage the advantages it has in terms of its massive revenue scale, “safe and effective grocery supply chain, merchandising DNA and deep history of focus on the lowest prices and cost.” He believes that the retailer can find ways to offer more convenience for shoppers, combining convenience with the areas it already excels in.

He sees the main principle as helping customers save not only money but also time. He said technology also should play a role in its transformation.

Amazon versus Google Search

Nomura analyst Anthony DiClemente turned his attention to Google search in his report dated October 7. He noted that some recent third-party studies indicate that the percentage of product searches that start on Amazon has risen over the last year. Because of these studies, he said investors have been asking whether Alphabet has anything to worry about in terms of Amazon stealing some of its share of retail search advertising.

He estimates that retail e-commerce consists of a rather small share of Google’s search ad revenue, pegging the share at somewhere in the mid-teens. Because of this, he estimates that even if Amazon does grow its share of the e-commerce ad market, it would have less than a 2% impact on Google’s revenue for 2020.

He pegs retail e-commerce search advertising at $12 billion for the whole industry this year and reaching $20 billion by 2020. He estimates that Google will capture $7 billion in revenue from this vertical this year for 16% of its total search business. He believes e-commerce revenue will decelerate to a compound annual growth rate of 12% between this year and 2020 as Google’s Shopping ad formats mature, related search return on investment approaches cost per click, and Amazon grows its share of e-commerce search revenue.

Amazon shares slumped during regular trading hours on Tuesday, declining by as much as 1.33% to $830.48.

Disclosure: This article is NOT an investment recommendation, more

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