Millennials might not remember what life was
like before you couldn’t make an online
purchase; when you had to travel to the next
town to find a decent bookstore, when such
a thing as PayPal was just a twinkle in the
eye of space cadet Elon Musk.
Not only has the store come to you via the
internet, but it’s thought it won’t be
too long until drones are dropping off goods
at your house from the air a la last year’s
Burrito Drone, and little robots are marching
down every high street with a view to deliver
your X-ray specs.
The future is nigh, and while some older folks
might lament the end of those days when you
knew and trusted the family that owned the
local hardware store, it’s doubtful the
past will make a comeback.
Today we’ll look at the reason why, in this
episode of the Infographics Show, Walmart
vs Amazon.
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First we’ll need a bit of background on
these two giants, entities that have just
become bigger enemies.
We’ll start with Walmart.
The first Walmart store was opened in 1962
in Rogers, Arkansas, by a former soldier and
shrewd businessman called Sam Walton.
By the time he opened what was called the
Wal-Mart Discount City store, he’d already
found success as a store owner, keeping his
shelves full with a diversity of goods – most
of which were American made.
He was by all accounts a noble recipient of
the American Dream, and said he followed ten
strict rules for business.
They included “share your profits with associates”
“listen to everyone in your company” and
“swim upstream”.
At the time of Sam’s death from cancer in
1992, there were 1,960 Walmart Stores.
In his will he left 100 billion dollars to
his heirs, and today the Walton family is
the richest family in the world with around
150 billion dollars.
If Walmart were a country, it would be the
24th largest economy in the world.
Can Amazon possibly match that?
Well, if it were a country it would be the
57th biggest economy in the world.
Not quite as impressive, but the bets are
on that Amazon is the future.
We’ll come back to facts and figures later;
first, let’s look at how Amazon got started.
Well before Amazon spread its wings and got
into cloud computing, AI-powered delivery
drones and virtual assistants, it was a fairly
simple ecommerce outfit.
In 1994 founder Jeff Bezos created the company
Cadabra, Inc., but not too long after, he
had second thoughts and renamed it Amazon.com.
It went online in 1995 while Bezos was rubbing
his hands knowing from his Wall Street days
that ecommerce was about to blow-up and make
him a fortune.
He worked out what would sell, which he decided
were books, compact discs, videos, computer
hardware, computer software, but then settled
with only books.
The first book ever sold while the site was
still in beta was “Fluid Concepts and Creative
Analogies: Computer Models Of The Fundamental
Mechanisms Of Thought”, bought by a computer
scientist who’d received an invite to the
site.
In a few months Amazon was making 20,000 dollars
a week and would soon declare itself the world’s
biggest bookstore.
The company sailed through a burst tech bubble
and just kept expanding and reinventing itself.
Jeff Bezos, the man who once said, “What’s
dangerous is not to evolve”, is now the
third richest person on the planet with a
worth of 72.8 billion dollars.
What’s his current plan?
To upend Walmart’s dominance.
Back to the numbers.
One of the most amazing facts about Walmart
is the number of employees it has, which is
an astounding 2.3 million in 11,695 stores
in 28 countries.
As we pointed out in another show, this means
it could employ almost everyone in the UK’s
second largest city of Manchester – including
the football/soccer team.
1.5 million staff are employed in the U.S.,
which includes its current CEO Doug McMillon.
Its revenue for 2016 was 485.9 billion dollars,
and it’s valued at 221.1 billion dollars.
It made a profit last year of 13.6 billion
dollars.
Amazon’s services are available all over
the world, whether you are buying a new laptop
or watching something on Amazon Prime.
Most of its 341,400 employees work in the
United States, but it also employs people
in 17 countries.
Its revenue last year was far lower than Walmart’s,
at 136 billion dollars, although it’s net
worth is higher than its new foe at 427 billion
dollars.
Last year it made a profit of 2.4 billion
dollars.
According to Market Watch, Amazon’s net
worth is not only so high because of it being
the “Walmart of the web”, but also because
of its Amazon Web Services which is leading
the fight for dominance of the cloud.
This is not just about selling space and services,
but also about understanding Big Data and
working out what you, the customer, the mark,
will buy.
Walmart doesn’t have that kind of power,
but does it need it?
Walmart knows it needs to get into the ecommerce
business, but it is way behind Amazon at the
moment.
In 2015, of Walmart’s vast profits, only
14 billion dollars came from its ecommerce
sales.
According to recent articles, it takes customer
data far more seriously than it did before,
but still, Amazon wins this fight hands down.
Another blow to Walmart is that Amazon just
acquired the supermarket chain Whole Foods
for 13.7 billion dollars.
Amazon straight away went for Walmart’s
jugular by slashing its Whole Foods grocery
prices, but many critics still believe it
is in no position to go head-to-head in a
price war with the king of discount stores.
The question that’s been asked for a long
time is can Amazon build up a massive chain
of physical stores and can it compete with
Walmart’s prices?
Or, can Walmart compete with Amazon’s tech
savvy, online stores, and does it have a view
to the future in which automation and drones
will surely play a part?
It is definitely trying, having acquired digital
commerce outfits Jet.com, Shoebuy, ModCloth
and Moosejaw.
One thing is for sure, and that is that both
companies are fast becoming very similar,
offering offline and online shopping at bargain
prices.
They both want to be and sell everything,
becoming unstoppable business Gods that own
the consumer goods world.
As a buyer, a customer, this battle only means
things will get cheaper… but it may also
mean we end up buying a lot more than we need.
And that’s not always a good thing.
The New York Times writes about the current
battle, saying that it has been “a boon
for consumers but also has more worrying implications
for jobs, wages and inequality.”
If we are going to compare these companies,
then we probably shouldn’t leave out the
matter of ethics and how they conduct themselves,
only because both firms have met with torrents
of criticism for years now.
So, who is the bigger beast?
Well, both stores are quickly putting every
other consumer goods store out of business.
To do this, they have to make things cheap,
and to do that they have to pay someone a
low wage or at least work them very, very
hard.
For that, you require poor desperate people.
Finding information on how unethically these
two companies sometimes work is quite easy
as its ongoing and pretty much in all big
media.
CNN calls Walmart’s low-paying policies
in Asia “exploitative”, stating that its
sweatshops in Bangladesh, Cambodia, India
and Indonesia are nothing short of “inhumane”.
The report adds that the clothes factories
leave workers “susceptible to unsafe working
conditions, low wages, denial of benefits
and harsh penalties for engaging in union
activity -- including termination of employment.”
Surely this was not in Sam Walton’s ten
business rules…
Amazon hasn’t ever been blamed for having
sweatshops, but many of its employees in its
warehouses have complained of “sweatshop-like”
conditions.
This has been going on for years, with the
Atlantic in 2011 calling conditions “brutal,”
and in 2016, Scottish workers – not renowned
for physical weakness – calling conditions
“intolerable”.
They said some of them were paid so little
they camped in tents near the warehouse.
According to American media, Amazon bullies
these low paid staff, and shames them if they
don’t perform in what’s been called a
Hunger Games style of management.
Walmart doesn’t receive anywhere near the
same bad press, but then when people die in
Bangladesh factories from heat exhaustion
or falling walls, it generally doesn’t result
in employee revolts.
If it did, they would be fired and wouldn’t
be able to eat.
You get the picture.
This is one way how things stay cheap.
So, which of these 2 behemoths do you think
is the better company?
Have any of you worked for either of these
2 places?
Let us know in the comments!
Also, be sure to check out our other video
called What If Apple was a Country?!
Thanks for watching, and, as always, don’t
forget to like, share, and subscribe.
See you next time!
