Wal-Mart, Amazon and the price of bananas

Richardglobalheader
 
Banana 
There is a growing amount of press about the rise of Amazon and what it means to the economy in general and for Wal-Mart in particular.
  It makes you wonder what the real story is.  After all, Wal-Mart has had an enormous impact on the toy industry.  Any contender could make a difference in all of our fortunes.  That is why I am going to be tracking these companies over the coming months.

In order to get started, I wanted to get a better idea of where the two companies stood relative to each other.  So, I did some investigating and found a great piece on Wal-Mart and Amazon entitled "The Retail Showdown of the 21st Century" that provides a great direct comparison of the two companies.   Here is some of what I discovered:

Amazon is not doing Wal-Mart’s revenue numbers…yet (some predict Amazon to pass Wal-Mart by 2024).  Wal-Mart still rules in terms of revenue with $408 billion in annual sales compared to $34 billion for Amazon. 

While Wal-Mart is the revenue leader by a mile, its lead in weekly customer counts is not as insurmountable.  200 million consumers visit Wal-Mart every week compared to 137 million for Amazon.  That means that while Amazon is currently doing approximately 8% of Wal-Mart’s volume, its customer base is a surprising 68.5%. 

That means that Wal-Mart shoppers are buying more from Wal-Mart than Amazon.   But what if Amazon can increase its 0cnsumer’s market basket?  It wouldn’t take long to make up the difference.


That really hits home when you consider this:  Amazon’s number one item in 2010 was the Kindle which sold for $139 a pop.  What was Wal-Mart’s number one item in 2010; it was the banana with an average price of 45 cents?

Wal-Mart is progressively relying on fruits and vegetables to maintain its volume figures.  If Amazon increases its ability to sell higher value goods it will mean a seismic shift in the retail market.  One that Wal-Mart, Target and all of us will feel.

But who is shopping at these stores.  That in my next posting.

 

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