This post is a mashup from a better post written by a friend who the world knows from the website DeepThroatIPO and here on Twitter
Amazon and Walmart are eating the retail world. This is the post mortem.
(Definition: when relevant, I’ll be using the financial abbreviation of GMV. GMV is a measure of goods that are sold through an eCommerce ecosystem even if they are someone elses (i.e. 3rd party sellers)
- At its IPO, Amazon was a book seller that did $16m in sales, had 256 employees and was bleeding cash, far away from being profitable
- At that same time, Walmart, our largest retailer, had sales of US$105 Billion, 728,000 employees and profitable.
American Retail 1997 vs 2017
- Revenues for the top 10 retailers and Amazon have grown from $304 Billion in 1997 to $1.323 Trillion (Including Estimated GMV) in 2017.
- Earnings for the group have nearly tripled from $7.6 Billion in 1997 to $23.4 Billion today.
Amazon and Walmart
- In the last 20 years, Amazon has produced $13.4 Billion in earnings and sports a valuation of P/E20 42.69 those earnings, compared to Walmart’s $235.9 Billion in earnings, valuing WMT at a P/E20 of 1.32.
- This is not a Current Price to earnings ratio of 42.69, which would be rich for any retailer. I’m diagramming a P/E20, the ratio of a company’s Price (Current Market Cap) divided by the last 20 years of earnings.
The schedule below compares the American Retail Landscape, per US Census Data, from 1997 to 2016 (2017 is not yet available)
- Amazon and Walmart today handle roughly 42.4% of all retail through their ecosystems, up from Walmart’s share (Amazon didn’t exist) of 10.4% 20 years ago.
- The “Top 10” Retailers (Plus Amazon) in America control about twice as much of the market (59%) as they did 20 years ago.
- Amazon was able to accomplish this massive assault on market share at virtually no cost. There was no meaningful requirement to supply shareholders with earnings or dividends, they clamored for potential stock price appreciation
Amazon was able to expand their business with virtually free equity and debt financing.
- In 2010 Amazon’s total long term Debt was only $1.5 Billion (8% of a $18.7 Billion Balance Sheet)
- In the last few years they’ve added leverage (Long Term Debt) by $46 Billion (35% of the $131 Billion Balance Sheet), with another $118 Billion of off balance sheet commitments (leases, etc)
- When we look at the “Top 10” PLUS Amazon (4th Column) we see that this group of businesses becomes an absolute economic juggernaut compared to the rest of the economy.
- As a group, Revenue (Including GMV) has nearly doubled our expectations ($1,328.B vs. $683.4B). The Market Cap for these businesses has also more than doubled from what we would have expected. ($1,080.6B vs. $461.3B)
- Oddly, earnings have only increased by 36% over what we would have expected.
The numbers are dismal.
- “Total Retail” (Red Line) increased by 11% in the last 20 years.
- “Department Store” (green line) employees have actually declined 22% over the same period.
The entire industry is doing a “Shitload more with much, much less.”
Transparency
Neither Amazon nor Walmart disclose GMV. reminder, GMV is a measure of goods that are sold through an eCommerce ecosystem even if they are someone elses (i.e. 3rd party sellers)
Table of Contents
Amazon and Walmart control significantly more of the retail footprint in this country than we think.
Why don’t they disclose the GMV figures?
Rather than actual numbers, we get ambiguous commentary, yet we have no idea what Walmart’s and Amazon’s third party sales actually are.
Why can’t or won’t Amazon and Walmart tell us how much third party, plastic, Chinese junk they are selling on their sites?
That same mall after
The Amazon and Walmart Bombs.
- Walmart’s bomb is dropped on a small town, wiping out every retailer within 20 miles of ground zero
- Amazon’s bomb is delivering third party GMV to your door sales tax exempt (for “free” with Amazon Prime)
3.) Cleveland, OH – 3 Walmarts
4.) New Haven, CT – 1 Walmart
5.) Memphis, TN – 7 Walmarts
6.) Stockton, CA – 2 Walmarts
7.) Birmingham, AL – 13 Walmarts
8.) New Orleans, LA – 8 Walmarts
9.) Oakland, CA – 2 Walmarts
10.) Modesto, CA – 3 Walmarts
11.) Reno, NV – 6 Walmarts
12.) St Louis, MO – 4 Walmarts
The end?The source post is part of a larger work with forensics on Amazon, its social consequences. its retail blast radius, the issues of Amazon’s veil on “country of origin” and then this, my re-write and re-creation which is about money laundering using Amazon’s prepaid cash card retail infrastructure. The source is here: Amazon, Walmart. Chinese potting soil and the 34th AmendmentThe publish date for this post is June 5th 2021 but it is backdated to the target post date of May 20, 2018