
Amazon Is Now Worth More Than Wal-Mart - ryanmonroe
http://blogs.wsj.com/digits/2015/07/24/amazon-now-worth-more-than-wal-mart/?mod=ST1
======
kumarm
I am surprised this is not talked about more:

Amazon Full Time Employees: 154,100

Walmart Full Time Employees: 2,200,000

(Based on Yahoo Finance Company Profile Stats)

There is a growing need for Human's to work Lesser Hours going forward rather
than more Hours.

~~~
AceJohnny2
I don't know if it's funny or sad. Remember how economists predicted that
productivity increase would lead to everyone being richer and having to work
fewer hours?

Yeah...

~~~
chongli
It will happen, just don't expect "the invisible hand of the market" to do it.
The mechanism for bringing about these benefits will be political in nature.

~~~
dylanjermiah
I don't know if you missed it, but everyone(for the most part) are far better
off than 10, 20, 30 etc years ago. I'd say in spite of the politics.

~~~
adevine
This is demonstrably false, and speaks of the "tyranny of averages". Yes,
worldwide, huge reductions of poverty, largely in Asia, have let to increases.
For the average middle class worker in the US, however, things have barely
budged in decades. When you take into account growing inequality, and the fact
that limited resources (like housing near city centers) will always go to the
wealthiest, it's easy to argue the average middle class worker is
substantially worse off.

See [http://www.pewresearch.org/fact-tank/2014/10/09/for-most-
wor...](http://www.pewresearch.org/fact-tank/2014/10/09/for-most-workers-real-
wages-have-barely-budged-for-decades/) , and this quote: "In fact, in real
terms the average wage peaked more than 40 years ago: The $4.03-an-hour rate
recorded in January 1973 has the same purchasing power as $22.41 would today."

~~~
yummyfajitas
If real waves dropped, you should be able to name a good or service (besides
obsolete ones like land lines) which we consume less of today than in the
past. In fact, most goods/services should satisfy this.

So please, name them.

~~~
adevine
_Hourly_ wages have dropped. Household wages have risen, mostly due to women
entering the work force.

~~~
yummyfajitas
Real household income has moved around, but no clear trend:
[https://research.stlouisfed.org/fred2/series/MEHOINUSA672N](https://research.stlouisfed.org/fred2/series/MEHOINUSA672N)

Real hourly compensation has risen:
[https://research.stlouisfed.org/fred2/series/COMPRNFB](https://research.stlouisfed.org/fred2/series/COMPRNFB)

Anyone pushing _wage_ numbers is playing a game of hide the salami, and
ignoring the trend towards a larger portion of income being given in forms
other than money.

~~~
adevine
Yeah, but "forms other than money" mostly means healthcare, which has
skyrocketed - despite the fact that other developed nations with longer live
expectancies have much lower healthcare costs.

More importantly, though, the Fed graph you show is an average (the real
hourly compensation one). With growing inequality, using the average hides the
fact the improvement for the median worker is much lower.

~~~
yummyfajitas
_Yeah, but "forms other than money" mostly means healthcare, which has
skyrocketed - despite the fact that other developed nations with longer live
expectancies have much lower healthcare costs._

If you feel consumers are overconsuming medicine and driving up the price,
there are lots of great ways to fix that. The most effective is high
deductibles (currently illegal).

I know you are aware that life expectancy is minimally related to health care
consumption, so why do you bring it up?

If you have data showing that median real compensation per hour is lower, show
it.

And again, since household income has not moved much (according to figures I
cited), you still need to provide an explanation for why we don't seem to
consume less. (Hint: the basket of goods in CPI changes and $1 of chained-CPI
adjusted wages today buys more than $1 of chained CPI adjusted wages 30 years
ago. I.e., CPI != inflation in the long run.)

------
Animats
WalMart revenue: $482bn.

Amazon revenue: $89bn.

Amazon is only worth its current market cap if it can increase sales by at
least 5x. Which it probably can, but it will take some years.

Wal-Mart is expanding into grocery stores, with their "Neighborhood Markets".
(They mean big supermarkets, not convenience stores. Typical size is 45,000
square feet.) Wal-Mart has 40 square miles of floor space worldwide.

~~~
gitah
Direct revenue comparison between Wal-mart and Amazon makes no sense. Amazon
revenues are a lot more diversified than Walmart.

Portions like AWS, Digital and 3P/FBA service revenues will have much higher
margins than first party retail revenues (which is the most like Wal-mart
revenues, except the margins are completely different due to no having brick-
and-mortar stores.). Additionally, Amazon is a lot more international than
Wal-mart so comparison is even harder.

All of this completely ignore the growth rates of these two companies.

~~~
dsl
> Amazon revenues are a lot more diversified than Walmart

Diversified into lots of "nice to have" items. In a really bad economic
downturn, Amazon would be wiped off the map. People would still be buying
bread and milk at Walmart.

~~~
amorphid
Amazon sells groceries now, too. I usually buy things from Amazon that I used
to buy at Walmart. I think Amazon will be around for a long time, and
Walmart's margins will shrink as competition becomes ever more fierce at the
bottom end of the market.

~~~
ams6110
When I need groceries and household supplies such as laundry detergent or
toilet paper the last place I think of is Amazon. It seems absurd to have
these things boxed, and trucked to my house in a UPS van that probably gets
5mpg when I drive right past a supermarket and a walmart every day.

~~~
paulmd
Depends on what you need. You can buy olives at a supermarket olive bar for $9
a pound (wet weight), or you can buy 5 lbs for $4/lb dry weight (8 lbs
wet/shipping weight, so $2.48 per lb measured equivalently) on Amazon and have
them there in 2 days. There's also many goods you just can't buy in
suburban/rural locations - my wife makes fabulous miso, but good luck finding
2 different kinds of seaweed and bonito flakes at your Walmart. If you don't
have an Asian market in proximity Amazon is literally your only choice (and
they're actually not cheap there). For pet supplies they drastically beat the
selection of a Wal-Mart and drastically beat the prices of a real pet store
(eg stuff like Feliway or Nature's Miracle).

Yes, for certain commonly-consumed heavy or bulky goods, i.e. anything that's
either mostly air (like toilet paper) or mostly liquid (like detergent) they
aren't your best choice. That's not all goods by any means.

Also you're comparing the mileage of a bus (the UPS truck) to a passenger
vehicle. The UPS truck is delivering goods for a hundred other people on his
run today, the gas spent transporting your package is an absolutely
insignificant fraction of that. If you're really worried about _~my carbon
emissions~_ then you should really be thinking about ditching that car and
getting yourself to work on one of those 5 mpg busses.

------
theseatoms
Not if you include debt, in addition to equity.

[http://blogs.ft.com/lex-live/2015/07/24/no-amazon-is-not-
mor...](http://blogs.ft.com/lex-live/2015/07/24/no-amazon-is-not-more-
valuable-than-wal-mart/)

WARNING: paywall

~~~
MaysonL
I don't know why this is getting down-voted. Amazon's enterprise value is
about $220 billion, Walmart's about $275 billion. I.e. Walmart is worth about
$50 billion more than Amazon.

------
krstck
One interesting thing is that Amazon is almost approaching Walmart's bad
reputation in terribleness for employees. (Maybe not software devs, but
perhaps warehouse contractors.) Is this kind of ruthlessness essential for
such a huge company to be so profitable?

~~~
port98
It's not so great for software devs, actually.

1) Zero paternal leave. This may lead to subconscious hiring bias for men b/c
you know they can't take paid leave. I'm surprised the S-team permits this,
but I think they're all male anyway.

2) No free lunch ever. Facebook and Google both have them. Microsoft has free
snacks I think. Several Seattle companies have catering on Friday. The Amazon
Silicon Valley office has them only because there would be a revolt if they
didn't. (Oh sorry, there's rumor of free ramen noodles on some floor in
Blackfoot maybe)

3) On-call for all devs.

I think reddit had a thread series last year showing off what interns got at
Microsoft, Google, etc. At Amazon, interns get to keep their backpack when
they leave.

~~~
CHY872
I don't think that's fair. Free lunch isn't 'free', it's just part of your
compensation package. At least some SV companies don't have it - I'm pretty
sure Apple doesn't.

If someone asked you if you'd prefer an additional $500 per month or free
meals, what would you say? I imagine it'd be at least a toss-up.

On-call and paternal leave aren't great, but again, it's a factor into a job
decision.

I guess my tacit assumption is that most people who get dev job offers from
Amazon also get job offers from other places (or could if they so chose)
because the job market for CS is so good. So if they take the Amazon job, they
must think that the lack of niceties is outweighed by either the pay or the
work they'll do.

This probably won't be the case for their warehouse workers, who might in many
cases have a choice between Amazon and unemployed.

~~~
sitkack
The food doesn't come out of the pay. Jesus, they don't bargain during hiring
by saying we have free food...

~~~
CHY872
I don't know about you, the last offer letter I got had on page 1 the specific
details (salary, options, whatnot) and on page 2 the perks (which included
meals).

It's implicit. When you weigh up job offers, you look at what the job gives
you; the busywork and the compensation. Perks are a clear part of that
compensation package; the perks are part of the pay.

Yes, you should absolutely view a company that offers free meals as giving you
an extra $ _amount you spend on food_ each day, or you should subtract the
same amount from a company that doesn't.

------
fahim305
This was a long time coming. 20% growth on a business that is approaching
$100B revenue (and probably 2-3x that in terms of GMV, a better measure of its
size and dominance), and AWS continues to grow as does the digital side of the
business. The crazy thing is that they still have low market share in several
of the retail categories that its in (apparel, grocery, several product lines
even in home, health & beauty, electronics, etc.)

Their achilles heal though continues to be browsability and searching. It is
obviously a great place to go if you know exactly what you want, but continues
to be a poor experience if you are browsing for an item or don't know what you
want. There continues to be duplicate listings for the same items (some listed
by 1st party and some by 3rd party), and it is very tough to browse items.
Once they actually figure this out and implement, that's when this will really
become game over (at least domestically)

~~~
anthony_romeo
One thing I note is that their recommendations aren't terribly smart.

I mean, I bought a coffee table through Amazon a few months ago. After buying
the table, for several weeks it kept showing me coffee table recommendations.
I would think Amazon would be smart enough to try and sell other living room
furniture or things to put atop the coffee table I just bought, rather than
trying to sell me more coffee tables.

~~~
_delirium
Their recommendations feel to me like the recommendation engine is still more
or less the one they had when they were mainly an online bookstore. So they
assume you want things similar to the item you bought: other novels in the
same genre, nonfiction books on similar subjects etc. Works fine for books,
less well for coffee tables.

~~~
blhack
Hmm, I think it's smarter than that.

Every year around burning man time it "notices" that I'm buying supplies for
burning man, and starts recommending me things like baby wipes, which are
completely unrelated (naively) to things like lag screws, rebar pullers, etc.

~~~
ergothus
I suspect that's the impact of other burners also shopping, generating a good
list of "people who bought A and B also bought C, D, E...". As soon as you hit
A & B, you trigger the rest, while the average person doesn't.

------
MaysonL
Of course, the headline is wrong. Walmart is worth about $50 billion more than
Amazon. Compare their enterprise value, not their market cap.

~~~
dlubarov
So Walmart's operating assets are worth more than Amazon's. I still think the
headline is fair. Usually when we speak of a company's value, we mean the
entire company including non-operating assets and liabilities.

------
brudgers
I am finding myself using Amazon less and less. For years it's been my goto
for long tail items and books, but over the last few years it's algorithms
have segmented me into the "show high margin prices" bin to the point where I
pretty much see prices that are competitive with my local big box _and_ Amazon
jacks up the shipping on anything in the first few pages. I guess I shouldn't
have used that $30 credit for getting one of their credit cards a few years
ago...or paid it off each month, because now Amazon's first order of business
appears to be clawing all my previous savings back.

Not that I take it personally. Amazon went down the path to breaking trust
when they came up with Prime. What does it say other than give us money so we
won't charge you more. Time, gravity and a slippery slope mean that logic
ultimately becomes dominant without heroic efforts of corporate culture.
Sponsored ads don't create a culture to help anyone within who might be trying
to fight the slide. Hell, Amazon is even in the textbook rental business
screwing college students.

The problem for Amazon is that they don't have good locations locked down. Six
letter .com domains aren't prime real-estate. All they have is the quality of
the sales experience, and the more convoluted shopping for value becomes the
better competition looks.

~~~
therealdrag0
I value Amazon for the reviews and the hassle-less ordering for years now. I
seen prices in local stores sometimes be competitive and sometimes be twice as
much.

I use the Amazon mobile-app to check reviews or compare prices of local items
(it uses phone camera and is very fast), and I use
[http://camelcamelcamel.com/](http://camelcamelcamel.com/) to sanity check the
items I wanna buy from amazon.

~~~
Nicholas_C
>I value Amazon for the review

Same here, but I've always wondered if they manipulate reviews. Obviously,
crappy reviews on high margin items and good reviews on a different brand of
the same item but with low margins are bad for Amazon. I've never seen
anything that would lead me to believe they remove reviews but having 100%
honest reviews could be hurting their business. I hope to hell and back they
never compromise the integrity of their reviews, but I wonder if it's
something they've thought about or are currently doing without our knowledge.

~~~
brudgers
Amazon doesn't have to remove reviews. They can just show the five most
productive one's on the product page. Given that for many items Amazon has
multiple listings of the same thing, they can just put the one's most to their
advantage upfront. Amazon can create (price . review rating) anchor points by
ordering the listing on the search results page.

To put it another way, if you're shopping the most relevant result for ten
listings of X is the one with the lowest price. That's not however what "sort
by revlevance" seems to mean.

------
mullen
I just don't understand why Amazon.com stock is so high. Bezos has stated time
and time again that he intends for Amazon.com to never make a profit and to
never pay a dividend, always folding all of the earnings back into the company
for future growth. There is no logic to its value.

~~~
umanwizard
The company can't grow forever in a finite universe. "If something cannot go
on forever, it will stop", despite what Bezos says now.

Someday Amazon will either be out of business or paying a dividend.

~~~
exacube
Isn't this true for all companies? And if so, why is this meaningful in
particular for Amazon

~~~
DavidHm
Not necessarily. Amazon aspires to have 100% of market share where it
competes, or very close to.

Other companies don't aspire to even 50% of market share. See Apple for
example. They are happy to have the premium segment locked in and reap the
profits out of it.

------
pmm621
1997 "Lee Scott, the future Walmart CEO who was then running logistics told
Dalzell (who Amazon was hiring) that Amazon was a novel idea but that it had
limited potential. Don Soderquist, Walmart's COO, said that because Amazon
didn't store its own iventory--at the time, it just ordered it from
distributors and then quickly shipped it back out-- the model would hit a wall
once it got to $100M in sales.

(from "The Everything Store" Bezzos' biography)

------
ryandvm
Wal-Mart's Q4/2014 net income was 16,363,000 and they have a P/E of 14.6.

Amazon's Q4/2014 net income was -241,000 and they had a P/E of, well, they
didn't.

I think Amazon has been one of the most innovative companies of the last
decade, but Amazon is going to be a much less attractive consumer option as
they start transitioning to business models that require them to actually
profit.

I could steal all the lawn mowing business in town if I were willing to mow
lawns for free...

~~~
mason55
Do you realize that their lack of profit is not because they can't profitably
sell things at current price points? The lack of profit is due to reinvestment
in the business.

It would be more like if you were mowing lawns at a very small profit and
using that profit to continually buy more lawnmowers and trucks and eventually
investing in developing my own, more efficient lawn mowing technology. Each
summer you lose a little money but after 50 years you now are mowing 50% of
the lawns in the US and doing it more efficiently than anyone else is capable
of.

~~~
Sherlock
Accounting doesn't work that way. You can have huge profits and reinvest them,
but your income statement will show the profits in any case.

Yes, Amazon could be more profitable with different price points, but sales
would take a hit, and thus their growth prospects.

FWIW, I think Amazon valuation is fair.

~~~
gitah
Software R&D (especially for new initiatives) is typically not capitalized so
if a lot of investment is in software than it would show up as operating
expenses rather than capex.

~~~
nickpsecurity
I got an idea: build the software, synthesize it into a chip with almost no
mask cost, buy the chip, run it in production (as a standby), use the
"software version of the chip" for production, and write it off as hardware
investment (capital).

Wonder if that would work in some form...

------
blackaspen
This has been writing on the wall for a while.

While both companies have their pitfalls, it's certainly interesting to
continue to watch e-commerce's rise.

------
fixxer
Call me old fashioned, but I "value" profitable companies more than
unprofitable ones. Amazon had a net loss of $241m last year[1], while Walmart
had a net profit of $16b[2].

[1]
[http://finance.yahoo.com/q/is?s=AMZN+Income+Statement&annual](http://finance.yahoo.com/q/is?s=AMZN+Income+Statement&annual)

[2]
[http://finance.yahoo.com/q/is?s=wmt+Income+Statement&annual](http://finance.yahoo.com/q/is?s=wmt+Income+Statement&annual)

~~~
aetherson
Cool. Go buy Walmart stock.

Seriously, guys, all this "Oh, well, _I_ disagree with the valuation of this
company" stuff isn't very interesting. We all know that sometimes the market
gets the value of companies wrong. Probably if Amazon's next quarter is not
very good, its valuation will go back down.

And trying to make a virtue of extremely simple analyses of company valuation
is also silly. It's not like you're revealing a deeply held secret that Amazon
is very low-margin and often runs a loss. It's not like people don't get that.
They've decided that Amazon has other virtues. Maybe they're right and maybe
they're wrong, but I'm really confident that looking only at net profit as
your sole method of valuation is a losing stock market strategy.

~~~
frostmatthew
> I'm really confident that looking only at net profit as your sole method of
> valuation is a losing stock market strategy.

I'm not sure investing only in highly profitable companies would result in a
"losing stock market strategy" (assuming "losing" means underperforming the
S&P 500). Just looking at the ten most profitable[1] eight of them (all but
Chevron and Walmart) are among the most weighted in the S&P 500 (in fact
they're the top eight), Apple alone makes up 3.84% of the index. Combined
these eight seem to account for about 15% of the index[2][3].

That's only looking at _eight_ highly profitable companies in an index of 500
and it's 15% of the index! I can't imagine a portfolio of the 20 or 30 most
profitable underperforming the index considering they would make up such a
large part of the index itself. [Though it would be interesting to see
historically what the performance would be of such a portfolio].

[1] [http://fortune.com/2015/06/11/fortune-500-most-profitable-
co...](http://fortune.com/2015/06/11/fortune-500-most-profitable-companies/)

[2]
[http://portfolios.morningstar.com/fund/holdings?t=SPY](http://portfolios.morningstar.com/fund/holdings?t=SPY)
(this is actually looking at the ETF but it's presented better then [3], which
is provided to show they don't differ much)

[3] [http://slickcharts.com/sp500](http://slickcharts.com/sp500)

~~~
aetherson
Here are the 10 most profitable companies (also according to F500
([http://money.cnn.com/2006/04/03/news/companies/mostprofitabl...](http://money.cnn.com/2006/04/03/news/companies/mostprofitable_f500_fortune/?cnn=yes\)))
of 2005:

1\. Exxon Mobil (2005 price: 61.05, 2015 price: 79.95)

2\. Wal-Mart (2005 price: 51.60, 2015 price: 71.58)

3\. GM (Went into bankruptcy, I don't really understand what happened to its
stockholders, which thank god I was not)

4\. Chevron (2005: 61.71, 2015 price: 90.62)

5\. Ford (2005: 12.40, 2015: 14.39)

6\. ConocoPhillips (2005: 42.38, 2015: 52.08)

7\. GE (2005: 36.12, 2015: 25.76)

8\. Citigroup (2005: 497.80, 2015: 58.72)

9\. AIG (2005: 1317.20, 2015: 63.64)

10\. IBM (2005: 94.10, 2015: 159.76)

S&P500: 2005: 1191.17, 2015: 2079.65

~~~
frostmatthew
That's not "a portfolio of the 20 or 30 most profitable" companies vs the S&P
500. That's a portfolio of ten companies that were _at one time_ the most
profitable and then not regularly adjusted compared to an index that was
updated regularly (only 312 companies in the index in 2005 were still in it in
2015[1]).

A realistic portfolio to prove/disprove your theory that investing in highly
profitable companies is a losing strategy would be to take the 25 most
profitable companies (I said 20 or 30 so let's just go with the middle) and
update it every year.

With only the eight most profitable making up ~15% of the weight a portfolio
of 25 is probably going to approach 30%. It's hard to imagine the largest
components representing nearly a _third_ of the index weight are going to move
completely and drastically divergent to the index as a whole.

[1] [http://marketcapitalizations.com/changes-in-
sp-500-component...](http://marketcapitalizations.com/changes-in-
sp-500-components-during-the-past-ten-years/)

------
kin
As someone who shops at both Amazon.com and Wal-mart, this makes me happy.
Now, I don't know if their worth translates to more success but all I know is
that my experience with amazon is always pleasant and convenient whereas my
experience at Wal-Mart is almost always unpleasant and inconvenient.

~~~
_delirium
I have mixed opinions. I find dealing with UPS/Fedex delivery attempts almost
as infuriating as dealing with traffic and the Wal-mart store. On other
angles: Wal-mart's browsability and prices are better, but Amazon's selection
and ability to find specific items are better. In some specific areas the
contest is much clearer: Amazon is much better for books, Wal-mart is much
better for household supplies, etc.

~~~
ergothus
I'm in a strange circumstance where the USPS won't normally deliver packages
to my house (I'm on a major road). UPS and FedEx both will. The exception is
on Sundays, when the USPS normally doesn't deliver to anyone, except Amazon
pays them to. On Sunday, they'll deliver packages to my door. So to have true
convenience, I actually TRY to get my Prime packages delivered on Sundays.
That's just weird.

------
jimbokun
This article I found linked in the side bar reflects my thoughts on Amazon's
valuation pretty well:

[http://blogs.wsj.com/moneybeat/2015/07/24/amazon-and-
apple-t...](http://blogs.wsj.com/moneybeat/2015/07/24/amazon-and-apple-take-
part-in-a-keynesian-beauty-contest/)

------
TrevorJ
I think AMZ's endgame is to own the whole pipeline end to end. Using third
party sellers has been a good way to get the scale underneath them but 10, 15
years down the road I fully expect the most profitable and in demand items
will be sold direct by amazon itself.

------
neel8986
On a side note currently three biggest companies by market cap are Apple,
Google and Microsoft leaving behind the likes of exxon and berkshire. This is
truly a rare event when all top three are tech.

Either a glimpse of a bubble in making or tech truly is the new oil.

------
simonebrunozzi
Well, it is no longer true as of now. AMZN stock went down a bit after a day
of trading.

------
bunkydoo
Amazon should try their hand at brick and mortar. I would love to see less
Wal-Marts

------
dfar1
I wonder if amazon would look like a walmart if it had a physical store.

------
_raisin
All thanks to the fire phone...

------
ck2
Is it worth more than walmart + walmart.com? I doubt it.

~~~
SwellJoe
Walmart.com is wholly owned by Walmart (it is merely a division of Walmart,
actually, and not a separate entity of any sort), and we're talking about
market cap, so...according to this article, Amazon is worth more than Walmart
and Walmart.com.

------
codemac
Is Amazon's wealth more concentrated ( as in just in bezos ) than Wal-Mart
(the walton family)?

I think it's unfortunate if it is.

~~~
brentm
The Walton's own a lot more of Walmart, closer to 50%. Bezos less than 20%.

~~~
krstck
Also, Bezos has far more influence (and responsibility) over Amazon than the
Waltons do over modern-day Walmart.

