Amazon has a good chance of taking the title of the largest retailer in the U.S. away from Walmart in as little as four years.
By 2025, U.S. consumers will buy $632 billion worth of groceries from Amazon's website and retail affiliates, including Whole Foods Market, surpassing Walmart's $523 billion. Thanks to this, the former will take away the title of the largest retailer in the United States.
All of this data comes from the analytical company Edge by Ascential, which conducted a particular study. In this case, analysts had to look for new approaches to evaluating retailers. Traditionally, the size of a company is measured by comparing revenues, but this does not give a complete picture because Walmart and Amazon have different business models.
For example, Amazon generates a significant portion of its sales from the roughly 2 million third-party sellers who list items on its site. They are charged a 15% commission on the price of the product. What the sellers collect does not show up on Amazon's income statements. On the other hand, although it has a rapidly growing online business, Walmart is still primarily a traditional retailer, buying products from wholesalers and stocking them on its shelves. Most of the products a retailer sells are reflected in its revenues.
According to Deren Baker, CEO of Edge by Ascential, the coronavirus pandemic has "shifted consumer habits from conventional stores to e-commerce forever." And that's what gives Amazon a considerable head start, while Walmart urgently tries to catch up by developing e-commerce.
In reality, though, things aren't going so smoothly for Amazon. The company has much work to do to attract new customers, which can be difficult against a lack of the best reputation. For example, Amazon has a reputation for being a place where employees are not treated the best way. There are also concerns that the company's activities are harmful to the environment and hinder the development of small businesses.
According to a survey of 2,000 shoppers conducted by San Francisco firm Sitecore, Generation Z shoppers often feel guilty about their purchases from Amazon. Fifty-three percent of them said they would like to cut back on purchases from the company's site. A similar desire was expressed by 49% of Millennial shoppers, 36% of Generation X, and 25% of baby boomers. At the same time, almost 70% of respondents were members of Amazon Prime, and more than half of them said that wanting to purchase on the Web, they first go to the Amazon website and then turn to other sources.
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