Amazon Vs. Walmart: North America Revenue Growth And Gross Margin

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Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT) have solidified their positions in the retail industry over the last few years. While Amazon operates primarily in the online retail segment, Walmart primarily operates through physical stores. If we compare their retail businesses, Amazon has seen around 25% annual growth in its net revenues from 2012 through 2015, while Walmart reported year-over-year growth rates of just 2-4% in the same period.

In terms of gross margins, Amazon has seen consistent expansion from 25% in 2012 to 33% in 2015, while Walmart’s gross margin has been relatively stable at around 29%. Amazon’s higher gross margin in 2015 was primarily due to significantly lower share of groceries (which are low margin) in its gross sales compared to Walmart, and a rising share of third-party sales. Groceries contributed around 56% of Walmart’s gross sales over the last three years, while Amazon’s grocery sales were statistically insignificant in the same period. Going forward, Amazon’s gross margin is expected to improve further, driven by economies of scale and a rising share of third party sellers. Currently, third party sales contribute around 55-60% of its total sales.

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