Amazon.com Inc. will replace Walmart Inc. as the biggest U.S. retailer by 2025, according to a new report by Edge by Ascential.
The report states that by 2025, U.S. shoppers will buy US$632 billion worth of products at Amazon and retail afflilites, including Whole Foods Market, surpassing Walmart’s US$523 billion.
To assess the relative size of Amazon and Walmart, Edge used gross merchandise volume, which measures how much money shoppers spend at each company. Traditionally company size is measured by comparing revenue, but doing so in this case doesn’t capture the full picture because the two companies have different models.
Amazon generates most of its sales from the approximately two million third-party merchants on its site, charging these sellers a commission that is typically 15 per cent of a given product’s price. What the merchants collect doesn’t show up on Amazon’s income statement.
However, most products Walmart sells show up as revenue, so by that measure Walmart will outstrip Amazon for several years.
The report sales from both retailer’s affiliates, including Whole Foods for Amazon and Sam’s Club for Walmart, but doesn’t include fees for subscriptions like Amazon Prime or Sam’s Club, or revenue from Amazon’s cloud computing division or advertising sales.