eCommerce Throwdown: Amazon vs. Wal-Mart vs. Target

Amazon is the largest online retailer in the world, but that doesn't mean it has the most potential in the eCommerce space going forward.

Jul 18, 2014 at 10:00AM
Wmt Ecomm

Walmart.com

Amazon.com (NASDAQ:AMZN) might be the largest online retailer in the world, and that leads to significant growth potential given the rise of the digital consumer, but Wal-Mart Stores (NYSE:WMT) and Target (NYSE:TGT) are eager to steal share.

E-commerce positioning versus net income
Below is an important list that every retail investor should keep up with. Retailers generating the most unique visitors to their sites per month:

  • Amazon.com sites: 164 million
  • eBay: 104 million
  • Apple websites: 90 million
  • Wal-Mart Stores: 56 million
  • Target(NYSE:TGT): 44 million

Based on that list, you might immediately say to yourself, "I don't care what this guy writes. I'm investing in Amazon!" Admittedly, this might pay off. Amazon has one of the most innovative CEOs in the world in Jeff Bezos. Based on past innovations, it's likely that more high-potential innovations are around the corner, and this could lead to top-line growth. The problem is net income.

Below is a list of Amazon's net income for its last five fiscal years:

  • 2009: $902 million
  • 2010: $1.15 billion
  • 2011: $631 million
  • 2012: ($39 million)
  • 2013: $274 million

Amazon has been in a capital investment cycle building out its business, but this has been said for many years without consistent net income growth. 

With the recent hike in the Amazon Prime membership price to $99 per year from $79 per year, Amazon might see more consistency in this area, but we still don't know if it will impact the company's revenue due to slower membership growth.

As far as Target goes, look at the past four fiscal years (we don't want to use quarters due to the data breach):

  • 2009: $2.49 billion
  • 2010: $2.92 billion
  • 2011: $2.93 billion
  • 2012: $3 billion
  • 2013: $1.97 billion

The decline in 2013 happened for three reasons: the data breach, poor performance in Canada, and a hesitant consumer. Only one of these three factors should dissipate soon (data breach). Therefore, while Target also has future potential on the bottom line, there are concerns.

Wal-Mart, on the other hand, can be summed up with ease. Despite being ranked No. 4 for unique visitors per month, it's the 16th most profitable company in the world as well as the most profitable retailer in the world. It generated $15.88 billion in net income in fiscal-year 2014. This should put investors' minds at ease since this kind of net income allows for consistent dividends and stock repurchases as well as a large safety net.

Wal-Mart's future growth channels
According to Wal-Mart's website, more than 50% of its customers own a smartphone. Therefore, it needs to capitalize on this trend. Wal-Mart has the largest collection of e-commerce data in the world, which will increase the company's odds of successful e-commerce initiatives in the future.

Currently, Wal-Mart is trying to bring the physical and online shopping experiences together on mobile devices. Wal-Mart is constantly developing mobile apps, which currently include:

  • Early Access Notifications: first to know about in-store and online specials
  • Fast & Easy Refills: reorder prescriptions and pick up in-store
  • Store Mode: weekly ad sent to phone when you're in a Wal-Mart store
  • Shopping List: add items by typing, scanning, or speaking into phone, then tally for budgeting purposes
  • Check Pricing Availability: check product price and availability online and in-store
  • Weekly Ad: product details, customer ratings and reviews, sales
  • Scanner: product information on price, ratings and reviews, other content
  • Customer Ratings and Reviews: self-explanatory
  • Store Finder: enter zip code for store information (directions, phone number, hours)
  • Shop Walmart.com: millions of products to choose from online

Wal-Mart's e-commerce sales increased 27% in the first quarter year over year, but e-commerce isn't its only growth channel. Other growth channels include small-box stores and international expansion.

The bottom line
Wal-Mart might not be an exciting investment, but that doesn't mean it won't be a long-term winner. In fact, investing in Wal-Mart can be like watching paint dry in slow motion, but when that paint dries, you might see the image of a large green dollar sign.

If you want faster returns, look here first! 
The best investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not just how we buy goods, but potentially how we interact with the companies we love on a daily basis. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns, you will need The Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

 

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers