Essay Example on Amazon vs Walmart: Who Wins the Price War?

Amazon and Walmart are among the most popular and also the biggest dealers in America. Amazon is the largest online store with low price cut reporting a net profit margin of 60% while Walmart is the strongest and the central element in operating a chain of hypermarkets and stores in the country for the past many years reporting a net profit margin of 40%. Since most customers prefer low priced products, both stores have been attracting customers that make it suitable for their needs. Walmart being the oldest in the industry it has generated 75.2% operating profit margin, it has been facing competition from its rival Amazon which has been generating 24.3% operating profit margin, which is also undertaking the first position in America Nonetheless, Amazon is slowly outstanding Walmart as a result of the trends in digital marketing lifestyle. The number of customers shopping online is increasing; therefore, their sales of the products and the profits is increasing.

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Amazon's market share's stock had a revenue of $280,522 million, with an annual return profit of $23 per share. Walmart 2019's market shares revenue stood at $523,964 million, with a return profit of $5 per share. The financial information indicates that Amazon had a higher profit return per share than Walmart, although Amazon had a lower revenue. Walmart had inventory turnover of 8.70 while Amazon had 3.9 times its rival. Walmart has the biggest interest ratio as compared to Amazon. The return on stock holder equity Amazon gets 27% returns while Walmart gets 18%, Amazon greater investments are yielding to the increase in its shareholder equity. Amazon and Walmart have concentrated on competition plans in delivery shipping, where Walmart uses its cargo as an aggressive way of addressing competition; thus, they can deliver goods that are shopped online by the consumers. Therefore, the packaging is free while in Amazon, they will package it for free if one makes an order and joins their supreme for a yearly fee. Amazon's competitive advantage has been created by its ability to supply products online, hence reaches a bigger market share (Thompson, Peteraf, Gamble, Strickland & Jain, 2013).

Conclusion

In conclusion, the difference between the two organizations is the business model they are involved in. Amazon takes on the digital way, where it operates online. In this case, a customer can shop online without necessarily going to any store. Walmart on the other hand operates stores and hypermarket that are physically located in majority parts of America. As a result, the customers have to go to their physical location. Nonetheless, the companies' business model have been effective in their success.

Reference

Thompson, A., Peteraf, M., Gamble, J., Strickland III, A. J., & Jain, A. K. (2013). Crafting & executing strategy 19/e: The quest for competitive advantage: Concepts and cases. McGraw-Hill Education.