Last week, e-commerce giant Amazon unveiled its impressive Q4 earnings, showcasing an unprecedented level of success. Notably, the company reported its highest-ever operating profit, along with the fastest service speed and a remarkable reduction in service costs for the first time since 2018.
However, while Amazon disclosed its total revenue, there was a notable absence of another crucial industry metric: Gross Merchandise Value (GMV). Given that the majority of Amazon's sales occur through its marketplace, the reported revenue, predominantly comprising commissions, differs significantly from the actual total GMV.
Industry analysts have made their own estimations, projecting Amazon's global GMV for 2023 to be within the range of $700 billion to $750 billion. Furthermore, approximately 73% of the company's total revenue is expected to originate from the United States. This implies a U.S. GMV between $510 billion and $546 billion, representing a substantial increase of $40 billion to $45 billion, or 7.5% to 9.5%, year over year. To put this growth into perspective, it is equivalent to adding the entirety of Best Buy's sales in 2023.
In comparison, the U.S. Department of Commerce Retail Trade division estimates that Core Retail (which excludes automotive and gas sales) grew by 3.6% in 2023, amounting to $5.13 trillion. Astonishingly, Amazon's individual contribution accounted for 23.6% of all U.S. retail growth, capturing nearly a quarter of all new retail sales.
As we await Walmart's upcoming Q4 earnings report, the race for dominance in U.S. sales between these retail behemoths intensifies. Both Amazon and Walmart possess significant influence over consumer preferences, thereby shaping the broader retail landscape. Consequently, this fierce competition leaves limited opportunities for other retailers to thrive and carve out a sizable market share.
The success of Amazon and Walmart not only highlights the power of online and offline retail giants but also underscores the importance of continuously evolving to meet consumer demands. With consumers increasingly gravitating towards the convenience and accessibility offered by these industry leaders, other retailers must find innovative ways to differentiate themselves and provide unique value propositions.
In conclusion, Amazon's impressive Q4 earnings reveal a company on an upward trajectory, achieving remarkable growth and profitability. Its unparalleled dominance in the retail industry shows no signs of slowing down, with projections pointing towards continued success in the years to come. As for the competition between Amazon and Walmart, only time will tell who will emerge as the leading retailer in U.S. sales.
