According to the data, Amazon’s sales share in the U.S. e-commerce market hit a record high of 56.7% in 2021, increasing Amazon’s market share in the total U.S. retail sales to 9.4%, while Wal Mart’s share was 8.6%. This means that Amazon, which has been established for 28 years, surpassed Wal Mart for the first time and became the king of retail in the United States. This reflects a reality. Impacted by the rise of e-commerce, global physical commerce has suffered a “cold winter” for many years.
All kinds of crises are forcing Wal Mart to enter the field of e-commerce. The first step of transformation is to introduce external sellers. Compared with Amazon, which has more than 1.11 million active sellers on American sites, Wal Mart, which has just more than 100000 sellers, still has a long way to go.
The competition between Wal Mart and Amazon in the field of retail consumption in the United States represents the market competition between physical commerce and e-commerce formats such as traditional hypermarkets all over the world. At present, Amazon has the upper hand against the background that the global epidemic has not ended.
The emergence of e-commerce platform is due to the reorganization of information flow, capital flow and logistics, the construction of a new online B2C model in essence, and the improvement of retail efficiency, which has robbed some offline hypermarkets and other physical stores of the link with consumers, and hypermarkets, department stores and shopping centers are obviously threatened. On March 31, the Beijing Beijing Centergate Technologies (Holding) Co.Ltd(000931) store of Carrefour, known as the “largest flagship store in Asia”, officially closed down, which is a symbolic event of the decline of traditional hypermarkets.
However, are the “e-commerce” represented by Amazon sure to win the final victory? I don’t think so. From the development trend of the global capital market, the internal law of urban prosperity, and the “disadvantages” shown by various e-commerce companies in the special period of the epidemic, the competition between the two in the field of retail consumption is far from over, and “Wal Mart” may even have the opportunity to fight back and completely reverse their disadvantages.
I believe that the reason why Amazon model can exist is related to the current tide of capital surplus pervading the global market. Amazon is developing vigorously, but it is not impeccable, and its inherent risks still exist. For example, according to an earlier Bloomberg report, the profit margin of e-commerce business in North America is only 2.7%, which is not an area that can support a huge market value. In the era of excess capital, Amazon’s greatest success is that its business layout can bring investors huge room for expectation and imagination – that is, it is likely to occupy a huge market in the future in new fields. From the principle of capital surplus, this situation will reverse under certain conditions. This opportunity is related to the change of the company’s valuation and the change of the market environment. Once the tide of excess capital begins to recede and investors begin to pay attention to sustainable business returns, it is still a big question whether the Amazon model can be maintained. Take cities and seize territory, China is now facing a collapse of high valuation bubble in both global and China. Under the influence of various factors, the era of “burning money” to win the battle for electricity giants is likely to be over.
The continuous impact of e-commerce development has led to the decline of real businesses, which is also full of disadvantages at present. From the perspective of urban economic development, the direct consequence of the disappearance of real commerce is the destruction of the original urban street system, which further reduces the degree of urban prosperity. The key reason is that the linkage consumption brought by physical commerce can breed huge consumption vitality in urban neighborhoods, while the simple and crude development of e-commerce will affect a considerable number of people to go shopping, which will lack the possibility and vitality of linkage consumption. Therefore, I think e-commerce is not the best way to stimulate social consumption.
At present, many countries have realized the “lethality” of e-commerce to urban prosperity under the halo of the so-called “new economy”.
At the same time, it is also highly dangerous for e-commerce platforms to “purify” a city. Under the epidemic situation, the advantages of e-commerce industry are fully displayed, and the market share continues to expand. However, a risk that cannot be ignored is that if a city’s commerce relies too much on e-commerce, it may also cause the disorder of people’s livelihood material supply.
Because E-commerce completely depends on logistics, once the logistics system collapses, the supply chain breaks, which will directly lead to the collapse of the material supply system in cities that rely too much on e-commerce. Even if e-commerce can maintain its operation, consumers may have to pay a heavy price for high price purchase and inefficient distribution. For traditional businesses, the consequences of this problem are much lighter. At most, it has a certain impact on urban supply,
From the perspective of consumer demand, the traditional retail industry can better meet the shopping experience of consumers. With the impact of e-commerce, exploring and innovating more attractive consumption patterns is the most effective and urgent way for the traditional retail industry to break through e-commerce. Under the impact of e-commerce for many years, supermarkets and other hypermarkets are also trying to develop online.
In February, Wal Mart’s annual report for fiscal year 2022 showed that Wal Mart’s e-commerce net sales reached US $73.2 billion, a year-on-year increase of 11%, a significant increase of 90% compared with two years ago, almost doubling. The obvious advantage of Wal Mart’s online sales in the United States is that, as one of the world’s largest physical retailers, 90% of the American population lives within 10 miles of Wal Mart stores. This is a huge advantage for Wal Mart to compete with Amazon, that is, it can realize rapid distribution in a short time. In contrast, Amazon often needs several days of delivery time, which may become the key to the final outcome of the two.
Although Wal Mart is still inferior to Amazon in the field of online sales, after two years of great development after the epidemic, Wal Mart has become the second e-commerce platform in the United States, which has created a good example for the digital transformation of physical businesses such as hypermarkets.
At present, in the competition between Wal Mart and Amazon, there is no doubt that e-commerce format has the upper hand. However, from the development trend of global capital market, the internal law of urban economic development and the emergency needs of residents, Wal Mart and other entity businesses still have the opportunity to compete with e-commerce platforms in the future. If we can fully combine online sales to realize digital transformation and take advantage of the inherent supply chain advantages, Wal Mart may even change the existing e-commerce business model. From this point of view, the format competition between physical commerce and e-commerce around the world may have just entered the “second half”.
