Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Walmart Has Made a Genius Move to Beat Amazon

Companies / Retail Sector Jan 14, 2020 - 04:08 PM GMT

By: Stephen_McBride

Companies I ordered Powerbeats earbuds from Amazon the other day. As a Prime member, I got them to my doorstep in Stowe, Vermont the next day for free.

When I unpacked the box, one of the accessories was missing. I called Amazon’s customer service to get a replacement sorted out. But what I was told raised my eyebrows:

“We’ll make a one-time exception. Keep the earbuds and we’ll issue you a full refund right now.”



“Why don’t you take them back? They are fine, it’s just the wire clip is missing,” I asked, puzzled.

“It’s too expensive to ship them back…” the customer rep replied.

This surprising story hints at Amazon’s Achilles heel that threatens its crown as the king of online retail. And as I’ll explain in a moment, America’s biggest retailer Walmart has a master plan to use it against Amazon. (Read my investment case for Walmart here.)

Amazon Is Bleeding to Retain Its Crown

As you know, Amazon (AMZN) runs the world’s biggest online store, which makes more than half of all online sales in the US. What you may not know is that Amazon is holding its crown at a huge cost.

There’s one thing that made Amazon the best, and it’s exceptional shipping service.

If you’re a Prime member, you can get stuff from thousands of retailers the same day or next day at the latest. For FREE! If you order from your local Whole Foods, Amazon will deliver groceries to your doorstep within two hours.

Amazon falls over itself with ultra-fast shipping to siphon off customers from competitors. While it works wonders, it costs Amazon billions of dollars. Take a look at the chart below that shows Amazon’s exploding shipping costs:



And the rise in shipping costs shows no signs of stopping. According to a QZ analysis, Amazon is expected to spend a record $11 billion on shipping this quarter. That’s more than it spent in an entire year just four years ago.

This is a growing problem for Amazon. According to The New York Times, the average Amazon order for one-day shipping is $8.32, which costs $10.59 for Amazon to fulfill. Because of shipping, Amazon’s megastore is losing money on most sales.

A Powerful Rival Is Nipping at Amazon’s Heels

For a long time, no one dared to stand up to Amazon. But have you seen Walmart (WMT) lately?

The nation’s biggest grocery chain is charging headfirst into online retail. Since 2016, Walmart’s online sales are up 78%. And get this, Walmart’s online sales are now growing twice as fast as Amazon’s.

Walmart is already the world’s third-largest online store. And since last March, Walmart stock beat Amazon’s return by 30%, as you can see below:



But Walmart is just getting warmed up.

Walmart’s Genius Move to Beat Amazon

As America’s largest retailer, Walmart has a “footprint.” Walmart operates 150+ distribution centers across America. Each is over 1 million square feet!

It also runs 4,789 stores in 49 states, according to Statista. Walmart’s footprint is so big that 90% of Americans live within 10 miles of a Walmart store.

No online retailer could match Walmart’s logistics network. And Walmart has a master plan to use it in its battle with Amazon.

In last year’s talk at the South by Southwest conference, Walmart’s former Chief Technology Officer Jeremy King revealed how Walmart is leveraging its physical footprint to charge ahead of Amazon.

It turns out Walmart is using its physical stores as warehouses for online sales. Since stores are already turning a profit from grocery sales, maintaining extra warehouse space adds little to costs.

That means Walmart will soon have the biggest and most effective “shipping network” in America. By the end of the year, Walmart plans to deliver stuff from 1,600 stores. For comparison, Amazon has only 110 warehouses across the US.

Most important, Walmart will pull this off at relatively little cost.

In a World of “Free Shipping,” Walmart Has the Upper Hand Over Amazon

A recent NRF study found that 75% of Americans expect free shipping, even on orders under $50. And according to Invesp, 56% of folks expect same-day delivery from online stores.

In other words, free same-day shipping has become the norm. While Amazon is bleeding to deliver on it, Walmart has it all figured out.

Think about it: 9 in 10 Americans will be able to order stuff online directly from their local Walmart store, which is just a few miles away. That will keep Walmart’s shipping costs to a minimum.

Since shipping is the biggest expense in online sales, we are talking a big difference in profits. Walmart will dodge Amazon’s fate and save billions on shipping.

Buying Walmart Is Like Buying Amazon at a 73% Discount

Ultra-fast shipping is the final frontier in the online retail wars. Those who figure out how to deliver stuff the fastest—while keeping their heads above water—will be the winners.

While both Amazon and Walmart have strong growth prospects, I’m putting my bets on Walmart for the long haul. Not only does it have the biggest shipping network in America, its stock is also selling at a 73% discount relative to Amazon.

Today, Amazon stock trades at a P/E of 84. That means if you bought it today, you would pay $84 for $1 of the company’s earnings. If you bought Walmart, you would pay only $23 for $1 in earnings.

That’s almost one-fourth of Amazon’s price. With so much more room for growth, I’m picking up this bargain.

The Great Disruptors: 3 Breakthrough Stocks Set to Double Your Money"

Get my latest report where I reveal my three favorite stocks that will hand you 100% gains as they disrupt whole industries. Get your free copy here.

By Stephen McBride

http://www.riskhedge.com

© 2019 Copyright Stephen McBride - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in