Wal-Mart Stores, Inc. (WMT): Why Amazon.com, Inc. (AMZN) Will Become the Biggest Retailer Ever?

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Final foolish Thoughts
Once Amazon surpasses Wal-Mart Stores, Inc. (NYSE:WMT) is there any chance that they and other competitors can catch up? Wal-Mart was late to take advantage of e-commerce. They’ve been trying to get inroads for the past 10 years without much success. In 2012 Wal-Mart sold only 2% of its total volume online, a mere $7.7 billion. They’re building new warehouses for Web orders, but it may be too little too late. It’s too early to be sure but comparing Wal-Mart’s margins with Amazon’s it doesn’t look good. Wal-Mart has a huge workforce to maintain as well as all their brick and mortar retail outlets. And how many existing retail customers will start shopping on their Website? This cannibalism is inevitable.

Auctions king eBay Inc (NASDAQ:EBAY) does remain a formidable competitor in the e-commerce arena. First, eBay Inc (NASDAQ:EBAY) is present in more countries. The company also has a 19.5% stake in Latin American e-commerce site Mercadolibre. Moreover, the company benefits from networking effects of payment processing platform Paypal (40% of total revenue), which processes 77% of eBay Inc (NASDAQ:EBAY)’s global sales volume. But although they do have a much wider reach globally, its year-to-year growth is still well below Amazon’s.

I believe most shoppers prefer discount stores rather than the uncertainty of an auction. eBay isn’t worried however as the market is large enough to accommodate two giants. And auctions will always fill a need on the Internet.

With all this being said, there is no reason why Amazon.com, Inc. (NASDAQ:AMZN) can’t reach 19% of the e-commerce market share by 2021. Their track-record of growth in their main business as well as their success in diversifying into other industries shows us that the risk vs. reward looks very promising.

The article Why Amazon Will Become the Biggest Retailer Ever? originally appeared on Fool.com and is written by Adrian Campos.

Adrian Campos has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and eBay. The Motley Fool owns shares of Amazon.com and eBay.

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