Tad Phelps, CEO of Fintech, wrote an article recently featured in Retail Today:
Amazon’s latest earnings report underscores its ever-expanding dominance in the retail space. The company reported a 55% increase in operating income for the third quarter, and an 84% increase in operating cash flow. With the conclusion of a successful Prime Day and in anticipation of the holiday shopping season, Amazon maintains its position as the leader in e-commerce and continues strategic investments in its business. As of the end of 2023, Amazon holds nearly 40% of the U.S. retail e-commerce market—a staggering lead compared to competitors like Walmart (6.4%), Target (1.9%), and The Home Depot (1.9%).
Amazon’s retail strength reflects its ability to adapt and invest in ways that other retailers struggle to match. As CEO Andy Jassy pointed out in the latest earnings call, “…We have some elements of our customer experience that are really unusual and unlike others. I think we have [a meaningfully] broader selection than almost all the players that you probably have seen and heard of. We have low prices with very significant deals that we go work with our third-party selling partners around key holiday shopping occasions.”
The company has consistently outpaced its retail competitors in year-over-year growth. From 2018 to 2023, Amazon achieved a cumulative annual growth rate (CAGR) of 20%, while Walmart’s growth rate lagged at 5%, and overall U.S. retail sales grew at just 7%. This trend stretches over the past decade, with Amazon’s CAGR at 24%, far exceeding Walmart’s 3% and the broader retail industry’s 5%.
Amazon’s ability to invest heavily in customer experience and its relationship with its third-party vendors has been a key driver of its growth, one that other retailers can replicate with similar success.
