Tales of Amazon’s Epic Size Have Been Greatly Exaggerated
Today I would like to take a look at the facts which disprove the meme, and show you just how false it is.
This meme is so widely accepted that it has led people to writing things like:
— Baldur Bjarnason (@fakebaldur) April 18, 2014
Earlier this year Digital Book World expressed the meme in a slightly different way when they (apocryphally?) quoted an industry expert:
In talking about Amazon’s competition, calling the Yonkers, NY branch of Barnes & Noble a “disgrace.” For those publishers worried that continued poor results at the nation’s largest bricks-and-mortar book retailer might mean its demise, Joseph Esposito speculated a way out.
“I fully expect Wal-Mart to buy Barnes & Noble,” he said.
He reasoned that companies like Wal-Mart, H-P and others that Amazon is increasingly competing with will not forever tolerate the e-tailer’s encroaching on to their territory and will fight back. In this case, Wal-Mart would be fighting back by acquiring a major Amazon competitor and propping it up.
Please note: Esposito has denied the accuracy of this quote, so don’t take it as something he said so much as an expression of an idea that is percolating through the ether.
And even the WSJ is beginning to fall sway to the "giant Amazon" meme:
Amazon has proved a fierce competitor for Wal-Mart, more than doubling revenue to $61 billion from 2009. Today Amazon’s market capitalization is $180 billion, compared with $241 billion for Wal-Mart.
The question for Wal-Mart is how it can efficiently adapt its existing infrastructure for online orders. With its own extensive network of warehouses and logistics expertise, Amazon has often been able to beat Walmart.com on number of product offerings and speed of delivery.
The plan under way will augment fulfillment from existing stores and distribution centers with online-only facilities, Mr. Ashe said. "This is not a side project," Mr. Ashe said. "This is how we will be serving customers going forward." Mr. Ashe said that the company will be able to match Amazon’s range of products and quick shipping times within about two years.
This meme is reflected in all the digital publishing coverage news which even touches on Amazon, but I won’t link to more examples here.
Would it surprise you to learn that all of this talk about giant evil Amazon is based on a flawed assumption, that Amazon is a huge retailer?
Amazon is big, yes, and they are growing fast, yes, but they are not the retail giant that the publishing industry makes them out to be.
As you can see in, Amazon is in fact one of many runners up to the title of giant retailer.
Walmart, with nearly $500 billion in revenue, is easily the giant retailer, but Amazon, with 61$ billion in revenue in 2012, is actually smaller than McDonalds. Even in 2013, Amazon wasn’t terribly larger than Target.
The reality of the situation is that Amazon is facing fierce competition from many similarly sized companies, including Target, Costco, Best Buy, Safeway, Walgreens, CVS, Kroger, and Royal Ahold. And those are only the general retailers with revenues in the same range as Amazon; I haven’t even mentioned the niche retailers like Lowes – or the retailers outside the US.
(On a related note, I think I just gave you a practical example of why Amazon is going to do brick and mortar retail eventually – or buy an existing retailer.)
In short, if you want to be afraid of Amazon, point to their growth rate and not their size. Amazon’s 2013 revenues were up 50% over 2011 revenues, an impressive feat. And if you extend that trend out a few years it starts to frighten even me.