retail news in context, analysis with attitude

by Kevin Coupe

The Wall Street Journal reports that for the first time in a decade, Walmart's annual online sales grew more than Amazon's - up 30 percent to $10 billion in 2013, compared to up 20 percent to $67.8 billion.

Amazon's total sales were more than its next 10 biggest competitors - combined. (That list of competitors includes Walmart, Apple, and Staples.)

According to the story, "Wal-Mart is intent on catching up with Amazon. To that end, the retailer is buying up e-commerce businesses. On Tuesday it is expected to announce the purchase of Adchemy, a search-engine marketing company that helps retailers optimize their use of search terms. It marks Wal-Mart's 12th e-commerce acquisition in three years … Wal-Mart has spent heavily to boost its online presence. In the year ended Jan. 31, it plowed roughly $500 million into e-commerce investments, including opening three new online fulfillment centers in Texas, Pennsylvania and Brazil and hiring 1,000 employees in Silicon Valley."

In my view, this illustrates why Amazon is likely to maintain its approach of reinvesting its profits in research and development - and most important, implementation - of new services that will drive new customer interactions. While this looks like Amazon isn't making any profit, the fact is that it cannot afford to relax … not even for a moment, much less for a quarter or two, and not even when investors get restless. Amazon has to count on the fact that its long game is going to work, and that there will be enough customers - and investors - that support its vision.
KC's View: