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The past decade was very, very kind to Jeff Bezos.

In 2010, the Amazon founder was worth a paltry $12,3 billion, but he wrapped up 2019 sitting on a net worth of $109,7 billion.

That’ll do just fine, thank you very much.

Bezos’ massive fortune is due in no small part to the rise and rise of Amazon, which now makes more than half of all online sales in the US.

What really makes the retail giant stand out from the crowd is their shipping service, and Amazon Prime members (who pay around $120 a year) get everything delivered for free, either on the same day, or the next day at the latest.

Delivering on that promise comes at a massive cost (especially for the employees who work under incredible pressure, but are largely ignored and paid a pittance), as Forbes points out:

Amazon falls over itself with ultra-fast shipping to siphon off customers from competitors. While it works wonders, it costs Amazon billions of dollars…

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.

The online retail giant is still doing just fine, so don’t shed any tears on its behalf, and it takes a fellow giant to mount any kind of challenge to their market domination.

Enter Walmart, whose extraordinary growth in recent times showing no signs of slowing down.

In the past four years, the company’s online sales are up almost 80%, and growing at a rate twice as fast as Amazon’s.

If you look at stock prices since last March, Walmart is outperforming Amazon by a full 30%:

Walmart, as the world’s third-biggest online retailer, is now looking to keep the pressure on, and it has a massive advantage in terms of a physical footprint across the US:

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…

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.

Amazon’s incredible shipping options have now set the benchmark for what Americans expect, but the cost of meeting those expectations is far higher for Amazon than it is for Walmart.

Going forward, 90% of Americans will be able to order from a Walmart store within 10 miles (16km) of their home, and that will keep shipping, which is usually the largest expense in online sales, to a minimum.

As a result of what’s mentioned above, Forbes’ expert will be betting on Walmart going forward:

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.

Much of this is useless in a South African context, but it’s still interesting to see how competitors plan on reining Amazon in.

Now you know.

[source:forbes]