They say “never judge a book by its cover,” but the same logic clearly does not apply to evaluating companies’ stock prices. That is especially true for large publicly traded retailers like Amazon and Walmart which are currently experiencing dramatically different realities as they craft responses to deal with the unique pains of their four core constituencies: customers, vendors, employees and investors.
As much as Amazon may be ahead of its rival on the former part, with its 45% share of U.S. eCommerce and dominance in discretionary purchases, on the latter part it is getting whopped by Walmart in terms of investor sentiment.
Specifically, shares of Amazon are down nearly 20% since the Seattle-based retail and the cloud-service company reported disappointing Q3 earnings a week ago.
This at a time when Walmart’s stock is flat, leaving it with a $380 billion market cap that is roughly 2.5x smaller than the $930 billion valuation of Amazon.
Zoom out to three months, and the distortion is even greater, with Amazon down 35% and the Arkansas-based retail giant up 8%.
While that performance contrast is certainly stark, it is not necessarily a true reflection of the current state of their respective underlying businesses and prospects, as both retailers — as well as all of their peers — have to swim in the same murky economic pond and do the best they can with the circumstances at hand.
That said, where there is a meaningful difference is in the present state of managing that all-important fourth constituency, as Amazon investors are sweating and agitated while Walmart’s shareholders are likely pleased as punch. That could all change 10 days from now when Walmart reports its Q3 earnings Nov. 17, but in the meantime, the challenge of managing cautious shareholders and customers is clearly tilted in Walmart’s favor. And with no respite in sight on either inflation or the economy, that bias could remain intact for the foreseeable future.
Even so, forward-looking deals like Amazon’s virtual fitting/shopping pact with Snapchat will allow the hip, social media platform’s 360 million daily active users to try on and buy eyeglasses — and soon other things too — may not move the needle this quarter but could be a game changer further down the road.
Amazon also got a nice shout-out from Peloton this week, when the connected fitness company touted the early above-expectations performance of its new storefront on the world’s busiest online marketplace.
I 🖤 Vendors
That leaves the battle to win the hearts and minds — and wallets — of vendors and employees, where both Amazon and Walmart each have over a million domestic workers and find themselves in an arms race, of sorts, over wages and benefits to attract and retain the people they need to sort, pick, pack, scan, restock and deliver goods to consumers quickly and cheaply — especially over the holidays.
Where one month ago, Amazon was publicizing its plans to hire 150,000 seasonal workers with average wages of $19 an hour, this week the post-Q3 earnings era of belt-tightening and “doing more with less” took the form of a hiring freeze at HQ.
On the vendor front, both Amazon and Walmart continue to take steps to ensure that budding brands, entrepreneurs and even well-established players choose to sell — and fulfill — goods through their respective stores and platforms.
In the case of Amazon, that took the shape of a new, easy-apply vendor financing plan that will advance businesses anywhere from $500 to $10 million loan.
“Today’s launch is another milestone in strengthening Amazon’s commitment to sellers and builds on the strong portfolio of financial solutions we already provide,” Amazon WW B2B Payments and Lending Director and GM Tai Koottatep said, “[It] helps them control their cashflow, and by extension, their entire business.”
For its part, Walmart took a slightly different tack and rolled out a new partnership with Popable that will allow struggling SMBs to rent floor space within one of its 4,700 physical retail locations in the US without having to sign a long-term lease.
“Supporting small businesses has always been a priority for Walmart,” Senior Director of Retail services for Walmart Darryl Spinks said in the announcement, calling it a great example of the company’s focus on offering services that are unique to the neighborhoods it serves.
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