Walmart on Amazon alert as sales explode at online rival
Amazon.com generates about three times the number of unique visitors each month that Walmart.com does, according to online measurement firm comScore, and all that traffic is allowing Amazon.com to generate record sales.
The nation’s leading online retailer reported a 51% increase in sales and better-than-expected profits during the second quarter and promised more of the same during the third quarter. Amazon.com’s sales increased 51% to $9.9 billion and even if the favorable effects of currency exchange rates are removed from the equation, sales advanced 44%. Profits actually decreased 8% to $191 million, or 41 cents a share compared with net income of $207 million, or 45 cents a share the prior year, but analysts were expecting a steeper decline due to rising operating costs, so shares of the company reached a new high, and at one point during the week touched $227.20.
“Low prices, expanding selection, fast delivery and innovation are driving the fastest growth we’ve seen in over a decade,” said Jeff Bezos, founder and CEO of Amazon.com.
The sales growth was broad based across geographies and categories, with worldwide electronics and other general merchandise sales growing the fastest at 69% to nearly $5.9 billion. Worldwide sales in the media category grew 27% to $3.66 billion.
Geographically, sales in North America grew 51% to $5.41 billion while international segment sales grew 51% to $4.51 billion or by a lesser rate of 36% when measured on a constant currency basis.
More sales growth is expected in the third quarter as well as further operating income declines. The company has forecast that sales will increase between 36% and 47% to a range of $10.3 billion to $11.1 billion. Operating income is forecast to fall in a wide range between $20 million and $170 million, which represents either a 93% decline or a 37% decline.
Amazon.com currently enjoys a huge advantage in terms of customer traffic over Walmart, according to comScore’s monthly Top 50 U.S. Web Properties report. During June, Amazon.com attracted 95.7 million unique visitors compared with 35.8 million at Walmart.com, giving the online only company a roughly three to one advantage is site traffic. That ratio has held steady since the beginning of the year.