WHOLE PAYCHECK Battle For The Digital-First Consumer - TRACKER - PYMNTS.com
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September 2020
WHOLE
PAYCHECK
TRACKER®
Battle For The Digital-First Consumer
WHO’S WINNING BY THE NUMBERS
WHOLE
PAYCHECK
TRACKER®
Battle For The Digital-First Consumer
Introduction 04
Amazon vs. Walmart, the Overview 08
Strengths and Weaknesses 10
The Battlegrounds 12
© 2020 PYMNTS.com All Rights Reserved 2 3
Whole Paycheck Tracker® Introduction
Introduction
AMAZON NUDGES WALMART
IN BATTLE FOR THE DIGITAL CONSUMER
T
he second quarter of 2020 pandemic. They also took care of their Other longer-term moves out of Seattle presence in furniture, intimate wear, and
was not a time for the hard own workforces with bonuses and included the debut of the company’s groceries. The company is expected to
sell. It was the height of the a greater focus on safety. And in the first Amazon Fresh grocery store, pay a combined $190 million for Urban
pandemic, with hundreds of thousands process, they both fought through complete with smart shopping carts Ladder (online furniture) and Zivame
contracting a still-unconquered virus Q2 with earnings that exceeded and more stirrings about the company’s (innerwear).”
on the way to 183,000 deaths in the expectations – and for Walmart, a spike move into high fashion. It also made
Walmart also played the long game in
U.S. by Sept. 1. Entire cities and even in eCommerce activity and revenue. some moves in India, launching the
Q2. Like Amazon, its biggest (potential)
states were locked down, and retailing territory’s second annual Prime Day
Amid the pandemic, the quarter was disruption came outside of Q2 when it
was split between “essential” and “non- with (guess what) higher-than-expected
marked not so much by competition joined Microsoft’s bid for TikTok. Unlike
essential” status. Americans were less results. While Prime Day might seem
for the whole paycheck in the short Amazon’s entry into wearables, the
concerned with how they were spending like a short-term revenue grab, it’s
term, but by various positioning moves Bentonville crew’s entry into social
their paychecks as they were concerned not. Amazon will soon have a major
to get the whole paycheck in the longer media and gaming is a bit harder to
with actually getting one. competitor on the subcontinent in the
term. No event was bigger than the see. It doesn’t tie directly to long-term
form of Indian billionaire and retailing
It was under these conditions that one announced recently by Amazon revenue as clearly as Halo does. But it
mogul Mukesh Ambani.
Walmart and Amazon – as well as their to enter the wearables, fitness and is an ambitious long-term move and
competitors – operated in Q2. Yes, it device markets. With Halo, which is a “Citing sources familiar with the matter, shows that Walmart is thinking more
was marked by aggressive moves from Fitbit-type wrist device that measures Indian financial daily Mint reports that digitally about its future.
both companies to get more than their everything from body mass to sleep Reliance Retail is about to go on a
“The way TikTok has integrated
fair share of the $65,960 the average patterns to voice tones, Amazon is buying spree to bolster its eCommerce
eCommerce and advertising capabilities
American spends each year. But both opening a new revenue stream and business in India,” says The Motley
in other markets is a clear benefit to
companies donated to various causes joining the move toward connected Fool. “The potential acquisitions are
creators and users in those markets,”
to help American workers during the fitness in a big way. expected to strengthen Reliance’s online
said Walmart in a statement. “We
© 2020 PYMNTS.com All Rights Reserved 4 © 2020 PYMNTS.com All Rights Reserved 5
Whole Paycheck Tracker® Whole Paycheck Tracker®
WHOLE
PAYCHECK
TIKTOK IS AN AMBITIOUS LONG-TERM PLAY
THAT SHOWS WALMART IS THINKING
MORE DIGITALLY ABOUT
ITS FUTURE.
TRACKER®
Battle For The Digital-First Consumer
believe a potential relationship with eCommerce brands, all in the interest
TikTok U.S. in partnership with Microsoft of eventually losing “omnichannel” and
could add this key functionality and simply going with “retailing.”
provide Walmart with an important way
And as much as Q2 was a time of
for us to reach and serve omnichannel
happenings, it was also a period of
customers as well as grow our third-
time in which one side set a date for a
party marketplace and advertising
major initiative and one didn’t. Amazon
businesses. We are confident that a
still held its date for Prime Day close to
Walmart and Microsoft partnership
the vest. Walmart finally announced its
would meet both the expectations of
launch date for Walmart+, which will be
U.S. TikTok users while satisfying the
Sept. 15.
concerns of U.S. government regulators.”
The following report will delve into
Note the word “omnichannel” in the
Instacart’s effect on Walmart’s grocery
previous statement, because Walmart
plans in the hottest battleground
also used Q2 to break down any
between the two companies, as well
remaining barriers between its online
as overall spending share of the two
and offline divisions. It combined job
companies as they head into the critical
functions in Bentonville early in the
end of the year in their quest
quarter and shuttered the ill-fated Jet.
to dominate the whole paycheck.
com, which it bought for $3 billion in
2016. It also shut down two other minor
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Battle for the consumer’s whole paycheck Whole Paycheck Tracker®
B
y the numbers, both Walmart and Amazon exceeded During the company’s post- TRACKER OVERVIEW
announcement earnings call,
all expectations. Because the Whole Paycheck Tracker As stated earlier, Amazon and Walmart
executives said that the quarter
is a comparison and a gauge of competition, the edge benefited from spending stemming
tried to find a place within the business
dynamics of the pandemic. And those
on earnings has to go to someone, and both checked in with from government stimulus packages.
dynamics were extraordinary during
In addition to grocery, strong
amazing performances. the month of April, for example, when
performances came from electronics
the assignment of essential versus
and connected home products. Specific
nonessential retail made Walmart,
Amazon gets the first look. The demand, despite the strong operating grocery numbers were not called out,
Target and grocery retailers the only
company almost doubled its revenue leverage in Q2. As we move toward other than a growth rate in the high
game in town for essential goods. And
and profit numbers while spending peak in the second half of the year, single digits.
if a consumer could wait long enough
more than $9 billion on capital we will ramp up our space needs even
The company raised some concerns through possible shipping delays, the
improvement projects. further, and we’ll be adding significant
regarding Q3. Back-to-school sales, other essential retailer that was open
fulfillment center and transportation
Among those numbers: Operating cash according to Walmart, are off to a slow was Amazon.
capacity.”
flow increased 42 percent to $51.2 start. Combine this with a possible
Gross sales in the U.S. via Amazon
billion compared with $36 billion for Q2 Walmart’s numbers showed eCommerce absence of an additional stimulus
have increased from $86 billion in 2014
2019. Net sales increased 40 percent growth and top-line increases as well. package, and the company could have
to $339 billion in 2019. Judging by its
to $88.9 billion compared with $63.4 The retailer saw a U.S. comp-store a hard time reaching the heights it has
performance in Q1 ($77.1 billion gross
billion in the second quarter of 2019. sales increase of 9.3 percent over achieved during the pandemic so far.
sales) and Q2 ($105 billion), it’s possible
Operating income increased to $5.8 Q2 2019 and a 97 percent increase
“Back-to-school is just one component that Amazon could ring up over $400
billion in the second quarter compared in eCommerce. The eCommerce
of the quarter,” CEO Doug McMillon billion for 2020. Why? Because the
with $3.1 billion, and net income performance comes on the heels of
said. “And we’ll have to sort out how pandemic is still a limiting factor for
increased to $5.2 billion compared to a 74 percent jump in Q1. Digital sales
customers want to shop as we go, consumers, and even though they have
$2.6 billion. Video hours on Amazon rose from 180 basis points in Q1 to 600
but we think our inventory is well- started to return to physical stores, the
Prime doubled. Online grocery sales basis points in Q2.
positioned. And we’ll just react location vast majority of U.S. citizens will not
tripled.
While grocery wasn’t broken out in by location. I don’t think we have a revisit pre-pandemic shopping habits
On the earnings call, CFO Brian the company’s financials, CEO Doug lot of liability exposure there. The until a vaccine is widely available. That
Olsavsky pointed out that Q2 2020’s McMillon called it out as a contributing sales exposure will be mixed as we go means consumers will still look to
numbers topped Q4 2020 –and that Q3 factor to the comp sales bounce, through the quarter and manage other spend a portion of their paychecks with
would be even bigger. “As a reminder, Q2 with an average ticket size that grew parts of our business.” Amazon before they consider going to a
is typically our largest-volume quarter 27 percent over 2019. If the grocery physical store, unless it’s grocery.
for the retail business. That’s not the category continues on its current
case this year,” he said. “What that trajectory, it will add $8 billion in sales
means is that we can flex into space to the company’s bottom line by the
normally used for second-half peak end of the year.
© 2020 PYMNTS.com All Rights Reserved 8 © 2020 PYMNTS.com All Rights Reserved 9
Amazon vs. Walmart, the overview Whole Paycheck Tracker®
Only about $4 billion of Amazon’s Q2 dropped to 44.4 percent in Q2 2020, When it comes to consumer spending, Amazon took 9.0 percent of consumer
revenue took place outside of the which is still a number any other Walmart accounts for 3.4 percent retail spend and Walmart increased to
Amazon.com domain, meaning Whole company would give their whole overall and 10.2 percent for retail. That’s 10.2 percent. Amazon has been closing
Foods, Amazon Fresh and Amazon paychecks for. It even dropped from Q2 up from 9.6 percent in Q1 2020, but the gap with Walmart over the past
Go. It’s interesting that the cumulative 2019 (46.6 percent). But the numbers roughly even since 2016. Bottom line: In five years, and trends suggest they will
annual revenue growth rate for the are misleading. The U.S. government 2019, Amazon accounted for 6.8 percent continue to reduce the gap in the next
Seattle-based crew since 2014 is 31.5 Census department put the eCommerce of total retail spend, and Walmart few years as the battle for the whole
percent for total sales and 30.1 percent increase from Q1 2020 to Q2 at 44 grabbed 8.9 percent. 2020 has been paycheck pulls to about even.
for eCommerce. That difference comes percent – a total number of $211 billion. better for Amazon so far. For Q2 2020
from the relatively nascent nature of For Amazon to drop only 7 percent in
its offline business as well as stiffer total eCommerce share with that kind
competition from other eCommerce of overall increase is actually quite an Figure 1: Amazon Share of Total Spending
players. achievement. 9%
7%
When it comes to Amazon’s share of Now on to Walmart. Considering the
consumer spending, things get a bit pandemic and its hybrid online-offline 5%
more complex. Amazon accounted for model, its results were more subtly
2%
3.2 percent of total consumer spending impressive. Its gross sales in the U.S.
0%
in Q2 (across all categories, including (online and physical) jumped about $7 2014 2015 2016 2017 2018 2019 Q1 2020* Q2 2020*
retail) and 9 percent of total retail billion from Q1 2020 to Q2 – from $103.9
Share of Consumer Retail Spending
spending. Check that against Q1 (7.7 billion to $110.5 billion However, that’s Share of Total Consumer Spending
Source: PYMNTS.com
percent of total retail) and the results roughly similar to 2019, when it jumped
are significant, considering Amazon’s from $95.1 billion (Q1) to $101.8 billion.
revenue base. Now compare it to Q2 That correlates to the relatively flat
2019 and the 6.4 percent number shows in-store comps the company reported
Figure 2: Walmart Share of Total Spending
that Amazon has gained 2.6 percentage for Q2 this year, which was impressive
11%
points in a year. when considering the pandemic.
eCommerce sales jumped from $9.3 8%
Now go back to total share of
billion in Q1 to $11.2 billion in Q2, almost 6%
eCommerce – again, the numbers
double the $5.7 billion in Q2 2019. That
bear some investigation beyond the 3%
$11.2 billion for eCommerce represented
surface. Amazon touched just north of 0%
10.2 percent of total company sales,
50 percent for Q1 2020 in eCommerce 2014 2015 2016 2017 2018 2019 1Q2020 2Q2020
more than double the 4.7 percent
market share (51.2 percent). That
reported at the end of 2018. Share of Consumer Retail Spending
Share of Total Consumer Spending
Source: PYMNTS.com
© 2020 PYMNTS.com All Rights Reserved 10 © 2020 PYMNTS.com All Rights Reserved 11Strengths and weaknesses Whole Paycheck Tracker®
STRENGTHS AND WEAKNESSES Figure 3: Share Of Total Electronics and Appliance
26.0%
The details of the purchase dynamics
during the pandemic can be seen 19.5%
through individual categories, and here
13.0%
Amazon has a much stronger story
than Walmart. Excluding grocery (which 6.5%
will be dealt with in the Battleground
0.0%
section), Amazon had several category 2014 2015 2016 2017 2018 2019 Q1 2020* Q2 2020*
breakthroughs, while Walmart had only Walmart Amazon
Source: PYMNTS.com
one. Note: Grocery will be defined as
two categories: food and beverage plus
health and personal care. Figure 4: Share of Total Clothing and Apparel
18.0%
Outside of those two, Walmart failed in
more categories than it succeeded. The 13.5%
pandemic was notable for its spikes
in exercise equipment and sporting 9.0%
goods, as can be seen in quarterly
4.5%
earnings from Peloton, Dick’s Sporting
Goods, Hibbett Sports, Target and other 0.0%
2014 2015 2016 2017 2018 2019 Q1 2020* Q2 2020*
retailers. But Walmart sales in the
Walmart Amazon
category showed minimal bounce, from Source: PYMNTS.com
$3.5 billion in Q1 2020 to $3.7 billion in
Q2. By contrast, Amazon added almost
Figure 5: Share Sporting Goods, Hobby, Music, And Books
$2 billion in sporting goods sales from
18.0%
$16.5 billion in Q1 to $19.4 billion in
Q2. Why the difference? Most likely 13.5%
in selection and ticket price. For any
9.0%
consumer buying an exercise bike, for
example, Amazon has choices from
4.5%
obscure manufacturers
0.0%
2014 2015 2016 2017 2018 2019 Q1 2020* Q2 2020*
Walmart Amazon
Source: PYMNTS.com
© 2020 PYMNTS.com All Rights Reserved 12 © 2020 PYMNTS.com All Rights Reserved 13Strengths and weaknesses Whole Paycheck Tracker®
total net revenue increased $2.0 billion this more than 13 percent of the U.S.
to $4.3 billion, up 83.7 percent year over consumer’s paycheck – where Amazon
year. and Walmart will go to war for the
balance of 2020 and into 2021.
Battleground: Grocery
And strictly by the numbers, it makes
By the numbers, retail takes 30.8
sense. Even if grocery is defined by food
percent of the U.S. paycheck. Eight
and beverage only, it’s still the largest
percent of that goes to food and
retail category for consumer spend. Put
beverage, while 5.3 percent goes to
it together with health and personal
health and personal care. Put them
care, and no other retail spend category
together (13.3 percent) and you roughly
at below $500 up to $2,000 NordicTrack in Q2 for 17.8 percent of total consumer even comes close (apparel is at 3.4
have the grocery category. It is here –
machines. Walmart’s selections are spend. With Amazon holding a summer percent). As Amazon and Walmart lean
primarily under $500. The consumer apparel sale in June and pushing
spending share for sporting goods was to enter the high-fashion category,
15.7 percent for Q2 at Amazon and Walmart will need a fairly dramatic Figure 6: Share of Total Food And Beverage
move to shore up its apparel share of 20.0%
3.7 percent at Walmart for what was
consumer spend.
arguably the hottest nonessential 15.0%
product category of the pandemic. The other category worth noting is
10.0%
furniture. Amazon caught up to Walmart
The two retail powers are also parting
on total spend percentage in 2019, and 5.0%
ways on two other important categories:
continues to pull ahead. For Q2 they
electronics and appliances. Amazon 0.0%
took 14.7 percent (Amazon) and
rose from 22.6 percent of total spend 2014 2015 2016 2017 2018 2019 Q1 2020* Q2 2020*
in Q1 to 24.4 percent in Q2; Walmart 11.5 percent (Walmart). But Amazon Walmart Amazon
Source: PYMNTS.com
dropped from 6.2 percent in Q1 to continues to pull more dollars in the
6.0 percent in Q2. Walmart’s biggest category. At the end of Q2 2019, it
Figure 7: Share of Total Health and Personal Care
percentage sales growth outside of logged $6.3 billion in sales, jumping 7.0%
grocery came in apparel. It added more to $9.3 billion for Q2. Walmart should
than $500 million to its quarterly tally in technically have an advantage with 5.3%
this category, jumping from $9.0 to $9.5 physical stores, but its category take
3.5%
billion and taking 10.5 percent of spend. was $7 billion for Q2 last year and $7.3
But Amazon still outperformed in this billion this year. This could be good 1.8%
category on a total spend basis, going news for Wayfair, which is holding onto
from $13.8 billion in Q1 to $16.2 billion its market share. Its Q2 revenue showed 0.0%
2014 2015 2016 2017 2018 2019 Q1 2020* Q2 2020*
Walmart Amazon
Source: PYMNTS.com
© 2020 PYMNTS.com All Rights Reserved 14 © 2020 PYMNTS.com All Rights Reserved 15The Battlegrounds
in on the biggest category relatively broken out in the company’s quarterly
late in the game, the battle for 2021 will earnings. However, food and beverage
ABOU
expand beyond the two whole paycheck is broken out. It barely moved from Q2
contestants and include aggressive 2019 to 2020. It’s no coincidence that
moves from Target as it comes in, and Amazon has been so aggressive in the
PYMNTS.com is where the best minds
from Kroger and other supermarkets as category – and it begs the question as
and the best content meet on the
they defend their turf. to whether Amazon will acquire another
web to learn about “What’s Next” in
chain, or convert a mall-based retailer payments and commerce. Our interactive
Walmart and Amazon have put so
like JCPenney to Whole Foods locations. platform is reinventing the way in
much emphasis on grocery – both
which companies in payments share
online, offline and home delivery – Walmart, on the other hand, has put
relevant information about the initiatives
that the current snapshot will change some big grocery numbers on the board, that shape the future of this dynamic
dramatically. Still, that snapshot shows which should only increase as Walmart+ sector and make news. Our data and
a complicated base from which they is rolled out and the partnership with analytics team includes economists,
both work. Instacart is deployed. Its food and data scientists and industry analysts who
beverage category went from $58.7 work with companies to measure and
Amazon is more complicated due quantify the innovation that
billion in Q1 2020 to $62 billion in Q2.
to its four-pronged approach to the is at the cutting edge of
Compare it to Q2 2019 and the numbers
category: Amazon.com, Whole Foods, this new world.
are even more impressive, jumping
Amazon Fresh and Amazon Go. It was
from $56.7 billion in Q2 2019. That’s
not a completely successful formula
a $5 billion difference in the biggest
in Q2. Amazon’s physical store revenue
consumer retail category. Compare it
(mainly Whole Foods) dropped almost
to Q2 2019 and the numbers are even
13 percent in Q2 2020 compared to Q2
more impressive, jumping from $56.7
2019. Compared to Q1 2020, the drop
billion in Q2 2019. That’s a $5 billion
was even higher at 18.7 percent. This
difference in the biggest consumer
could be an indicator of consumers
retail category.
being too COVID-concerned to visit
physical stores. It is not a line item
Table 1 shows the drop in Amazon’s physical stores, Whole Foods, Amazon Fresh and Amazon Go
Source: PYMNTS.com
© 2020 PYMNTS.com All Rights Reserved 16Disclaimer Amazon, Walmart Battle For The Consumer’s Whole Paycheck: Who’s Winning By The Numbers may be updated periodically. While reasonable efforts are made to keep the content accurate and up-to-date, PYMNTS.COM: MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, REGARDING THE CORRECTNESS, ACCURACY, COMPLETENESS, ADEQUACY, OR RELIABILITY OF OR THE USE OF OR RESULTS THAT MAY BE GENERATED FROM THE USE OF THE INFORMATION OR THAT THE CONTENT WILL SATISFY YOUR REQUIREMENTS OR EXPECTATIONS. THE CONTENT IS PROVIDED “AS IS” AND ON AN “AS AVAILABLE” BASIS. YOU EXPRESSLY AGREE THAT YOUR USE OF THE CONTENT IS AT YOUR SOLE RISK. PYMNTS.COM SHALL HAVE NO LIABILITY FOR ANY INTERRUPTIONS IN THE CONTENT THAT IS PROVIDED AND DISCLAIMS ALL WARRANTIES WITH REGARD TO THE CONTENT, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT AND TITLE. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF CERTAIN WARRANTIES, AND, IN SUCH CASES, THE STATED EXCLUSIONS DO NOT APPLY. PYMNTS.COM RESERVES THE RIGHT AND SHOULD NOT BE LIABLE SHOULD IT EXERCISE ITS RIGHT TO MODIFY, INTERRUPT, OR DISCONTINUE THE AVAILABILITY OF THE CONTENT OR ANY COMPONENT OF IT WITH OR WITHOUT NOTICE. PYMNTS.COM SHALL NOT BE LIABLE FOR ANY DAMAGES WHATSOEVER, AND, IN PARTICULAR, SHALL NOT BE LIABLE FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, OR INCIDENTAL DAMAGES, OR DAMAGES FOR LOST PROFITS, LOSS OF REVENUE, OR LOSS OF USE, ARISING OUT OF OR RELATED TO THE CONTENT, WHETHER SUCH DAMAGES ARISE IN CONTRACT, NEGLIGENCE, TORT, UNDER STATUTE, IN EQUITY, AT LAW, OR OTHERWISE, EVEN IF PYMNTS.COM HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. SOME JURISDICTIONS DO NOT ALLOW FOR THE LIMITATION OR EXCLUSION OF LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES, AND IN SUCH CASES SOME OF THE ABOVE LIMITATIONS DO NOT APPLY. THE ABOVE DISCLAIMERS AND LIMITATIONS ARE PROVIDED BY PYMNTS.COM AND ITS PARENTS, AFFILIATED AND RELATED COMPANIES, CONTRACTORS, AND SPONSORS, AND EACH OF ITS RESPECTIVE DIRECTORS, OFFICERS, MEMBERS, EMPLOYEES, AGENTS, CONTENT COMPONENT PROVIDERS, LICENSORS, AND ADVISERS. Components of the content original to and the compilation produced by PYMNTS.COM is the property of PYMNTS.COM and cannot be reproduced without its prior written permission. © 2020 PYMNTS.com All Rights Reserved 18
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