Comparison of Walmart and Amazon Business Models and Financial Stability

This report analyzes the business models of Walmart and Amazon, their financial stability, and how they manage their content. It compares their return on assets, debt to equity ratio, and quick ratio. The report also discusses the strategies used by both companies to generate profits and the importance of technology in their business models.

Running head: E-COMMERCE AN MARKETING 1
Report on Walmart and Amazon
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Introduction
The paper presents an analysis of the various occurrences that are existing around two different
companies or firms. Namely, these firms are the Amazon and Wal-Mart. The major focus,
therefore, will be put on issues concerning the different business models that are perceived by
each firm, financial stability comparisons together with analyzing the ways through which these
companies manage their information. To begin with, a business model refers to a sttra5tegyy or
plan that is put in place to make a profit. A proper business plan or model should be in a position
to identify the products and or services that are sold and to which market category. The
discussions and explanations relating to the business models undertaken by each of the chosen
companies area elaborated upon as below.
Walmart business model
The Walmart company has over the years been characterized with its well operation on the three
types of business units or segments. It has therefore been through such segments that the
Walmart Company attained well over an estimated $ 495 in terms of market sales during the year
of 2018 (manu,2016). Out of the total earnings, about 64% of the revenues were generated by
Walmart US, 24% of the incomes were obtained from Walmart international segment, and the
only 12% of the revenues were generated from the Sam’s club segment (Lang et al, 2012). Apart
from the above strategies of the Walmart business, there are other additions that are used
especially on concerns related to the internet and online company business. For instance, the
company is currently using two strategies and these include the innovation and the strategy to
build k instead of buying (Dages et al, 2016). These are the two major strategies that the
company is using in developing its business model on the market. The major driving or pushing

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factor for such technological strategies is to obtain and increase market share. The change has
also been out of the pressure from other competitors such as the Amazon that have embraced
technological changes and methods of marketing. From using such methods and strategies, the
company has eased access to its estimated 260 million customers globally and in about 27
nations or countries. Therefore, one can firmly conclude that without the development of online
strategies the company would not have had the capacity to achieve such a wide market in a short
period.
Amazon business model
With the increasing need to satisfy customer convenience on the market, companies such as the
Amazon have taken up strategic decisions to maintain the growing e-commerce mode of trading
on a global scale. This is, therefore, a valid explanation for the growing trends in e-commerce,
online trading in the global market. Almost similar to the Walmart company amazon operates a
widely diverse business model. The model includes the use of several different strategies and
techniques of service delivery to the company customers. The strategies that are used by the
amazon include online stores, physical stores distribution agents or the third-party sellers of the
goods. Because of the diverse business model that is used by the company, financial benefits are
highly expected. For instance, the amazon contributed to a percentage of about 70% of global
trade during 2016 (Chugh, 2018). The company financial prospects show an estimated $ 356
billion in revenues for the year of 2022 whereas Walmart was well over a trillion dollars at least
by the year 2018. By 2011 the amazon company had kick-started its online marketing strategy
and through this particular approach, the company had a vision and objective of easing customer
access to different marketing channels. The company effectively developed electronic

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advertising web pages, campaigns and so many other activities. Since then, Amazon has
positively turned out to be one of the largest and most profitable global e-commerce traders on
the market.
Comparison of the financial stability of the two companies
The comparison of the financial stability of the two companies will be done using a few
measures of financial ratios. These include the return on assets (ROA), the debt to equity ratio
and the quick ratio among others. Calculations obtained from the return on assets shows that the
amazon company had a reduced return on assets. The 5.68% ROA of 2019 shows a decline as
compared to the 6.85 % ROA which was registered in 2018 (Chaffey, 2018). The implication in
this is that the efficiency of using company assets to generate profit is significantly declining. On
the other hand, the Walmart financial ratios are far less than those 0f the Amazon. Walmart
records show that the company has a percentage return on assets ranging between 3.15 to 6.15%
of 2019. This, however, shows that Walmart is performing very poorly and it is, therefore, less
efficient in the rate of generating profits while using assets is much lower than the Amazon.
The debt to equity ratios, on the other hand, show a relatively different picture altogether. The
debt to equity ratio is a measure of the ability to pay off debts and other obligations. An average
debt to equity is meant to be about 1.5 although this figure sometimes depends on the nature of
the business or industry (Izogo and Ozo, 2015). However, according to this particular measure of
financial stability, Walmart has a relatively better position of debt to equity especially during the
current 2019 (walamart, 2018). For example, the Walmart debt to equity ratio of 0.84 in 2019 is
almost higher than the amazon debt to equity ratio of 0.44. This means that Walmart has a better
capacity and ability to pay off debts as compared to the Amazon (Heller, 2018).

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How companies are managing their content
The Amazon Company majorly stores information on an online platform known as the kindle
direct publishing web page. This type of service is majorly applicable to independent publishers
and authors strictly. This service allows the publisher of information to have the liberty of
directly marketing his or her content online after choosing or selecting an online royalty. Having
selected a royalty, publishers can then access the kindle store where they can put all their works
for the customers to buy (Balvers et al, 2016). For matters concerning intellectual property, the
Amazon regards copyrights as a vital aspect that has to be strictly observed. This is normally
applicable to musicians, filmmakers and so on. The Walmart Company, however, uses mainly
the global operations of the retail business. Under such a strategy, different distribution units and
channels such as the retails, wholesalers, and e-commerce platforms are used for managing
content and information in the market (Del- Rey, 2019). The company has various locations that
cover a large and wide regional scope. Information of the company is always under regular
reviews that are conducted by the CODM (Chief Operating Decision Maker). This person makes
analyses concerning the various aspects such as the different segments and so on (Visnji, 2019).
According to the analysis that is done by this CODM, resources are then allocated respectively
depending on the level of need. Basing on the provided information and content, the possibility
of making value of the information is high. The type of content that is obtained and stored is
highly valuable and it is also important both in the long and short-run period. The reason as to
why such information is valuable is because it provides an insight into the necessary and critical
aspects such as ownership. For instance, reserving and observing the aspects of copy rights has a

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significant role it plays in reducing the likelihood of duplication. If a filmmaker stored
information with the amazon, such information would be attributed to that specific person.
Therefore if a third party wanted to use the same information, a price would be paid. This is,
therefore, a value generated out of stored information.
Conclusion
Marketing trends and strategies have globally shifted for them the traditional approaches that
were used by companies in the early times of industrialization. The consistent developments in
technology have over the years made marketing more diverse. The growing need for global
market requires the use of more sophisticated approaches if a business is to attain efficiency and
effectiveness.

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References
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