One thing is clear: Doug McMillan is not waving the white flag. If anyone embodies the spirit of fighting back against Amazon, it’s Walmart’s CEO. In the March-April 2017 issue of Harvard Business Review, Doug opened up about his near and long-term strategy for Walmart.
Amazon's eCommerce growth and profit margin is largely driven by the company’s marketplace strategy. More than 50% of the units ordered in Amazon’s retail business are from its third-party marketplace sellers. Those sales are virtually pure profit for sellers as Amazon does not stock the product, fulfill it (unless the seller pays for Fulfillment by Amazon or FBA) or service it. Rather, Amazon simply takes a commission in exchange for connecting buyer and seller. That being said, we can assume that the lion's share of Amazon's innovation dollars are funded by marketplace sales and Amazon Web Services (AWS), the company’s Infrastructure-as-a-Service (IaaS) business-- not its own retail business.
With the news that Amazon will acquire Wholefoods for $13.7 billion, industry pundits are weighing in on why the eCommerce giant would buy a chain of grocery stores. The theories are wide ranging: