Amazon recently overtook Walmart to become the world's largest company by annual sales. It sells almost everything — groceries, cloud computing, streaming shows, e-readers — and in the US alone, it controls 40.5% of all online retail sales. Its nearest rival, Walmart, sits at just 9.2%. So why does no Western company come close to challenging it?
One is a 'first-mover' advantage. Among the earliest to scale online retail — and with a clear vision of how the internet could revolutionise shopping with convenience and speed — it captured market share faster than many rivals. Crucially, shareholders allowed Amazon to sell products at a loss for years, then aggressively reinvest profits back into growth rather than paying dividends. Traditional retailers could never have pursued that strategy without destroying their stock price.
Two pivotal moves cemented Amazon's dominance. In 2000, it opened its platform to third-party sellers, triggering a powerful network effect: more sellers attracted more customers, which attracted even more sellers. The other was the launch of Amazon Prime, in the US in 2005 and the UK in 2007, offering free and fast delivery in return for an annual subscription fee. Prime made the platform extraordinarily sticky — once you're paying for shipping, why search anywhere else?
Amazon also funds its lower-margin retail operation using profits from AWS, its hugely lucrative cloud-computing division. This cross-subsidisation gives it a financial firepower that pure retailers simply cannot match. Add a culture of bold experimentation — moving into healthcare, original content, and consumer devices — and you have a company that keeps expanding its competitive moat.
"Amazon is not just a website that sells products," says Annabelle Gawer of the University of Surrey. The scope of what it offers is unparalleled, and that combination of scale, technology, and financial muscle makes building a genuine Western rival look almost impossible.
