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The figures shows that Walmart is currently performing at a revenue of 5.36 times its
benchmark competitor and with a net income that is 6.41 times. By 2025, the forecast suggests
that Walmart's revenue will be 6.4 times with a net income that would be 7.12 times the
synthetic competitor. However, this scenario is quite different for Amazon.

To build the forecast for Walmart and Amazon from the historical data, we projected their
revenue and income trends for 10 years into the future based on the data from the 10 years. We
limited the historical basis to the last 10 years to ensure we only take into account the
performance considerations associated with the recent choices of each of the firms. We used a
linear forecasting model which showed an R-sq of 0.97 and 0.91 for Walmart and Amazon,
respectively. Although we found the R-sq to be somewhat higher in the case of the polynomial
model, we used the linear model for simplicity.

Next, we projected the expected future behavior of each firm (Walmart and Amazon) as well as
of their synthetic competitors. In the case of the firm, we relied on their historical performance
to forecast the future performance. This is consistent with the idea of ‘path dependency’ which
suggests that firms are constrained by their historical choices and their future actions will be
not too different from their history.

To develop a firm that is completely identical in terms of its sources of revenues, we averaged
the performance of the top three competitors for Walmart and Amazon shown earlier. Once the
average performance was established for each category, we created a weighted average of the
competition based on the proportion of revenues from each category. The resulting
performance represents a benchmark for Walmart (across its five major categories) and
Amazon (across its ten major categories).

As the product category-wise distributions indicate, there are significant differences between Walmart and
Amazon in terms of the source of their revenues. These differences suggest that the market outlook of
Walmart is likely to be different than the outlook for Amazon. The two firms are not completely comparable.
This requires some way to establish and apples-to-apples comparison whereby the performance of Walmart
is compared to a synthetic competitor with similar revenue streams (i.e. product categories) and the
performance of Amazon to its own synthetic competitor. T

Amazon.com, Inc. is an American electronic commerce and cloud computing company with headquarters in
Seattle, Washington. It is the largest Internet-based retailer in the United States. It started as an online
bookstore, later providing cloud infrastructure services and becoming the world’s largest provider. Now
Amazon sells almost everything with separate retail websites in 17 countries and offers international
shipping to many other countries for some of its products. The company also produces consumer
electronics – notably, Amazon Kindle e-book reader, Fire tablets, Fire TV and Fire Phone.

In view of the excellent performance in the past forty years, Walmart not only focuses on retail business, but
also wholesale and international business. Now Walmart has three main parts of their business, Walmart U.
S., Walmart International and Sam’s Club. However, in recent years, the revenue of Walmart decreased with
the rise of e-commerce, such as Amazon, EBay and Best Buy. The e-commerce stole the revenue from
Walmart and Walmart decided to develop its own e-commerce to provide customers online retailing for
Walmart, Sam’s Club, ASDA and all other international brands. It is a tendency to shop online which brings
lower prices and more convenience, and obviously, Walmart knows that, so in the past few years they spent
an enormous amount of money to build and improve their online shop.