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Here's An Undeniable Advantage Amazon Has Over Walmart

A lot of ink has been spilled about brick-and-mortar retailers moving into e-commerce that's dominated by online selling pioneers like Amazon (NASDAQ: AMZN). But there's one edge that tech platforms have over big-box giants like Walmart (NYSE: WMT) that investors should know.

ProShares' Executive Director of Thematic Investing Scott Helfstein sat down with The Motley Fool to dive into some of the intriguing stocks in their new ETF: ProShares MSCI Transformational Changes ETF (NYSEMKT: ANEW).

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Corinne Cardina: Definitely. So that we can get to all four, I'm just going to kind of speed through these digital consumers. Let's start with Amazon. Amazon stock is up 1,700% in ten years. Beyond e-commerce, it's got a lot going for it, its biggest growth driver being Amazon Web Services, the cloud, of course. Do you think that Amazon can do anything near a repeat performance when we're looking ahead to the next decade? How do you envision this as an investment today?

Scott Helfstein: That's where I get back to that 16%, that is the total e-commerce penetration of retail in America. We're still early on as much as it doesn't feel that way for a lot of people. There is a lot more to come. We're going to be doing more and more online. Even their roll out of the Amazon stores or their use of the Whole Foods brand in the food space, I think is all reflective of innovation. Certainly AWS has been a phenomenal success story for the company. I don't know about repeating past performance, but we do think that we're early in the digital consumer revolution still. So there's a lot more to come. We saw Amazon Prime Day had the largest sales on record. Alibaba (NYSE: BABA) just put out numbers last week from its Singles Day, which also showed phenomenally strong growth year-over-year. So there's more to come. Not only that, we also focus a lot on margins. You look at a company like Walmart (NYSE: WMT) that has successfully grown its e-commerce business, yet it's done so at the expense of margins. Whereas Amazon margins have consistently increased over time. We think that that's a trend that they can continue. Some of those investments if they made a few years ago, for example, like their own delivery trucks has turned out to be a phenomenal advantage.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Corinne Cardina has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alibaba Group Holding Ltd. and Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.


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