To feel the sheer, raw business power of selling so much stuff under one roof, just start with the five-year financial summary Wal-Mart posts online. Sure, total revenues grow only somewhere in 4% to 5% range, a fraction of the 25% bumps that Web outfits such as Amazon ( AMZN) brag about. But here in investor world, revenue, free cash and EBIT valuations are cute. But what really drives the extended bull market is pure profit: what you keep from every dollar for a sale after taking out all the costs of making that sale. And from this operational, net earnings perspective, Web retailing is not even in Wal-Mart's parking lot. Let's start the gross profit margins: Wal-Mart's margins hold steady in the 25% range from 2009 all the way to 2013. Total assets, similarly, grow year in and year out at about 5%. And most of all, the net margins -- profit -- run the 3% range. Love or hate its politics and labor policies, Wal-Mart is a real business that makes real money. Then try to compare that with any pure-play Web retailer and let me know how it works out for you. EBAY) solid operating story really comes from its growing retail side. To me its social exchange and PayPal transfer business that's moving that needle. For better or worse, Amazon's numbers are the best story the Web can tell. And frankly, it's a tale of woe. Amazon is a business that will cheer when it sells even 30% of what Wal-Mart does. And operationally, have operating margins ever gone above 10% in the past half decade? Geez, last year, unless I screwed up subtracting $60.4 billion in operating expenses from $61.1 billion in total sales, you're looking at less than a penny on the dollar left over -- even before the fixed costs of doing business are taken out. Where does all the money go? It's insane. The Web's lost dollars
Even more bizarre, if you look at the culture that Wal-Mart projects in its statements, I get the feeling it is not even trying to compete with the Web. Ever been down to a store? Ever talk to a sales associate? Everyone is trying hard, but "high tech," Wal-Mart is not. Imagine the money that could be made if it installed an in-store system that did the shopping for you. But Wal-Mart knows the real score in retail: In terms of investor value, dollars flowing to the Web are lost dollars. And there is a good reason Jeff Bezos sold 1 million shares in his company this year: Pure-play Web retailing is, at best, a niche business. It's a shopping aisle investors would be smart to stay out of.