- "Mad Money" host Jim Cramer says that Wal-Mart is the only retailer that can target one of Amazon's few weaknesses.
- By leveraging its relationship with product suppliers, Wal-Mart can level Amazon's playing field, Cramer says.
- As other retailers struggle to stand out, Cramer sees the industry becoming a two-horse race.
Retail competition is at the forefront of Wall Street yet again as retailers release their earnings reports, and Jim Cramer is seeing a divide form around the industry's most powerful disruptor.
"When the book is closed on retail this quarter, we're going to have two different narratives: there are the companies that Amazon can crush and the companies that Amazon should admire or perhaps even fear," the "Mad Money" host said.
As of Thursday, one company stood out to Cramer as the competitor Amazon should worry most about: Wal-Mart.
The discount retailer's second-quarter earnings report not only beat the Street's estimates on earnings per share and revenue, but also saw a 60 percent boost in online sales.
Wal-Mart's same-store sales, a key measure of success for retailers, ticked up as well thanks to traffic growth, a much sought-after trend at many struggling brick-and-mortar businesses.
Cramer attributed Wal-Mart's online growth to its 4,100-store network, which makes it easy for the family-owned company's 100 million weekly shoppers to pick up their goods in-store.
"You could also look at Wal-Mart's store base as 4,100 distribution centers with easy delivery for food, blunting the footprint of Amazon, which will only have a 10th of the stores that Wal-Mart has when that Whole Foods deal closes," the "Mad Money" host said.
Doug McMillon, Wal-Mart's CEO, told Cramer exclusively on Thursday that "we're taking 140 million transactions a week [and] combining it with our exploding online business to serve customers in a seamless way, in-store and online. We will own the intersection of physical and digital shopping."
"Speaking of family, that's Wal-Mart's ace in the hole," Cramer added.
Amazon may turn to the capital markets for the money it needs in place of profits, he said, but Wal-Mart has its legacy owners, the Walton family, to provide a similar cushion that goes hand in hand with Wal-Mart's bargaining power with product suppliers.
"And there too, lies the real Achilles Heel of Amazon: the clout Walmart still has over its suppliers," the "Mad Money" host said.
Amazon is likely the biggest customer of almost every single U.S.-based consumer products company. Most of those companies' websites are hosted by Amazon Web Services, the e-commerce giant's cloud computing arm.
But those same companies risk losing Wal-Mart's business by partnering with Amazon for the cloud, and they want their products featured on the big-box retailer's shelves as much as they want them on Amazon.com, Cramer said.
"If I'm the chief technology officer of any supplier, I'm going to green-light shifting away from Amazon Web Services to the ultra-competitive Microsoft Azure or Google Web Services," Cramer said. "That way, my CEO can go to Wal-Mart's headquarters and say, 'Hey, we know the score. We're not trading with the enemy anymore.'"
So the two giants are neck-in-neck; Amazon's Alexa steers customers towards Amazon's products, while Wal-Mart's free two-day delivery challenges Amazon Prime's membership fee, and their product prices are comparably attractive.
"Let just call it as it is: a legitimate, two-horse race with others bringing up the rear, but at least they're now at the track," Cramer said.