Amazon Vs. Walmart: Bricks, Clicks Or Both? Which Model Wins?

When technology changes the landscape, even unicorns can get their horn caught in the throes of a mega competition for market dominance.?

In this case, it’s difficult to tell which contender is the unicorn and which is the stodgy established leader trapped by its own success.

In fiscal year 2023, Walmart's e-commerce sales reached $82 billion, showing a year-over-year growth of 12%, later rising to cross the $100 billion threshold in 2023, as announced by Walmart.

E-commerce sales accounted for approximately 13% of Walmart's total revenue of $611 billion in 2023 while 86.6% of total revenue was generated in store.?

Growth Story In The Data

That said, e-commerce sales are growing at a faster rate than overall sales. In the first quarter of fiscal 2025, U.S. online sales grew nearly 22% year-over-year, dwarfing total U.S. net sales at 4.6%.??

Groceries account for 55.7% of Walmart's total revenue, with a significant portion coming from in-store sales, revealing Amazon’s motivation to acquire Whole Foods in 2017.?

Grocery Wars

But in the online grocery segment, Walmart is projected to take the lead over Amazon in 2024, with a 26.9% share of the U.S. online grocery market compared to Amazon's 18.5%.?

With Amazon's e-grocery sales being valued at roughly $36.4 billion in 2023 and online grocery sales projected to reach $40.50 billion in 2024, the rapid ascent to the top has only begun while Walmart has no plans to slow down the steady rise it is engineering.??

By the end of 2024, Walmart is expected to have online grocery sales of $58.92 billion, which would be more than $18 billion higher than Amazon's projected sales.

In terms of market share, Amazon's portion of the online grocery market is declining. By 2024, Amazon is projected to have 18.5% of the online grocery market share, while Walmart is expected to reach 26.9%.

The remaining online grocery market share that is up for grabs is growing rapidly with revenue expected to hit $298 billion by 2026.

Your Friendly Neighborhood Grocer Is Going Digital Too

While pure play brick and mortar retailers like Albertsons, Price Chopper, Trader Joes and Hannaford are facing increased competition from the two leaders in the online space, they have benefited from the rise of third-party grocery delivery apps such as Instacart, DoorDash, and Uber Eats, which has sharpened their competitive edge for the remaining market share left on the table.?

Rising inflation has led to more deal-seeking and trade-down behaviors from consumers, which tends to favor larger retailers with more extensive logistics networks and pricing power.

Meanwhile, Amazon is still trying to figure out how to compete effectively with Walmart in the grocery space, both online and offline. While Whole Foods is a niche player in the premium segment, it lacks the mass appeal that Walmart has in spades.?

So with Walmart's online grocery sales anticipated to reach $58.92 billion, Amazon is facing some intense competitive pressure.?

To place it all in perspective, Walmart's e-commerce sales in the U.S. rose nearly 24% in the third quarter of 2023, fueled in part by strong performance in pickup and delivery services.?

Even so, Walmart still has a long haul ahead in the epic marathon to dominate the e-commerce side of its bricks and clicks strategy. Because while the retail giant generated $611.29 billion in total revenue, Amazon captured almost $500 billion of the online spend.??

Future Trends

Walmart is actively investing in its e-commerce capabilities, rolling out aggressive initiatives like its 4-year old Walmart+ subscription program and continuously improving the customer experience in pickup and delivery services driving online sales growth.

It’s clear that any strategic concerns about cannibalizing its 4600 stores in the US are behind it. Walmart has proven that the integration between online and offline sales is more synergistic than competitive.?

Knocking An Industry Leader Off Its Perch

While it's difficult to imagine any scenario where Walmart would be the underdog, Amazon's revenue is growing at a rate of 12% compared to Walmart's 6%. If this trend continues, Amazon could potentially overtake Walmart in total revenue in the near future.

Considering that in the most recent fiscal year, Walmart's revenue was a mind blowing $657.33 billion, catapulting it–for the tenth consecutive year–to the top of revenue rankings worldwide, it’s too early to call when or if Walmart will ever be stripped of its global leadership position.?

Remember, the company's market capitalization is approximately $536.78 billion, which, while substantial, is less than its annual revenue while Amazon trades at over 3 times its annual revenue.?

The Bold Decision To Challenge A Brand’s Heritage

The next shot across the bough, is Walmart’s competitive response to Prime Day, the two-day sale in the summer when Amazon offers discounts and deals on thousands of products, exclusively for members of its Prime Membership.?

Walmart’s answer? "Walmart Deals." Starting in July 2024, customers can shop thousands of deals on popular items from electronics, home, toys, travel to exquisitely timed items heading into the back-to-school season.?

Ripping a page from Amazon’s book, Walmart+ members will have early access to shop the biggest deals of the season five hours before anyone else.?

Going head to head with Amazon’s Prime Day is strategically sound. Mostly. But it does not come without risk to its brand credibility.?

Tweaking The Value Proposition?

Walmart's brand has always been "Everyday Low Prices," meaning you never need to wait for a sale to save money. And yet, Walmart is so motivated to keep up the competitive pressure on Amazon that this long-established brand is going to get out of its own way and do a sale that takes a big bite out of Amazon’s market share anyway. It should be interesting to see how it shakes out.?

Either way, now that more than 320 million people live within a 15-20 minute drive from a Walmart, the ease of online shopping, pickup and delivery will make it a formidable rival to Amazon for decades to come.?

Thank you for reading Business Intelligence Weekly. Abnormal Insight for Extraordinary Minds. Andrew Ellenberg, is President & Managing Partner of Rise Integrated, an innovative studio that creates, produces, and distributes original multimedia content across digital touchpoints. To submit story ideas or ask about custom multimedia publishing, call 816-506-1257, email [email protected], or read more of his work in Forbes. To learn about his company check out this profile story.