Amazon has officially overtaken Walmart in total revenue, marking a pivotal moment in their long-standing battle for retail supremacy.
Amazon reported $187 billion in first quarter revenue, surpassing Walmart’s expected $180 billion Q1 report.
This milestone underscores the shifting dynamics in retail, driven by the rapid growth of e-commerce, technological innovation, and diversification into high-margin businesses like cloud computing and digital advertising.
While Walmart continues to dominate brick-and-mortar retail and groceries, Amazon's strength in online shopping, fast delivery, and services like AWS (Amazon Web Services) has propelled it ahead. However, the battle is far from over, with both companies aggressively expanding into new sectors to secure long-term dominance.
Long-Term Advantages: Where Each Retailer Excels
Amazon has solidified its lead in e-commerce, with a commanding 37.8% market share in the U.S., compared to Walmart’s 6.3%.
Its dominance is fueled by Prime memberships, which exceed 200 million worldwide, offering exclusive deals and expedited shipping. Another key advantage is Amazon Web Services (AWS), which generated nearly $91 billion in 2023 and contributes over 70% of Amazon’s operating income. AWS provides a steady stream of high-margin revenue that Walmart simply cannot match.
Walmart, however, retains a critical advantage in physical retail.
With thousands of locations across the U.S., it has unmatched accessibility, allowing customers to shop in-store or pick up online orders quickly. The company also continues to dominate the grocery sector, where its competitive pricing and convenience make it the preferred choice for millions of Americans. Walmart’s Everyday Low Prices strategy ensures affordability, making it difficult for Amazon to compete on price in key product categories.
The Role of Non-Competing Sectors in Revenue Growth
Beyond retail, both Amazon and Walmart generate significant revenue from areas where they do not directly compete.
Amazon’s AWS cloud computing division is a major profit driver, accounting for a large portion of the company’s total revenue. Meanwhile, Amazon Prime Video and its acquisition of MGM Studios add another layer of diversification, strengthening its media and entertainment offerings.
Walmart, on the other hand, has invested in financial services, including banking, money transfers, and credit services, which generate billions in additional revenue. Its international expansion in markets like Mexico, Canada, and China also contributes to its overall revenue strength.
Sectors Where Competition Remains Fierce
One of the most hotly contested sectors between the two retailers is health and personal care.
In 2019, Walmart led this category with a 6% market share, while Amazon lagged behind at 2.1%. However, by 2023, Amazon had closed the gap significantly, reaching 5.4% compared to Walmart’s 6.3%.
Amazon’s foray into healthcare, including the acquisition of PillPack and the launch of Amazon Pharmacy, has enabled it to gain traction. Walmart, on the other hand, has countered by expanding its Walmart Health clinics and pharmacy services, ensuring it remains a trusted provider for in-store and online healthcare needs.
Another battleground is advertising, where Amazon has surged ahead, but Walmart is making up ground quickly.
Amazon’s advertising division generated $45 billion in 2023, leveraging its vast e-commerce traffic and customer data to target consumers with precise ad placements.
Walmart, recognizing the profitability of retail media, has rapidly expanded its own advertising arm, Walmart Connect, which saw a 30% increase in revenue last year. By utilizing its physical stores and e-commerce platform, Walmart is creating new opportunities for brands to advertise directly to shoppers.
The delivery and logistics sector is another key area of competition.
Amazon revolutionized online shopping with its same-day and next-day delivery services through its Prime membership, supported by an expansive network of fulfillment centers and last-mile logistics.
Walmart has responded aggressively, investing heavily in micro-fulfillment centers, drone delivery programs, and its Spark driver service to enhance same-day delivery. Additionally, Walmart’s GoLocal service, which provides third-party delivery solutions for other businesses, is another attempt to reduce Amazon’s dominance in logistics.
The Changing Landscape of Market Share
Over the past five years, Amazon has steadily gained ground in various retail sectors, reshaping consumer shopping habits.
Despite Amazon’s advances, groceries remain Walmart’s stronghold.
With over 5,000 stores across the U.S., Walmart benefits from its widespread physical presence and low-cost pricing strategy. While its market share dipped slightly from 16.3% in 2019 to 15.6% in 2022, it still holds a significant advantage over Amazon in the grocery sector.
Amazon has made strides with its acquisition of Whole Foods, the expansion of Amazon Fresh stores, and the introduction of cashier-less Amazon Go technology. However, it has struggled to match Walmart’s scale and ability to offer competitive grocery pricing.
One of the most notable shifts has been in electronics and appliances, where Amazon’s aggressive pricing, Prime-exclusive deals, and fast delivery have given it a commanding lead. In early 2019, Amazon held a 14% share of the market, while Walmart had 4.9%. By the end of 2020, Amazon’s dominance surged to 25%, while Walmart struggled to hold onto 4.4%.
Walmart has attempted to counteract this trend by enhancing its in-store tech promotions and integrating third-party marketplace sellers to expand its product catalog.
Similarly, clothing and apparel has seen Amazon emerge as a formidable competitor.
Although both companies started with less than a 6% share in 2019, Amazon has capitalized on its ability to offer fast, hassle-free returns and a vast selection of private-label fashion brands such as Amazon Essentials and Goodthreads.
By mid-2022, Amazon had increased its share to 9.2%, while Walmart had fallen to 5.3%. To fight back, Walmart has partnered with well-known brands like Reebok, Sofia Jeans, and Free Assembly, making significant investments in its online fashion shopping experience.
The battle has also played out in home furnishings, where Amazon has overtaken Walmart since 2019.
By 2023, Amazon controlled 16.2% of the market, while Walmart trailed at 7.6%. This shift is largely due to Amazon’s vast third-party seller network and fast delivery services, which allow customers to browse and purchase home goods effortlessly. Walmart, in response, has pushed its MoDRN furniture brand and partnered with brands like Gap Home to make a stronger play in the home goods space.
Amazon’s recent revenue surpassing Walmart is a historic shift in retail, signaling the increasing dominance of e-commerce and digital services. However, Walmart remains a formidable force, with its stronghold in groceries, physical retail, and logistics giving it a strategic advantage. While Amazon leads in high-margin businesses like cloud computing and advertising, Walmart continues to excel in essential goods and everyday shopping.
As both companies invest in AI-driven logistics, omnichannel shopping, and expanding their presence in advertising and healthcare, the retail war will only intensify. Whether Amazon’s momentum continues or Walmart finds new ways to counter its e-commerce rival, one thing is certain: the battle for retail dominance is far from over.
