A recent analysis by Bernstein delves into the ongoing battle between Walmart (NYSE: WMT) and Amazon (NASDAQ: AMZN) in the e-commerce space. The brokerage compares both giants across key areas such as growth, profitability, category exposure, and valuation, with a focus on how Walmart’s e-commerce strategy could close the gap with Amazon’s dominant position.
Walmart’s E-Commerce Growth Momentum
Walmart’s U.S. e-commerce business has been experiencing impressive growth, expanding at a rate of over 20% annually. This growth is expected to continue with a double-digit compound annual growth rate (CAGR) through FY30, driven by Walmart’s strategic investments in its online presence.
E-Commerce Penetration: Bernstein estimates that Walmart’s e-commerce penetration will rise from 17% in FY25 to 25% by FY30, signaling an 12% CAGR for its e-commerce sales.
3P Marketplace: One of the key drivers behind Walmart’s e-commerce growth is its expanding third-party (3P) marketplace. Currently, 20% of Walmart’s Gross Merchandise Volume (GMV) comes from its 3P marketplace. This figure is expected to grow to one-third of total GMV by FY30, with the 3P business projected to grow at an impressive 26% CAGR—outpacing the growth of Walmart’s first-party (1P) e-commerce.
Walmart’s Strength in Grocery
Despite the impressive e-commerce growth, Walmart’s real competitive advantage lies in its grocery leadership, which accounts for 60% of its e-commerce GMV. This positions Walmart uniquely compared to Amazon, where grocery sales only account for 5% of GMV. While Amazon’s GMV is dominated by general merchandise (73%), Walmart’s focus is more diversified, with grocery as the primary driver.
This gives Walmart an edge, especially as grocery shopping continues to be a significant and growing segment in the e-commerce space, with consumers preferring the convenience of ordering online and having their grocery essentials delivered.
Amazon’s Dominance in E-Commerce
Despite Walmart’s growing momentum, Amazon remains the dominant player in the U.S. e-commerce market. Bernstein estimates Amazon holds a 41% share of the market in 2024. Amazon’s success is largely attributed to its best-in-class fulfillment network, which allows the company to offer fast and reliable delivery options.
Expansion of Same-Day Delivery: Amazon has expanded its same-day delivery network by more than 60% last year, reaching over 140 metro areas. This expansion supports growth in key categories such as everyday essentials and health and personal care, further solidifying Amazon’s leadership position.
Will Walmart Close the Gap?
Walmart’s future in e-commerce looks promising, particularly as it continues to leverage its strength in the grocery sector while expanding its marketplace. However, Amazon’s substantial lead, coupled with its robust fulfillment infrastructure, presents a significant challenge for Walmart in the coming years.
To monitor the ongoing performance of both Walmart and Amazon, along with broader market trends, investors can use the Market Most Active API to track the stocks of both companies and assess their position in the evolving e-commerce landscape.
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Conclusion
Walmart’s aggressive growth in e-commerce, fueled by its expanding third-party marketplace and strong position in the grocery segment, shows great potential. However, it faces a formidable competitor in Amazon, whose logistics capabilities and vast product range remain unmatched. Whether Walmart can close the gap with Amazon in the e-commerce race will depend on how it capitalizes on its strengths and adapts to the ever-evolving retail landscape.
