A recent analysis by Bernstein explores the ongoing competition between Walmart (NYSE: WMT) and Amazon (NASDAQ: AMZN) in the e-commerce sector. The report compares both giants across key metrics such as growth, profitability, category exposure, and valuation, emphasizing how Walmart’s e-commerce strategy could narrow the gap with Amazon’s leading position.

Walmart’s E-Commerce Growth Momentum

Walmart’s U.S. e-commerce business has seen remarkable growth, expanding at better than 20% annually. This upward trend is projected to persist with a strong compound annual growth rate (CAGR) through FY30, driven by Walmart’s strategic online investments.

• E-Commerce Penetration: Analysts predict Walmart’s e-commerce penetration will grow from 17% in FY25 to 25% by FY30, indicating a 12% CAGR for e-commerce sales.

• 3P Marketplace: A key factor to Walmart’s e-commerce growth is its expanding third-party (3P) marketplace, currently responsible for 20% of Walmart’s Gross Merchandise Volume (GMV). This figure is expected to grow to one-third of total GMV by FY30, with the 3P business projected to expand at an impressive 26% CAGR, outpacing Walmart’s first-party (1P) e-commerce growth.

Walmart’s Strength in Grocery

Despite the impressive e-commerce growth, Walmart holds a significant edge in grocery leadership, which comprises 60% of its e-commerce GMV. This provides Walmart with a unique advantage compared to Amazon, where grocery sales account for just 5% of GMV. While Amazon’s GMV stems largely from general merchandise (73%), Walmart’s portfolio is more diversified, with grocery as the main driver.

This advantage positions Walmart well, particularly as online grocery shopping becomes an increasingly significant segment with consumers seeking convenience in ordering groceries for home delivery.

Amazon’s Dominance in E-Commerce

Despite Walmart’s acceleration, Amazon remains the preeminent player in the U.S. e-commerce landscape. Bernstein estimates that Amazon commands a 41% share of the market as of 2024. Amazon’s success is attributed to its advanced fulfillment network, enabling fast and reliable delivery options.

• Expansion of Same-Day Delivery: Last year, Amazon enhanced its same-day delivery network by over 60%, facilitating access to over 140 metro areas. This expansion benefits key categories, including essential items and personal care products, further solidifying Amazon’s market leadership.

Will Walmart Close the Gap?

Future prospects for Walmart in e-commerce appear promising, especially as the company continues leveraging its grocery strengths while expanding its marketplace. However, Amazon’s notable lead and robust fulfillment infrastructure pose a significant challenge for Walmart in the near term.

Investors can utilize the Market Most Active API to track the performance of both Walmart and Amazon, along with broader market trends, to assess their standings in the changing e-commerce environment.

Conclusion

Walmart’s aggressive push in e-commerce, supported by its growing third-party marketplace and strong grocery segment, presents substantial potential. However, it must confront a formidable competitor in Amazon, whose logistics capabilities and wide product selection remain outstanding. The ability of Walmart to narrow the gap in e-commerce will depend on leveraging its strengths and adapting to the ever-changing retail terrain.