Walmart (WMT) has come a long way since its inception as a local discount chain in Rogers, Arkansas in 1962.
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Since then, Walmart has grown to be one of the world's largest corporations. This year, it was named the top company in the National Retail Federation's 2024 Top 50 Global Retailers list.
Sitting number 2 on that list is Walmart's closest competitor for the retail crown, Amazon (AMZN) .
The Amazon/Walmart rivalry has burgeoned over the years as Amazon has diligently spent to take Walmart's retail crown.
However, the two companies — both components of the Dow Jones Industrial Average — have always had one fundamental difference:
Walmart's retail revenue came almost exclusively from its brick-and-mortar infrastructure, while Amazon's came almost exclusively from its e-commerce business.
But as what was once a cold war between the two behemoths turned hot, each party started encroaching on the other's turf.
Walmart makes progress in e-commerce after Amazon declares war
Amazon made the greatest encroachment into its rival's territory when it announced the purchase of high-end grocer Whole Foods for nearly $14 billion in 2017.
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Since then, Walmart has responded by investing tens of billions of dollars to beef up its e-commerce business. The company has maintained a 20% market share in U.S. grocery spending, nearly 10x more than Amazon's 2.8% share, according to Insider Intelligence and eMarketer Forecast.
Meanwhile, Walmart's e-commerce grocery sales reached nearly $50 billion in 2023 compared to more than $36 billion for Amazon.
Amazon and Walmart sell much more than just groceries, however, Overall, Amazon's e-commerce business easily dwarfs Walmart's.
But Walmart is still seeing strong growth in its e-commerce segment, while Amazon is showing signs that its vision of a complementary brick-and-mortar future may not come to fruition.
Walmart's e-commerce push is bearing fruit
In August, during his company's earnings call, Walmart CEO Doug McMillon made sure to give a special shoutout to e-commerce, saying that the division "is compounding as we layer on pickup and even faster growth in delivery as our speed improves."
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This is a microcosm of Walmart's inherent advantage over Amazon in e-commerce; it can combine curb-side pickup with home delivery, maximizing consumers' options for obtaining their wares.
About 90% of Americans live within 10 miles of a Walmart store, according to World Trade Scanner.
This advantage has led to an e-commerce business that grew 22% year over year in the U.S. in the second quarter, led by store-fulfilled pickup and delivery. In fact, curbside pickup is growing faster than Walmart's in-store or club sales growth, but delivery is outpacing them all.
While Walmart's global e-commerce business is still not profitable in spite of, or maybe because of, all the money the company is investing in the service, the company recognizes the benefits of being strong in the segment, and McMillion expects the e-commerce business to eventually turn a profit.
"But if you go back over the last several quarters and you tend to parse out the various buckets of your business... and look at the contribution of each of those to our profit, the single biggest contributor to our profit improvement year-over-year was just core e-commerce business," said Walmart CFO John David Rainey.
Amazon's brick-and-mortar business has a long way to go
Amazon has tried numerous initiatives to jumpstart its retail physical presence.
Since buying Whole Foods, the company has added 70 new stores across the US, UK, and Canada and plans to open 75 more. In addition to Whole Foods and the grocery selection on Amazon.com, Amazon also operates Amazon Fresh grocery stores and Amazon Go convenience stores.
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The company's physical store businesses, including Fresh, Go, and Whole Foods, brought in $5 billion in revenue in the previous quarter.
“The grocery effort, in our minds, is subpar,” Scott Mushkin, founder and CEO of research firm R5 Capital, told the Seattle Times. “There’s nothing new — this is kind of the bottom line — there’s nothing new that they’re putting forward in the grocery space."
Of course, Amazon's grocery business will be just fine. When combined with its online delivery service, it brought in $54 billion last quarter.
The two companies battle in a different way: how investors value them.
Amazon, which closed Friday at $188.82, up 1.2% on the day and has a market capitalization of nearly $2 trillion. It's up 24.3% on the year.
Walmart closed Friday at $80.10, up 0.6%. Its market cap is $643.9 billion. But Walmart's shares are having a better year, up 52.5%.
But looking at stock performance since the beginning of 2000, Amazon is up 4,861%. Walmart is up just 246%.
Despite the stock-price performance differential, any thoughts that Amazon would be a major threat to Walmart's physical presence have been mostly put to bed. Meanwhile, Walmart continues to make forays into a realm over which Amazon has had exclusive control for a long time.
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