Amazon Continues to Own eCommerce as Walmart Finds Digital Footing

When it comes to the share of online retail spend, there’s only one champion. Per the retailers’ recent earnings, Amazon far outpaces Walmart in eCommerce sales. PYMNTS’ proprietary research, created by combining data gathered from Amazon and Walmart earnings reports and U.S. Census Bureau numbers, illustrates the significant gap between the world’s largest two retailers.

With Amazon accounting for an estimated 48% of U.S. retail spend compared to Walmart’s 7%, it is evident who takes the eCommerce crown. Quarter-over-quarter between Q1 2022 and Q1 2023, Amazon increased its share of eCommerce spend from 43.7% to 47.9%, representing growth of more than 4 percentage points. During the same period, Walmart rose from 5.7% to 6.7%. These two retailers alone have an increased combined share of more than 5 percentage points. With today’s eCommerce market worth more than $1 trillion per year, this growth, individually and especially together, represents a relatively pronounced quarter-over-quarter share of captured spend.

However, there are signs that Walmart is focusing on taking a chunk of Amazon’s share of digital sales. During its earnings call, Walmart management said the megaretailer posted 27% growth in its comparable eCommerce sales gains, representing $16.9 billion in sales in Q1 2023. Per the earnings call, double-digit store-fulfilled pickup and delivery growth primarily fueled this rise.

On the call, John Furner, Walmart’s United States president and CEO, said that marketplace seller expansion has helped spur eCommerce growth as Walmart now offers a greater “assortment delivered in one or two days. And we see a pretty significant increase in conversion rates when a seller is using fulfillment services and can deliver within two days.” As this length of time is considered by many to be the standard shipping time for Amazon Prime packages, Furner may have been alluding to their delivery speed being on par with Amazon’s.

Leaning into the fact that Walmart is consumers’ top choice for groceries, accounting for 19% of food shopping spend, the retailer is expanding its omnichannel, and presumably digital, sales numbers, starting with providing alcohol delivery through a partnership with Uber-owned Drizly. In May, Walmart grew this service to include Arizona, Georgia, Iowa, Louisiana and Ohio, expanding the megaretailer’s alcohol delivery service to nearly 2,500 stores across 23 states.

Given Walmart’s omnichannel approach towards establishing a digital presence, it is not easy to parse whether the retailer’s uptick in online sales is related to its grocery segment, as much of those sales are buy online, pick up in-store. This shopping feature could account for Walmart’s rise, especially as more people return to work at an office and, logically, could be picking up groceries on their way home.

Amazon has been taking a two-pronged approach to maintaining its market lead, by appealing to its customer base and offering tools and services to preserve its hefty stable of third-party sellers. In a news release, Amazon Vice President of Worldwide Selling Partner Services Dharmesh Mehta wrote, “Amazon invests billions of dollars annually to provide entrepreneurs with a constantly improving set of valuable tools and resources to help them gain access to capital, quickly launch in our store, build their brands, and rapidly scale and reach more customers.”

These investments by Amazon on behalf of its smaller sellers include assistance in brand building, with the latest promotional activity to draw in more businesses a part of a long line of similar efforts going back to Amazon’s launch of its third-party marketplace more than two decades ago.

One recent effort Amazon has made to assist sellers highlighted its smaller third-party sellers. To help these companies, Amazon set up storefronts creating individualized brand experiences through the Amazon platform, including advertisements and “insights” designed to help those businesses better understand customer traffic and sales.

Recent PYMNTS research finds that consumers expect to embrace eCommerce even further in the coming year. This increased eCommerce usage could push Amazon’s digital sales share further, even as the estimated double-digit increase in grocery sales could shift a large slice to Walmart.

Despite the expected rise in grocery sales in conjunction with its global sales plan, it may take much more effort before Walmart comes close to Amazon’s significant eCommerce market share. While no one is yet counting out Walmart’s ability to stake its digital retail claim, like the fable of the tortoise and hare, it may be quite a while before it catches up to Amazon.