In the Big Battle Between Amazon and Walmart, Here’s Who Wins the Most

As I think about the big recent news out of Amazon and Walmart the last few weeks, I’m reminded of the idea that the grass always seems greener on the other side. 

1. Amazon is by far the leader in online sales, accounting for about 38.7 percent of U.S. e-commerce. But among its its clear current consumer-related goals? A big opportunistic increase in its physical footprint.
2. Walmart has the opposite situation. It’s the original bricks and mortar retail juggernaut, so ubiquitous that 90 percent of Americans live within 10 miles of a Walmart. Its big initiative? A massive sprint to make up ground against Amazon and emerge as the “other” ecommerce giant.

The key reason behind it all is obvious: technology and consumer behavior have evolved, accelerated by a global pandemic.

On the surface, this doesn’t really seem like a fair fight, since Amazon as a company is worth so much more than Walmart: over $1.5 trillion as of Friday for Amazon, versus $375 billion for Walmart.

But if you were to strip out Amazon Web Services, the gap would be much less pronounced.

In fact, if I were in the prediction game, I’d be willing to bet that a few years from now, it will all be just one big, giant lawn, as green on one side as the other — meaning Amazon and Walmart will be almost indistinguishable from one another, at least as far as their retail business models are concerned.

That convergence will likely produce a few winners and losers — including some that I don’t think people are really thinking of yet.

So, the situation: Customers want both the convenience of online shopping and an immediacy of delivery that would have been far-fetched for e-commerce not long ago.

Hence, Amazon is reportedly rushing to take over as anchor tenants and build distribution centers in suddenly vacant shopping malls, and Walmart is preparing (but again delaying) Walmart+, which is its plan to compete directly against Amazon Prime.

If we play things out, and assume that over time, (a) Amazon remains the ecommerce leader but catches up to some degree in terms of physical footprint, while (b) Walmart maintains much of its physical lead but continues its e-commerce rush and makes up some ground against Amazon, I see three beneficiaries.

The first is the “little guy,” at least in the short term.

This includes both typical consumers and smaller business owners, assuming that both big brands will rush to sweeten the deals they offer to get more subscribers, customers and vendors — at least until everything shakes out.

The other two beneficiaries are Amazon and Walmart themselves. 

For Walmart, it’s direct: a matter of growing larger, getting more sales, and cementing a place as the medium-term second brand when it comes to broad e-commerce.

For Amazon, there’s an added benefit. In short, any dominant company has to keep a weather eye out for a challenge much bigger than any individual competitor: government antitrust investigations.

Hence, Jeff Bezos’s testimony before Congress last month, in which he argued that not only is Amazon competing with Walmart, but also with e-commerce companies like Shopify and Instacart, as well.

So if Walmart, which at least pre-pandemic accounted for just a single digit percentage of ecommerce, can increase that share of a growing pie, it ironically could benefit Amazon, too.

The more the merrier, so to speak.

Those with the most to lose: other, smaller retailers trying to compete with the two big juggernauts.

So, if you’re running a smaller business, and depending on distributors like Amazon and Walmart, your strategy has to be to play these two big players off against each other, and take advantage of opportunities that arise as a result of their opposite goals.

It’s easier said than done, I know, but diversification of your business between the two is likely to be your friend–at least until the grass starts to seem greener somewhere else, once again.