Introduction
In the world of retail, there are two giants that tower above the rest: Amazon and Walmart. These companies are not just the two largest retailers in the United States, but also the world. Their competition has intensified in recent years as they‘ve increasingly encroached on each other‘s traditional strengths – Amazon making bold moves into brick-and-mortar retail and Walmart investing heavily in e-commerce.
This fierce rivalry has led some to speculate: could Amazon actually own Walmart? The idea might not be as far-fetched as it seems at first blush. Amazon has made some massive acquisitions in recent years, like its $13.7 billion purchase of Whole Foods in 2017. And with Amazon‘s market capitalization hovering around $1.5 trillion, it certainly has the financial firepower to make huge deals.
However, the short answer is no, Amazon does not own Walmart. While they are increasingly competing across both physical and digital retail, Amazon and Walmart remain separate companies. In this article, we‘ll take a deep dive into the complex and evolving rivalry between these two retail behemoths. We‘ll examine their different origins, business models, and growth strategies, and analyze how their competition is shaping the future of retail.
Tale of the Tape: Amazon vs. Walmart by the Numbers
Let‘s start by looking at some key statistics that highlight just how massive both Amazon and Walmart are in the world of retail:
| Metric | Amazon | Walmart |
|---|---|---|
| 2022 U.S. Retail Sales | $386 billion | $433 billion |
| 2022 U.S. E-commerce Sales | $361 billion | $57 billion |
| Number of U.S. Employees | 1.1 million | 1.6 million |
| Market Capitalization (April 2023) | $1.05 trillion | $408 billion |
As these numbers show, Walmart is still the larger company overall in terms of U.S. retail sales and number of employees. However, Amazon is growing much faster, with its U.S. sales jumping 26% in 2022 compared to 7% growth for Walmart. And in e-commerce, Amazon is in a league of its own, with U.S. online sales more than 6 times larger than Walmart‘s.
"Amazon has been growing at a blistering pace for over two decades now, and it‘s showing no signs of slowing down," said retail analyst Mike Kaput. "It‘s easy to imagine a scenario where Amazon surpasses Walmart in total U.S. retail sales within the next few years."
Brick-and-Mortar vs. E-Commerce: The Different Roots of Walmart and Amazon
To understand the rivalry between Amazon and Walmart, it‘s important to examine their very different origin stories. Walmart traces its roots all the way back to 1945, when Sam Walton opened his first discount store in Rogers, Arkansas. Walton‘s strategy was based on rolling out stores in rural areas that were underserved by other retailers and keeping prices low through a relentless focus on cost control and operational efficiency.
This strategy proved enormously effective, and Walmart grew rapidly through the latter half of the 20th century. Sales hit $1 billion in 1980, $100 billion in 1997, and $500 billion in 2018. Today, Walmart operates over 10,500 stores worldwide and is the largest private employer in the world.
Amazon, meanwhile, was born at the dawn of the internet era. Founder Jeff Bezos started the company in 1995 as an online bookseller, but had a vision to make it the "everything store." Bezos recognized that the internet would revolutionize retail by enabling nearly infinite selection, price transparency, and personalized recommendations.
Amazon‘s growth in its early years was explosive. Sales reached $1 billion in 1999, just four years after the company was founded. Amazon expanded rapidly into new categories like music, movies, and electronics, and launched its revolutionary Prime membership program in 2005. Today, Amazon controls around 40% of the U.S. e-commerce market.
"Walmart built a retail empire through its dominance of physical stores, while Amazon did the same thing in the digital realm," said Barbara Kahn, Professor of Marketing at The Wharton School. "But in recent years, the lines have increasingly blurred as each company has moved onto the other‘s turf."
Expanding Capabilities: How Walmart and Amazon Are Evolving Through Acquisition
Indeed, as Walmart and Amazon have sought to expand their capabilities and challenge each other in new arenas, they‘ve both used acquisition as a key tool. Here are some of the most important deals each company has made in recent years:
Key Amazon Acquisitions
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Zappos (2009): Amazon acquired the online shoe retailer for $1.2 billion, its largest acquisition ever at the time. The deal expanded Amazon‘s footprint in apparel and accessories.
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Kiva Systems (2012): Amazon paid $775 million for the robotics company, gaining technology to automate fulfillment center operations. Amazon has since deployed over 200,000 robots in its warehouses.
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Whole Foods Market (2017): Amazon shocked the grocery industry by buying Whole Foods for $13.7 billion. The acquisition gave Amazon a major brick-and-mortar grocery presence and valuable data on customer purchasing habits.
Key Walmart Acquisitions
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Jet.com (2016): Walmart paid $3.3 billion for the fast-growing e-commerce startup and its dynamic pricing technology. The acquisition was a key part of Walmart‘s strategy to challenge Amazon online.
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Bonobos (2017): Walmart continued its e-commerce buying spree with the $310 million purchase of the online men‘s fashion brand Bonobos.
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Flipkart (2018): Walmart made its biggest acquisition ever, spending $16 billion for a 77% stake in Flipkart, India‘s leading e-commerce company. The deal gave Walmart a strong foothold in India‘s huge and fast-growing online retail market.
As these deals illustrate, both Walmart and Amazon have aggressively used M&A to acquire new capabilities, expand into new markets, and compete with each other more effectively. And the Whole Foods acquisition, in particular, showed that Amazon is determined to become a major player in physical retail.
The Omnichannel Imperative: Walmart‘s E-Commerce Push
Of course, Walmart hasn‘t just been sitting still as Amazon has moved into physical retail. The Arkansas-based giant has also been investing heavily to build its e-commerce capabilities and integrate its online and offline operations into a true omnichannel experience.
Walmart‘s U.S. e-commerce sales grew 54% in 2020 and another 12% in 2021, reaching $64 billion. And the company has launched a number of innovative online services in recent years, like free two-day shipping on orders over $35, an Amazon Prime-style loyalty program called Walmart+, and same-day delivery through its Spark Driver network.
"Our omnichannel focus will allow customers to shop and interact with us in whatever way they choose, while delivering a fast, convenient, and seamless experience across stores and online," Walmart CEO Doug McMillon said in a memo to employees in 2020.
Walmart has also been leveraging its unparalleled network of physical stores in its battle with Amazon. The company now has over 4,700 locations that offer free grocery pickup, allowing customers to order groceries online and pick them up at their local Walmart store without leaving their car. Walmart is also using its stores as e-commerce fulfillment centers, shipping online orders from locations close to customers to enable faster delivery.
"Walmart‘s big competitive advantage is being able to offer services that combine the digital and physical, like buy-online-pickup-in-store," said Carol Spieckerman, President of Spieckerman Retail. "That‘s much harder for Amazon to match."
Innovating in Physical Retail: Amazon‘s Latest Moves In Stores
For its part, Amazon has made plenty of waves in physical retail since its landscape-altering acquisition of Whole Foods. The company has been steadily expanding its brick-and-mortar grocery footprint, opening Amazon Fresh stores that offer high-tech features like smart grocery carts and cashierless checkout.
Amazon has also been rolling out other innovative store concepts:
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Amazon Go: These cashierless convenience stores use computer vision and AI to let shoppers grab items and leave without going through a traditional checkout process. There are now over 40 Amazon Go stores across the U.S. and U.K.
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Amazon Style: Launched in 2022, Amazon Style is the company‘s high-tech clothing store. It features algorithmic recommendations, QR codes for product info, and touchscreens in fitting rooms that let shoppers request different sizes or styles.
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Amazon 4-Star: These stores only carry products rated 4 stars or above by Amazon.com customers, along with new and trending items. The assortment is curated using customer ratings, sales data, and Amazon‘s own retail expertise.
"Amazon‘s approach to physical retail is about using cutting-edge technology to create new and better customer experiences," said Mark Ryski, Founder & CEO of HeadCount Corporation, a retail analytics company. "Just as they did with e-commerce, Amazon is trying to reinvent what‘s possible in physical stores."
Culture Clash: The Different Philosophies of Amazon and Walmart
Beyond just the tactics of competing across channels, Amazon and Walmart are operating with quite different philosophies and corporate cultures.
Amazon has always been a technology company first, with a culture that prizes innovation, risk-taking, and long-term thinking. Founder Jeff Bezos famously said "it‘s always Day 1 at Amazon," reflecting his view that the company should never stop innovating and pioneering new businesses. That‘s led Amazon into areas that have little to do with retail, like cloud computing, entertainment, and drugstores.
Walmart‘s culture, by contrast, has historically been more focused on operational excellence and efficiency. Sam Walton built a retail empire through an obsessive focus on reducing costs and passing those savings onto customers. He was famous for his thrifty ways, like having executives share hotel rooms on business trips. While Walmart has become more innovative in recent years, it‘s still a brick-and-mortar retailer at its core.
"Amazon wants to be the most innovative company in the world, while Walmart wants to be the most efficient at serving customers," said retail futurist Doug Stephens. "Those are very different operating philosophies that manifest in different strategic choices."
One clear example: Amazon has been investing heavily in building its own delivery infrastructure, with cargo jets, delivery vans, and even sidewalk robots. Walmart has taken a more asset-light partnership approach, teaming up with third-party delivery services like DoorDash and Postmates rather than bringing delivery fully in-house.
Conclusion: The Future of Retail Is the Collision of Digital and Physical
As Amazon and Walmart‘s rivalry plays out, it‘s becoming clear that the future of retail will be decided at the intersection of e-commerce and brick-and-mortar stores. Both companies are making big bets in each other‘s domains, as the lines between physical and digital shopping experiences continue to blur.
While Amazon has the early lead in e-commerce and is increasingly moving into physical retail, Walmart remains a formidable competitor with massive scale and valuable real estate in its thousands of stores. The two companies are likely to keep battling for years to come across a wide spectrum of retail categories and customer experiences.
While it‘s fun to speculate about an Amazon acquisition of Walmart, the reality is the two companies are simply too large to combine. Amazon buying Walmart would be astronomically expensive and likely face significant antitrust challenges.
Instead, Amazon and Walmart will continue their battle for retail supremacy as separate companies. The ultimate winner may have less to do with which one grows larger, but with which most successfully creates a seamless omnichannel experience. Because in the future of retail, there won‘t be distinct "brick-and-mortar" and "e-commerce" channels – there will just be commerce, in all the ways and places that customers want to shop. And no two companies are better positioned to deliver that future than Amazon and Walmart.
