[In-Depth Report] Understand the competitive landscape of Walmart and Amazon in one article

Produced | Author of Houlang Research Group | Daivd Pictures | Tu Chong Creative

1. Overview

The two retail industry giants analyzed in this article - Amazon and Walmart - both have complete distribution networks and countless fans in the online market.Although the two powerful rivals have many things in common in terms of business operations, they also have their own merits. For example, Amazon has unique streaming media technology to provide a diversified user service experience, while Wal-Mart has benefited from its long-term physical store business. Take root in the industry.

Amazon’s e-commerce experience far exceeds that of Walmart in the past 20 years. However, in recent years, Walmart’s e-commerce development has also caught up and achieved explosive performance growth, becoming one of Amazon’s few powerful competitors.

This market analysis report focuses on the development history of these two major retailers and how they reached their current size, and further explores where their future will go in the eyes of consumers.

1. Both sides are inseparable

• Amazon’s global sales are expected to exceed US$468 billion by the end of 2021, while Walmart’s global online revenue is expected to reach US$75 billion.

• Walmart's global e-commerce sales are likely to grow 89% this year, compared with 16% for Amazon.

2. Walmart’s physical stores win customers’ hearts

• Walmart shoppers value its reasonable prices and familiar brands, as well as the ability to quickly pick up items in its stores.

• At the same time, Amazon consumers are attracted by its Prime membership discounts and shipping costs.

3. Membership plans of both parties

Amazon Prime and Walmart Plus offer similar consumer benefits, including fast, efficient and free shipping and merchandise deals, and both models have their own unique competitive advantages:

• Plus membership offers gas savings and convenient in-store checkout, so Walmart may continue to attract consumers who prefer in-store shopping.

• Prime membership includes media streaming services. Amazon continues to prioritize a range of electronic goods such as smart home devices, so it may be the first to attract consumers who love online shopping and electronic products.

2. Revenue and development of Amazon and Walmart

In this chapter, we examine how Amazon and Walmart operate.What key events over time have contributed to their success today, and how third-party Amazon sellers view Walmart’s future market opportunity.

1. Data analysis

Current data shows that Walmart’s global e-commerce revenue is expected to grow by 89% in 2021, far exceeding Amazon’s 16% increase.

As shown in the figure, in the global market in 2021, the number of third-party sellers on Amazon is 6.3 million and Walmart is 114,700; the potential business opportunities of third-party sellers on Amazon are 1:48 (that is, 1 merchant may have the opportunity to face 48 consumers and concluded a transaction), while Wal-Mart’s business opportunity ratio reached an astonishing 1:1918.Amazon's global average monthly visitors are 2.65 billion, while Wal-Mart's is 457 million; Amazon's average weekly number of customers is 30 million, while Wal-Mart's is 22 million.

In the U.S. market, Amazon’s e-commerce market share is 40.4%, while Walmart only accounts for 7.1%; in 2021, the number of Amazon Prime membership subscribers reached 112 million, while the number of Walmart Plus membership subscribers was 8.2 million.

2. A brief history of competition

Wal-Mart was founded by Sam Walton in 1962;

In 1994, Jeff Bezos founded Amazon Online Bookstore;

In 1995, Wal-Mart had 1,995 retail stores in 50 states;

In 1998, Amazon began to expand categories other than books;

In 1999, Amazon’s third-party seller program was launched;

In 2005, Amazon launched Prime membership, offering free 2-day shipping within the United States;

In 2006, the Amazon FBA project was launched;

In 2007, Wal-Mart's 'order online and pick up at offline stores' service was launched;

In 2009, Walmart introduced third-party sellers;

2015, Amazon’s first Prime Day;

In 2016, Walmart began to acquire some e-commerce brands and platforms and provide their mobile online payment services;

In 2017, Walmart launched a free 2-day shipping service;

In 2020, Walmart launched Plus membership and logistics services, opened it up to more third-party sellers, and launched its first Black Friday promotion day;

In March 2021, Walmart opened its doors to third-party sellers outside the United States.

3. Amazon third-party sellers believe that entering Walmart can achieve greater sales coverage.

Currently, only 7% of Amazon’s third-party sellers are also Walmart sellers, and 39% of Amazon sellers are considering selling in the Walmart market in 2021.Among these sellers interested in Walmart:

• 95% of sellers sell on the Amazon marketplace in the United States, and 59% are in at least one other North American marketplace in the United States;

• 27% of stores currently have total sales of more than US$1 million, and 78% of stores have average monthly sales of more than US$1,000;

• 87% of merchants consider themselves intermediate or expert Amazon sellers;

• 54% of merchants have more than 10 active Amazon product listings.

4. How do Amazon sellers view Walmart?

• 33% of Amazon third-party sellers believe Walmart will compete fiercely with Amazon in 2021 and beyond;

• 22% of Amazon sellers are worried about being impacted by Walmart in the future.

3. What are the types of consumers on the two e-commerce platforms?

By studying the preferences and behaviors of consumers who shop on Amazon or Walmart, we can understand how Amazon and Walmart’s consumer base will diverge in the future.

What is the difference between Amazon and Walmart in the eyes of American consumers?What factors attract consumers to these two platforms?What are the differences between the two consumer groups?The answer will be given step by step below.

1. Why do consumers choose these two e-commerce platforms?

In 2021, 65% of American consumers choose Amazon for shopping, and 37% of American consumers choose Walmart. Although there is considerable overlap between the two, and the sales volume is also considerable, the factors that attract consumers are also different. All are different.The chart below shows the reasons consumers make choices:

The figure below shows the hot-selling category data of the two platforms in the past three months:

How frequently do Amazon and Walmart fans shop?

• 54% of Amazon’s loyal shoppers shop on the platform every week;

• 57% of Walmart fan shoppers shop on the platform every week.

Which platform’s consumers care more about price and shipping speed?

• 76% of Amazon consumers and 67% of Walmart consumers said they are price-sensitive consumers of online products;

• 76% and 56% of consumers on Amazon and Walmart respectively are more focused on finding merchants with low shipping costs when shopping online;

• Only Amazon customers appear more picky about delivery speed.

Are there other factors that differentiate the hardcore consumers of the two platforms?

• 73% of Walmart consumers have an annual household income of less than $500,000, compared with 54% of Amazon consumers;

• 44% of Walmart shoppers are parents of children under 18, compared to 39% of Amazon shoppers;

• 41% of Walmart consumers are between the ages of 18-34, and 32% of Amazon exclusive consumers.

4. Future e-commerce market development forecasts of both parties

Amazon's different pricing strategies for the daily grocery market will attract a large number of consumers in the future. Related business lines are Whole Foods Market and Amazon Fresh.

Walmart’s sales history and widespread popularity will collide fiercely with Amazon’s rich product categories and extensive FBA logistics and warehousing system.

1. Consumers’ online shopping expenditure in 2021

In 2021, 65% of consumers shop on Amazon and 37% of consumers shop on Walmart.If consumers are divided into two categories:

• 35% of consumers shop on Amazon;

• 9% of consumers shop at Walmart.

Interestingly, 57% of Amazon-exclusive online shoppers said they also shop at Walmart physical stores.

2. Growth in the number of members

Both Amazon and Walmart offer membership programs to consumers, promising convenience and discounts on products and shipping.The main differences between Amazon Prime and Walmart Plus include price, Amazon's streaming service, and Walmart's brick-and-mortar revenue.

• 45% of consumers have shopped on Amazon Prime Day in the past

• 33% of consumers have shopped at Walmart's 'Daily Deals' event in the past

• In December 2020, online holiday sales surged 124% year-on-year after Walmart’s Black Friday promotion

3. How do both parties maintain consumer retention during the epidemic?

Amazon is increasing its air cargo fleet from 50 to 70 aircraft to make up for shipping delays caused by COVID-19.In August 2021, Amazon opened its cargo centers at Cincinnati and Northern Kentucky International Airport,

It plans to invest $2.5 billion to build a second headquarters in Arlington, Virginia, which is expected to create 25,000 jobs by 2031.

Amazon has also built a broader digital ecosystem, some of which include its partnership with Twitch to develop games, media partnerships with Amazon Music and Amazon Studios, and even increasing its focus on the health care field.At the same time, it further expanded the advertising coverage of its virtual AI assistant Alexa device.

Walmart has added local micro-fulfillment centers in its stores and expanded its curbside pickup service to non-grocery items through its app.

As of September 2021, Walmart has partnered with Meredith to provide shoppers with Al meal planning tools that match shoppable ingredients with Walmart’s own products, while also working with Walmart partners to enhance advertising efforts.

4. Amazon will expand its presence in physical stores and grocery markets

• Amazon has a total of 599 retail stores in the United States: 503 Whole Foods supermarkets, 32 4-star stores, 24 Amazon bookstores, 22 cashierless stores, and 18 Amazon Fresh stores.

• Walmart has a total of 5,339 retail stores in the United States: 3,560 supercenters, 683 Neighborhood Supermarkets, 599 Sam's Club stores, 372 discount stores, 107 small stores (including Amigo and campus supermarkets), and 8 convenience stores .

5. Future shopping in physical stores

Nearly two-thirds (62%) of consumers believe that most consumers will do their shopping online in the future.For most consumer product categories, consumers are more likely to buy on Amazon than at Walmart or other online stores.However, in-store shopping at Walmart remains popular, especially in the daily essentials category.Walmart's physical store sales increased 61% in the third quarter (compared to 54% in the first quarter).

Capitalizing on the continued popularity of in-store shopping, especially groceries, Amazon is expanding its brick-and-mortar footprint while gradually rolling out a slew of new products and plans to build out grocery and department stores.