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Seemingly every day, Amazon and Walmart are making moves to level up their offerings for consumers, and tools to power growth for brands and sellers.
In some ways, it’s difficult to imagine the recent advances that the two companies made taking place without the other. Walmart is building a third-party marketplace while growing a powerful data component, upgrading fulfillment centers to create its own logistics network and expand the benefits of its membership program. These are key elements that helped Amazon become the top US ecommerce company by share. For its part, Amazon is expanding into grocery with physical stores through Whole Foods and Amazon Fresh, while putting more emphasis on essentials and beauty products. These are areas where Walmart has the lead. Looking ahead, healthcare and drone delivery are major focus areas of recent building and invention at both companies.
The moves are fascinating to watch, and it’s equally compelling to consider what they say about where the companies – and commerce as a whole – might be heading next. But one way to look at it is through the lens of increasing competition between the world’s two largest retailers. So, it’s worth considering: When it comes to sales and share, how do they stack up? Recent reports from Jungle Scout and PYMNTS dig into the numbers, through surveys of consumers and analysis.
Here are a few takeaways:
Amazon continues to lead in ecommerce
Amazon started in ecommerce, and its lead in the space continues to be the source of its standing as a top retailer. When compared to Walmart, it has far greater ecommerce sales, site traffic and assortment on its marketplace thanks a larger number of third-party sellers. Consumers also opt for Amazon in several key online shopping areas, according to data from 1,000 consumers and financial reports surveyed by ecommerce seller platform Jungle Scout.
Amazon is visited more frequently. The report states 75% of US consumers purchased from Amazon recently, while 43% who have shopped on Walmart.com.
It is also the site where a larger share of ecommerce shopper journeys begin. The report states 63% of consumers begin their online product search on Amazon, while 43% begin on Walmart.com.
Consumers are also more likely to have an Amazon Prime membership, as 57% have Amazon’s membership, while 31% have a Walmart+ account.
Walmart wins on grocery
Walmart’s origins lie in its ubiquitous brick-and-mortar stores that deliver low prices, and that is where its strengths still flow.
Groceries are a key advantage for Walmart, as it continues to be the country’s largest food retailer. According to the Jungle Scout survey, 56% of consumers turn to Walmart for groceries, while 15% prefer Amazon.
Price is also a primary driver for Walmart. The survey states 43% of consumers say product prices are the main reason they shop at Walmart over Amazon. When it comes to ecommerce, consumers prefer Walmart.com for groceries, medicine and cleaning supplies.
At a time of inflation, this advantage extends as people seek savings.
Overall consumer spend: The view from Q2 2022
While both businesses have their strengths in different categories, it is worth considering how this adds up. One area to examine is share of consumer spend.
There is plenty of close competition on this front, according to a study from PYMNTS dubbed The Battle for Consumer Retail Spend: Amazon Versus Walmart Q2 2022.
Amazon accounted for 6.5% of consumer retail spending and 3.1% of total consumer spending in the second quarter of 2022, the survey found.
Walmart, for its part, outpaced Amazon in retail spending with 7.1%, but was slightly trailing Amazon in total consumer spending, at 3%.
This is an area where Amazon has cut into Walmart’s lead. Pre-pandemic, in the first quarter of 2019, Amazon had 4.4% of consumer retail spending. That rose as high as 8.1% by Q4 2020. Meanwhile, Walmart had 7.7% of consumer retail spending that quarter. It has dipped slightly, but maintains a lead. Amazon is likely aiming to cut into this total further.
Discretionary vs. essential
In that context, a strategy for approaching the competition for each starts to come into view: Further the advantages in the areas where they have the lead, then work to peel off some share in the areas where the other has strengths.
Amazon is dominant in discretionary spending, PYMNTS found, with 14% of the market share. Its site is a destination for people seeking to buy items like sporting goods, music, hobbies, clothing and apparel, furniture and home furnishings, and electronics and appliances. This has increased markedly since Q1 2019, when it had 8.7% of this market.
In some areas of this segment of spending, the companies are going in opposite directions. Amazon and Walmart both had less than a 6% share of the clothing and apparel market in Q1 2019, the report states. But as of Q2 2022, Amazon’s share increased to 9.2%, while Walmart was at 5.3% – below its 2019 level of 5.9%.
On groceries, Walmart is losing some share, PYMNTS found. Walmart held 16.3% of the food and beverage segment in Q1 2019, while the share fell to 15.6% in Q2 2022. However, this is not only a result of Amazon’s expansion. Kroger, Costco and Target are taking more share. A proposed merger between Kroger and Albertsons would create an even bigger player in the market. Still, Amazon’s expansion of Fresh stores this year shows that it is continuing to build aggressively.
Walmart also has a lead over Amazon in health and personal care, with Walmart’s 4.8% of the market compared to Amazon’s 3.6%.
Omnichannel: Where the battle will be won
Amazon has gained in key areas following the pandemic ecommerce boom. Yet Walmart is moving quickly to chart a future that may only be starting to reveal itself. In some ways, its pandemic-era ecommerce build is still taking place.
"We’re becoming more digital, even more relevant as an omnichannel retailer, and the related businesses like fulfillment and advertising continue to grow," CEO Doug McMillon said on the company's recent earnings call. "We’re building a different business and we’re making progress.”
Omnichannel is the key word there. While Amazon and Walmart come from different origin points, the constant stream of technology launches indicates that they are largely pushing toward the same thing. The goal is to create elevated experiences across ecommerce and in-store. Technology can enable both, and connect these modes to each other. That’s why innovation is such a big focus, and why the announcements from both companies will only continue.
“The retail environment is constantly changing due to economic currents and consumer whims. Amazon and Walmart are both leveraging online and offline technologies as a way for brands to create more dynamic solutions that satisfy their customers,” says Michael Scheschuk, president of small and medium business and chief marketing officer at Jungle Scout, in a statement. “Investments like Amazon’s Dash Cart in Amazon Fresh stores and Walmart’s Virtual Try-On in their iOS app will raise the bar for all retailers and improve consumer experiences.”
When leaders in an industry go head-to-head, the race to outdo the competition often has the byproduct of pushing innovation forward. Right now, that’s happening in retail. Let’s see how far they take it.
For more on the head-to-head comparison, check out Jungle Scout's graphic below:
(Courtesy of Jungle Scout)
Trending in Retail Channels
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.