27 October 2022
Amazon vs. Walmart, by the numbers
The largest retailers have different origins, but they are converging on the same battleground.
The largest retailers have different origins, but they are converging on the same battleground.
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 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’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.
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.
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%.
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)
Nestlé's annual report outlines steps for ecommerce to reach 25% of sales by 2025.
In 2022, 15.8% of Nestlé's sales came through ecommerce. By 2025, the world's largest food company wants to increase that share to 25%.
While the annual results tell a story, the company's recently-released annual report makes clear that it is the activities taking place across teams and technology that will ultimately push it toward that goal. In 2022, the Gerber and Purina owner prioritized building skills on its teams, focusing on digital shelf execution and advancing analytics.
The report illustrates a balance that the company is striking on the path to its 2025 goal: It is aiming to drive growth of sales across digital channels, while at the same time increasing efficiency in the operations that drive them.
Here are takeaways on this progress in ecommerce from Nestlé’s recently-released 2022 annual report:
Nestlé is working to build digital skills across the organization. To advance this effort, the Gerber and Purina owner created a global community of 3,000 employees who connect to share best practices, and even challenges. Webinars and trainings have reached 11,000 people across the company.
Nestlé’s vision for the digital shelf is called “Perfect Shelf Execution.” It measures by market and retailer, and down to the SKU level. With a standardized approach in place, Nestlé said it is able to improve the text, content, ratings and reviews that are major ingredients of success on ecommerce platforms.
Nestlé is working to advance retail media, which is a fast-growing form of advertising that places advertising on ecommerce marketplaces, close to the point of purchase. With retail partners, Nestlé is focusing on both how teams work, and driving return on investment.
As channels expand, Nestlé is also creating ways to do “more with less,” the report states. With Amazon, the company created a center of scale, in which the team outsources and automates routine tasks so that teams can focus on tasks that provide the most value.
The ability to use data to gain deeper insight into operations and make changes quickly is of growing importance to businesses. In 2022, expanding this capability was especially important to Nestlé as it navigated “an extremely volatile retail environment and rising costs of raw materials,” the report states.
Nestlé’s analytics activities include a strategic revenue management program, which now covers 95% of its markets. It is also tapping AI and end-to-end analytics on collaboration with customers, product assortment and promotions.
In marketing, the company is investing in proprietary solutions that are being deployed to increase effectiveness of marketing investment.
Nestlé also recently launched a data science hub in Bangalore to track return on investment and predict scenarios for particular channel strategies.
Nestlé said 55% of its media spend is directed to digital platforms. With this, the company has worked to build a more efficient model for creating and optimizing content that is tailored to each platform.
As a result of work to build out this model in 2022, Nestlé now has 37 content studios operating, and has reduced creation costs by 50%.
The company is also using AI to track and adjust the relevance of more than 500,000 digital assets across digital platforms. This produced a 66% improvement in return on ad spend on Meta-owned Facebook and Instagram.
The report highlighted one example of how Nestlé is reaching consumers with content that can be put to use as people prepare products from the company. Online recipe platforms are reaching more than 100 million consumers annually in Latin America.
Receitas Nestle features 20,000 recipes, tutorials and a feature that allows consumers to ask chefs questions. Working with retailers, Nestlé is also driving customers toward shoppable recipes that allow consumers to order ingredients that arrive at their home.
In Brazil, the platform helped to drive a 30% frequency increase in consumption of Nestlé products.
It's an example of how digital commerce can take familiar forms of content, create a more interactive experience, ease the path to a sale. When they enjoy this process, consumers are more likely to seek out recipes again and again.