Report: Amazon will surpass Walmart as America’s biggest retailer by 2025

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Photo: Amazon
Apr 28, 2021

Amazon Inc., including its online marketplace of third-party sellers, will overtake Walmart to be the largest retailer in the U.S. by 2025, according to a new report.

The swap in positions will be driven by consumers shifting a greater percentage of their overall purchases to online sellers, according to the “United States Retail Landscape and Market Planning Report 2021” from Edge by Ascential. Overall sales are forecast to climb from $710.7 billion in 2020 to $1.204 trillion by 2025. 

The report sees Walmart’s total sales growing 3.9 percent annually by 2025 driven largely by annual gains of 14.9 percent. The forecast sees online making up 16.7 percent of Walmart’s total by 2025.

Amazon’s growth will largely be driven by third-party sellers, which currently make up just over half its sales. The report predicts that the retail giant’s marketplace will account for 66 percent of its total sales over the next four years.

When the dust settles, Amazon’s annual sales in the U.S. will stand at $632 billion and Walmart will be well behind at $523 billion, excluding gas.

Deren Baker, CEO of Ascential Edge, paints Amazon as an inexorable force.

“As Amazon grows to become the largest retailer in the U.S., brands must understand they cannot win through mass personalization when faced with the huge spending power of large marketplaces like this,” he said in a statement. “They should therefore ensure they have the correct strategies in place to use marketplaces, like Amazon, to reach the right consumers and meet their needs.”

Walmart has concentrated on building the size of its marketplace in recent years, but it still pales in a size comparison. Should Amazon succeed in passing Walmart, it will not be because the nation’s current largest retailer has not been paying attention. A self-assessment by Walmart under the name Project Glass concluded that the retailer was falling short and that upping its omnichannel game was a business imperative.

The retailer has focused on making its app and website easier to search, shop and for completing purchases. If this approach sounds like Amazon me-toos, it is because Walmart has made the assessment that it has to match its currently smaller rival before it can build a bigger lead. Whether that will happen by 2025 is the question.

DISCUSSION QUESTIONS: Do you think total sales made through Amazon’s stores and online platforms will surpass those of Walmart by 2025? What does this mean for these parties and the rest of the retailers that compete with them?

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23 Comments on "Report: Amazon will surpass Walmart as America’s biggest retailer by 2025"


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Mark Ryski
BrainTrust

Yes, I believe that Amazon will surpass Walmart by 2025 – maybe even sooner. Amazon has a significantly broader market reach and marketplace that continues to expand. It’s hard to see anything that will stop Amazon’s growth, and while Walmart will continue to be a formidable competitor, Amazon has more opportunities and importantly the willingness and the financial resources to try.

Gene Detroyer
BrainTrust

Yes, the two companies have a different mindset about their businesses. Walmart, despite its recent experiments and expansions, is still a retailer. Amazon is not constrained by that thinking.

Rick Watson
BrainTrust

This. Amazon is whatever it dreams up.

Gene Detroyer
BrainTrust

The real question is, “can Walmart online challenge Amazon?” Walmart’s physical stores are operating in a mature business landscape. A 2 percent year-over-year growth would be very welcome. Amazon is playing in an arena that looks at double digit growth. Can Walmart online make up the difference? Perhaps it’s not likely, but it tells Walmart where to focus.

The real challenge for #1 is global. Walmart leads, but Amazon and Alibaba are sure to surpass them.

Gary Sankary
BrainTrust

I agree with your question Gene. Is Walmart online going to be able to challenge Amazon? To compare Walmart and Amazon, or really any retailer and Amazon is a bit of an apples and oranges comparison in my opinion.

Gene Detroyer
BrainTrust

Yes, different mindsets, different objectives, different companies!

Neil Saunders
BrainTrust

If third-party revenue is included then I am sure that, at some point, Amazon will overtake Walmart. Once again, this raises the question as to whether third-party sales actually belong to Amazon or if Amazon is acting more as a “mall” where lots of brands sell their wares. The consumer makes little to no distinction on this, but from a regulatory and analytical standpoint there is a world of difference between first-party and third-party sales.

The wider point here, however, is that by 2025 the retail market in the U.S. will be worth around $5.2 trillion. So there is plenty of room for Amazon, Walmart and a whole stack of other retailers big and small. And a lot of those sales will continue to be made through stores and omnichannel where Walmart, and others, currently have an advantage over Amazon.

Lisa Goller
BrainTrust

Yes, Amazon has the momentum to make it happen.

Walmart has made smart plays to stay competitive online like partnering with Shopify and TikTok. Yet Amazon is investing in long-term advantages as global e-commerce surges.

For instance:

  • Biggest assortment: Its platform attracts brands of all sizes, as consumers start their product searches there.
  • Brick-and-mortar: Opening physical stores like Amazon Fresh and Amazon Salon in the U.S. and U.K. will boost global omnichannel sales.
  • Selling efficiency: Offering Just Walk Out tech to other retailers provides new revenue streams.
  • Connecting with crowds: Partnering with sports giants like the NFL will help Amazon reach massive communities and sell more merchandise.
  • Amazon is allergic to complacency. It will find a way to win.

DeAnn Campbell
BrainTrust

It’s going to be a photo finish, one that’s still too close to call. Amazon may have innovation and big money, but their profit margins are nowhere near as healthy as Walmart’s. You can’t underestimate the power of Walmart’s massive brick-and-mortar network and how critical this is to achieving healthy long term profits. And Walmart’s innovation focus has ramped up significantly over the past decade – they started playing with VR, robots and hair salons long before Amazon. Go get your popcorn because this is going to be fun to watch.

Gary Newbury
Guest

Depending how you measure sales, I suspect Amazon, helped by the pandemic, has already beaten Walmart (hence Walmart’s current internal review as they look at levers to advance their position). Amazon works as an agent on their third-party marketplace, deriving fees for storage, fulfillment and other services (such as ad spending).

Although roughly 60 percent of Amazon’s volume is transacted on their marketplace, their declared revenue understates their market dominance in general merchandise.

As they turn their attention to driving strong revenue from their terrestrial grocery incursion, ditching Whole Foods, in the next couple of years they will continue to see high growth as they scale their proposition which is most likely to reshape the customer expectations which they have been doing for the last 25 years.

Their dominance is not in question, rather what is in question is, will they attack another category in parallel to grocery, or focus their senior management on grocery?

Gary Newbury
Guest

I would add, in response to what does this mean for other retailers … the ship has left, if you believe your competition is Amazon — your party is over.

There’s plenty of niches where you can make progress. Focus into service, a great discovery experience, high availability, a focused “purpose led” proposition and really understand your target customers needs and wants. Keep close tabs on these as they evolve.

James Tenser
BrainTrust

I love stats like this that say “excluding gas.” Isn’t fuel a product? Too bad you can’t ship it in corrugated boxes, or Amazon would sell it too.

Gas or no gas, it seems inevitable that Amazon’s total retail revenues will outpace those of Walmart. Their models differ enough, however, that boiling the results down to a single number does not provide a useful diagnostic picture. Much more clear is how the intensity of the rivalry puts less powerful retailers at a disadvantage. When giants clash, the little people tend to get stepped on.

Walmart and Amazon both possess the immense resources and the will to enable intense experimentation at scale. Most other retailers can only stand by and observe, then try to mimic the best experiences after the fact.

Gene Detroyer
BrainTrust

Yes, of course, the intensity of this rivalry puts less powerful retailers at a disadvantage. It is ironic how we wring our hands about how Amazon is hurting the small guy, but seem unconcerned about what these powerful entities are doing.

I remember how concerned folks were that malls were killing Main Street. Then how Walmart was ruining small town retail. It is evolution.

James Tenser
BrainTrust

In every era, the retail status quo confronts a new shibboleth. Recall the panic when Walmart entered the grocery sector in the early ’90s? Somehow the industry adapted and survived.

Venky Ramesh
BrainTrust

We still have four years to go for 2025. The rate at which disruption is taking place in the industry accelerated by the pandemic, let us not discount one of the newcomers taking away a chunk of the growth that the established retailers are counting on. I would love to get some thoughts from the BrainTrust colleagues on the possibility of this happening.

Jeff Sward
BrainTrust

I think the distinction between Amazon as a marketplace and Walmart as a retailer is part of the point here. Amazon simply has more growth opportunities than Walmart. The significant other third party in this conversation is the mall. Now that the pandemic has shaken everybody out of their hand-wringing race to the bottom mentality, the new level of competition for the customers’ time and wallet share is going to be good for everybody. Explore + Experiment = Experience. How will each of these competitors manage this equation?

Gary Sankary
BrainTrust

I do see Amazon surpassing Walmart. That said the Amazon stores will continue to be a minuscule part of the mix. Apples to apples, Walmart’s penetration in the digital channel, which by their own admission isn’t where it should be, is still light years ahead of Amazon’s penetration into the physical retail space. For now.

Dave Wendland
BrainTrust

Amazon will continue to grow, evolve, and challenge traditional retail models. And yes, they have the fortitude to overtake Walmart by 2025. However Walmart is a moving target and it too will continue to grow and evolve. Neither of these companies are one-dimensional — and THAT is the secret sauce for any organization looking to survive, thrive, and revive in these turbulent times.

Doug Garnett
BrainTrust

Ignoring the general inaccuracy of predictions like this, I’m struck that this is a false comparison — Amazon and Walmart are not comparable. Especially since Walmart makes profit on its retail sales and Amazon is unable to make profit on its retail-like sales. (one of the ways VC money and investor returns turn markets upside down so companies are allowed to run without being companies).

My biggest response is this: So what? The report acts like this is meaningful. Does it change how Walmart does business? Not from what I can tell. Will it change how Amazon does business? They don’t seem to feel a need for profit from retail sales so they’ll continue paying to undercut true retailers.

In the end, I don’t think it matters — except to investors who love to read stuff like this.

Ananda Chakravarty
BrainTrust
I like Doug’s question — so what? Yes, maybe a shift for Amazon including its third party sales and excluding Walmart’s gas business towards higher growth makes for a great plaque on the wall or even bragging rights, but it means nothing in the broader retail market. However, to answer the question, will Amazon have more sales in 4 years? Maybe. Will it be more profitable? Probably. Will it be the consummate retail service? Doubtfully. I suspect further shift back to retail stores (online and off) as the pandemic tapers off, plus a renaissance within the retail sector. Retailers are still doing fantastically well and online has become just another part of their agenda. Each and every day, Amazon is up against more competition by smaller retailers and manufacturers going DTC and this will continue for the foreseeable future. Amazon will be running faster just to stay in place — innovation or not. Four years is just too far ahead to predict with any certainty and who knows what Walmart will come up with in… Read more »
Craig Sundstrom
Guest

Probably, and absolutely nothing (other than the obvious fact that in order for this to happen, more retailers will have to be on the platform; but this is the cause for the fact, not an effect from it).

Jack Pansegrau
Guest
So how does Walmart change my behavior? Anytime I think of something I “need” (and often it can be a product that I’m not even sure where I’d go to find it in a physical store…) I go, every time, to Amazon. I never check Walmart.com. And if I don’t buy it that day, I put it in my shopping cart and save it for later — so it’s my “to do list,” too. I have Amazon Prime and delivery is quick, returns are easy, my subscription service list keeps growing and now includes cat litter and cat food … I have over two dozen items on subscription. I assume I’m the norm among Amazon Prime customers. How does Walmart get me to try them out? And I must say, even though I’m a Walmart shareholder, I have a mental image of Walmart.com that is connected to their crowded physical stores with endless checkout lines and impossible lines at the return desk. So I’m not planning to give Walmart.com a look very soon either. So… Read more »
Shep Hyken
BrainTrust

Yes, Amazon will continue to grow and most likely surpass Walmart. Habits are changing. Brick-and-mortar will still be relevant. Even Amazon knows this and will continue to expand their physical presence in the proper locations. Other retailers must continue to do what has made them successful. Keep an eye on innovation that others, including what Amazon, Walmart and other major retailers are doing. Incorporate these innovations if appropriate and reasonable, based on the size and type of business. In other words, learn and adapt from the biggest and/or best.

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