Why Amazon's Move Into Rural America Can't Cut Walmart's Retail Lead

Forbes

27-06-2025

SANTA FE, NEW MEXICO - APRIL 5, 2020: An Amazon Prime package delivered to a mailbox by a U.S. ... More Postal Service mailman in Santa Fe, New Mexico. (Photo by)
Amazon just announced that it is expanding same-day and next-day deliveries to customers in more than 4,000 smaller cities, towns and rural communities by the end of 2025. This comes on the heels of a 30% increase in same or next-day delivery so far this year compared with same period last year.
Touting speedier delivery to customers in North Padre Island, TX, Asbury, IA, Lewes, DE, Sharpton, MD, Fort Seneca, OH and other locations further afield, Amazon will invest over $4 billion to triple the size of its delivery network by the end of next year. It will transform existing rural delivery stations into hybrid hubs that will store location-specific inventory. This move will also create an average of 170 local jobs per hub, plus additional driving opportunities for independent contractors.
In an unexpected twist, Amazon is copying Walmart, instead of the other way around. One of Walmart's competitive strengths is its foothold in rural America. With over 90% of Americans living within ten miles of a Walmart store, the company is now able to deliver food, general merchandise, and prescriptions to 93% of the U.S. in less than three hours. This reach has powered its e-commerce business to over 20% growth annually for the past two years.
Battle For Market Share
While Amazon is the undisputed leader in e-commerce, with an estimated 42% market share compared to Walmart's 9.4% in 2024, Walmart's share grew by 1.2% over the previous year, outpacing Amazon's 0.8% gain, according to BofA Global Research. And with growth in e-commerce slowing – advancing over 10% in 2021 and 2022, then subsiding to 8.1% in 2024 and 6.4% through May this year – the competition between the two giants is intensifying.
Walmart has been moving aggressively to play catch-up online, but with over 4,600 stores in the U.S., it has an advantage that Amazon can't begin to match. Thanks to its physical connection with customers, it has much more room to maneuver. In effect, Walmart is playing chess and Amazon is playing checkers.
Building Omnichannel Bridges
Walmart's omnichannel customers shop three-times more often and spend 13% more per order. And the new Walton Goggins 'Walmart. Who Knew?' ad campaign is sure to attract more customers to engage online.
Its latest iteration features Goggins in cowboy gear talking to his horse in a barn right out of Yellowstone, and it takes a not-so-subtle jab at Amazon. 'They don't know the first thing about you or Walmart Plus.'
Walmart+ is its answer to Amazon Prime. For $98 per year, Walmart+ members get free shipping on all Walmart orders, as well as free direct delivery from the local store on orders of $35 or more, with deliveries scheduled to meet the customer's timeline. However, there is no minimum on delivery for pharmacy orders.
Walmart+ stands behind members with free online pet services through Pawp and free flat tire repair and road hazard warranty for customers who purchase and install a set of tires at Walmart. Members also get Walmart cash rebates on travel services.
Other benefits include gasoline discounts at over 13,000 stations nationwide, including Exxon, Mobil and Walmart, and a 25% discount at Burger King and a free Whopper with any purchase every three months.
While Walmart+ can't match Amazon Prime's entertainment offerings, it does provide streaming services from Paramount+ and ad-free content with Pluto TV.
Membership Shortfall
Amazon Prime is way out in front when it comes to memberships, with an estimated 85.7 members and according to Capital One, memberships grew from 76.6 million in 2022 even after Prime memberships went up to $139 per year.
Walmart+ has a long way to go to catch up. Morgan Stanley estimates its membership between 17.2 million to 24.6 million based on results of a consumer survey. The company does not release membership figures, though the company has commented that memberships are growing at high double-digit rates.
However, Amazon has been pushing Prime far longer. It launched in 2005 and Walmart+ a mere five years ago.
Best Of Both World's
Increasingly, consumers are opting for both membership plans. Pyments found nearly 25% of consumers have memberships in both plans as of April 2025 with dual memberships highest among Millennials at 37%.
Overall, about 30% of U.S. consumers have yet to sign on to either service, based upon a survey same of 2,000 adults. The highest non-participation rate is among Baby Boomers at 42%. These nones are the prime battleground – pun intended – for both competitors.
Interestingly, Pyments found brand loyalty strongest among Walmart+ members. Some 11% of Amazon Prime-only members made their last retail purchase from Walmart, while no Walmart+ members returned the favor.
While Amazon takes the lead in general merchandise purchases, accounting for some 73% of gross merchandise value, Walmart is catching up. Speaking at a recent Oppenheimer investor conference, CFO John David Rainey shared that about half of its GMV growth in general merchandise has been from its marketplace business.
Overall Walmart's marketplace revenues grew 34% in the last fiscal year and Marketplace Pulse estimates there are 150,000 sellers on the platform.
Dominating Grocery
Walmart's dominance is most pronounced in grocery. Overall 60% of its e-commerce gross merchandise value is credited to grocery, whereas grocery accounts for only about 5% of Amazon's GMV.
In Pyment's survey, only 1% of consumers surveyed who purchased groceries within the last 30 days, made their last purchase with Amazon, compared to 30% who bought from Walmart. And the rate of most recent grocery purchases among Walmart+ members reached nearly 60% and among nones, some 24% purchased groceries from Walmart.
Amazon has yet to crack the code in grocery, not for lack of trying with its new grocery subscription offering and acquisition of Whole Foods. It's an advantage that Walmart will continue to capitalize on.
'If you can attract a customer to come into your website or your store to buy groceries, it's so much easier to sell them other things, whether a T-shirt, furniture, whatever it is,' shared CFRA investment analyst Arun Sundaram with Investor's Business Daily.
That's why Walmart is going to stay in the lead against Amazon. Even while Amazon dominates in e-commerce, that channel accounts for only about 30% of retail sales and online sales growth is slowing.
Walmart operates where consumers still overwhelmingly shop – in physical stores. And it offers digital experiences that are catching up to Amazon's and are even better for online grocery customers far and wide. Walmart is truly an omnichannel retailer and Amazon can hardly say the same.