Could Walmart and Costco’s E-Commerce Surge Challenge Amazon’s Dominance?
Amazon (NASDAQ: AMZN) has long been the king of e-commerce, commanding an unmatched lead in the industry. However, as consumer expectations evolve and new shopping models emerge, even Amazon faces challenges from competitors like Walmart (NYSE: WMT) and Costco Wholesale (NASDAQ: COST). Both retail giants are leveraging their physical store networks to boost e-commerce sales, offering a robust omnichannel experience that could spell trouble for Amazon.
The Omnichannel Advantage
E-commerce is now a mainstream shopping method, but it still has limitations, such as the inability to physically inspect items before purchasing. Many customers find that combining in-store and online shopping offers the best of both worlds. This omnichannel approach—integrating physical stores with digital platforms—has proven to be a winning strategy for Walmart and Costco.
Walmart’s E-Commerce Growth
Walmart’s revenue increased 5.5% year-over-year in its fiscal Q3 2025, with online sales surging by 27%. The company’s vast network of 4,600 U.S. stores and over 10,600 worldwide serves as a backbone for its e-commerce operations, allowing Walmart to use its stores as fulfillment centers. This hybrid model attracts new, more affluent shoppers who might not typically visit Walmart locations.
Walmart’s international segment also experienced impressive growth, with e-commerce sales rising 43%. By combining its physical and digital assets, Walmart is expanding its reach and drawing in diverse customer demographics.
Costco’s Digital Success
Costco has also embraced e-commerce, which was a major growth driver in its fiscal Q4 2024. Online sales grew by 13% year-over-year, nearly double the growth rate of its total sales (7.5%). Costco’s strategy focuses on selling big and bulky items online—categories that benefit from cost-effective delivery solutions. While the company avoids online pickup for smaller items due to labor costs, its focus on larger items helps maintain margins while boosting revenue.
What This Means for Amazon
Amazon remains a dominant force, but Walmart and Costco’s success in integrating their physical and digital platforms highlights a gap in Amazon’s strategy. While Amazon has experimented with physical retail, such as its Amazon Fresh grocery stores, its physical footprint is minimal compared to Walmart and Costco. This limits Amazon’s ability to offer services like in-store pickup or same-day delivery from local outlets.
Additionally, Walmart and Costco can use their stores to cut delivery costs and increase operational efficiency—advantages Amazon lacks without a comparable store network. For certain categories, such as grocery and bulky items, Walmart and Costco’s hybrid approach is proving particularly competitive.
The Bigger Picture
Amazon’s e-commerce lead is unlikely to disappear anytime soon, but the rapid growth of Walmart and Costco’s digital sales signals a shift in the retail landscape. The ability to offer a seamless omnichannel experience may become a crucial differentiator, and Amazon will need to innovate to maintain its dominance.
As retail continues to evolve, the competition between these industry giants will likely intensify, reshaping how consumers shop and interact with brands. Whether Amazon will adapt or face stronger challenges remains to be seen.
