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  • - [Narrator] This is a grocery store.

  • It's filled with fruits you can touch

  • and meat you can pick out yourself.

  • This is a fulfillment center.

  • It's filled with robots that pick out products

  • that will arrive at your door.

  • The first is Amazon,

  • a company that accounts for an estimated 40%

  • of all e-commerce sales in the U.S.

  • but also has dozens of physical grocery stores

  • and hundreds more counting Whole Foods.

  • The second is Walmart,

  • a company that took in around $327 billion

  • from its physical stores in the U.S. last year

  • but is also investing heavily in its e-commerce business.

  • These companies fight for their share

  • of the estimated $5 trillion U.S. retail market,

  • has started to blur the lines between the two.

  • - I think Amazon and Walmart are moving

  • in on each other's turfs because they're so big.

  • - They are fighting for dollars

  • and they want to be that place that people go to

  • for shopping in-person and online.

  • - [Narrator] So let's take a closer look

  • at how the Venn diagram that is Amazon and Walmart

  • is quickly becoming a circle.

  • What are the areas these companies are competing in today

  • and will their fight for retail dominance

  • eventually make them indistinguishable?

  • The competition between these two wasn't always obvious.

  • Amazon built its everything store for the online shopper.

  • - Where they have really made a mark

  • is by appealing to people with fast delivery,

  • for almost anything you can think of.

  • - [Narrator] Walmart designed its super centers

  • for the in-person experience,

  • putting stores near American homes and promising them

  • every day low prices.

  • - [Advertiser] Walmart, always low prices, always.

  • - [Narrator] A majority of retail sales still happen offline

  • but as online sales have grown each year,

  • so too, has this head to head competition.

  • - The American consumer is really fickle.

  • You can't just get people these days

  • by offering the lowest prices.

  • You have to offer them the lowest prices

  • and a whole range of other products and services.

  • And I think the biggest players are trying to do them all.

  • - [Narrator] For Amazon that has meant

  • expanding into groceries, not just for delivery either.

  • Adding to its network of more than 500

  • Whole Foods locations.

  • Amazon is pushing deeper

  • into physical grocery with a new brand.

  • Amazon Fresh.

  • - Amazon Fresh is more like your traditional grocery store.

  • So you'll find a wide range of items

  • from brands that you're probably familiar with.

  • And you'll probably also find items at low prices.

  • - [Narrator] If that sounds familiar,

  • it's not a coincidence.

  • Walmart is the undisputed leader in grocery.

  • - Walmart is a massive retailer that really

  • at its base is an American grocery chain.

  • It sells other things, but most of its sales and profits

  • come from selling groceries.

  • And it's the largest company doing that.

  • - [Narrator] Data from Numerator shows

  • Walmart accounted for roughly 21%

  • of overall grocery spending in the U.S. in the last year.

  • Amazon.com and Whole Foods meanwhile,

  • made up about 3% of spending in the sector.

  • But adding Amazon Fresh to the mix gives the company

  • a store that experts say is priced to compete with Walmart.

  • - Food is of huge value for them.

  • One because food is something

  • that consumers buy really frequently

  • and people I've spoken to in this space have said

  • that it essentially it gives Amazon access to more data

  • of what their customers are purchasing

  • and how they're behaving.

  • - Amazon has 27 Fresh stores so far,

  • but the company recently announced

  • it would refocus its physical retail efforts

  • in part on groceries.

  • And it's doing so with an Amazon twist.

  • - It also serves as an avenue to sort of try out

  • some of these technologies that they've come up with

  • like the Just Walkout technology.

  • - [Narrator] Just Walk Out, which allows customers to shop

  • and walk out of the store

  • without stopping at a cash register

  • is in place at 11 Amazon Fresh stores.

  • The company's Dash Carts which also allow customers

  • to skip the checkout lines by paying from the cart instead

  • are used at other locations.

  • It's this tech that Amazon sees

  • as its differentiating factor.

  • Why a customer might pick Amazon Fresh over Walmart.

  • And in grocery loyalty is key.

  • - One thing that is unique about grocery stores

  • is people are really habitual about where they go.

  • And once they do make the switch over

  • you will have a higher likelihood of holding onto them.

  • - Narrator] As Amazon looks to peel away

  • some Walmart grocery shoppers,

  • Walmart is eyeing a greater share of the e-commerce market

  • dominated by Amazon.

  • In 2021 Walmart added nearly 60,000 new sellers

  • to its online marketplace.

  • And the year before it launched Walmart+

  • a subscription service that offers paying members

  • free shipping and fast delivery.

  • - It's very clear that Walmart created a membership model

  • to mirror some of the success

  • that Amazon has had with Prime.

  • There's a loyalty factor.

  • There's a sheer revenue factor

  • and they would love to have that model

  • as part of their effort to keep sales growing.

  • - [Narrator] But in other ways, Walmart's e-commerce efforts

  • look very Walmart.

  • The best example, Buy Online Pick Up In Store.

  • - For Walmart, Buy Online and Pick Up In Store

  • has been one of their major successes.

  • It's also been a major part of their e-commerce growth

  • that counts as part of their e-commerce sales.

  • And that's a huge growth driver for them.

  • - But for some delivery is still more convenient.

  • Amazon, which offers delivery in as little as five hours

  • in some cases is often the fastest option here.

  • It's able to do this in part

  • by having more than 380 fulfillment centers worldwide.

  • Walmart has just 31 dedicated e-commerce fulfillment centers

  • but the company uses more than 3,500 of its stores

  • to send out online orders.

  • And it plans to attach around a 100 smaller

  • fulfillment centers to existing stores

  • in the next few years,

  • some of which are already in operation.

  • - Walmart is really trying to leverage stores

  • to catch up to Amazon on e-commerce.

  • Sort of ironically because they have the goods

  • in those stores.

  • And they're trying to use those stores

  • increasingly as sort of hubs for delivery.

  • - An example of that is Walmart's Inhome Delivery service

  • which brings orders from the store

  • straight into a shopper's home or fridge.

  • Walmart says this service will be available

  • to around 30 million homes by the end of this year.

  • But all of these efforts cost money.

  • And for Walmart, retail isn't enough.

  • - They wanna find some other profitable revenue pools

  • to do things like build lots of fulfillment warehouses

  • to offer fast shipping.

  • - [Narrator] That's something Amazon does well.

  • The company is now the third largest digital advertiser

  • after Google and Facebook.

  • Ad sales brought in $31 billion for the company last year.

  • Walmart which recorded 1.6 billion in ad sales last year

  • sees this as an opportunity.

  • - Walmart has really emphasized

  • building an advertising business.

  • They have hired a bunch of people.

  • They've restructured that side of their business

  • over the last few years

  • because they want to have another profitable revenue source.

  • Just like Amazon.

  • - [Narrator] It's clear, this competition

  • is changing Walmart and Amazon.

  • Shoppers don't need to go into a Walmart

  • to shop with the company nor do they need to trust Amazon

  • to pick out the right avocado for them

  • and low prices and fast delivery are now expected from both

  • but will these companies ever really be the same?

  • - I think that Amazon and Walmart

  • are getting more similar in some ways,

  • but they're so fundamentally different

  • in where they came from.

  • - [Narrator] Walmart, with its background in physical stores

  • is now using those to help grow its e-commerce business.

  • While Amazon is using the money it makes

  • from its digital offerings to support its physical growth.

  • - So they're crossing each other's paths.

  • They're getting on each other's turf,

  • but they're not the same.

  • - [Narrator] Even if the two

  • are starting to look more and more similar.

  • (light music)

- [Narrator] This is a grocery store.

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