Subtitles section Play video Print subtitles - [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?