Last week’s headlines were just so typical of the modern clickbait environment. Based on Walmart’s results for the year to January 2026, some platforms screamed to the world that Amazon is now ahead of Walmart in annual revenue.
It’s a delightful story (in theory at least), suggesting that the e-commerce champion has now overtaken the GOAT — greatest of all time — of traditional retail. But it neglects a critical fact: Amazon is larger than Walmart only if you include Amazon Web Services (AWS).
Including AWS (which could just as easily be a separately listed company) doesn’t make sense, as Walmart doesn’t have a comparable cloud hyperscaler. Given the recent share price pressure in the big tech names that are throwing everything at AI, this is a characteristic the market is probably thankful for at the moment.
Amazon’s market cap is $2.26-trillion and Walmart stands at just $980bn, so there’s another good reason the comparison is frivolous. The market clearly values each dollar of revenue at Amazon very differently to how it sees Walmart. This isn’t to say that Amazon is a better investment though, as Walmart is up 31% in the past year vs a tepid performance at Amazon of -1%.
But there is one element of this comparison that is valid: Walmart’s recent success has been driven more by e-commerce than in-store sales. The official narrative is one of omnichannel sales, with the stores acting as fulfilment centres to help Walmart compete with Amazon. This approach is consistent with what we are seeing at many other retailers, locally and abroad.
With the fast delivery category (defined as under three hours from time of order) up more than 60% for the year, and with 35% of store-fulfilled orders in the US delivered in under three hours, Walmart is doing more than just paying lip service to the omnichannel story. It claims it can serve 95% of the US in three hours. This is the power of omnichannel, as Walmart can take full advantage of its store footprint.
Walmart is also making strides in China, with e-commerce sales up 28%. Online now represents more than 50% of sales in that market. The broader international story is encouraging for Walmart, with growth much faster than anything it is achieving in the US — and the omnichannel strategy is key to that global growth push.
Still not convinced about how Walmart is taking the fight to Amazon? Here are a couple more stats that are relevant. First, 52% of sellers in Walmart’s Marketplace took advantage of Walmart Fulfilment Services in the latest quarter, arguably the purest way in which Walmart competes with Amazon. And as an indication of how Walmart is allocating capital, it opened 12 new stores in the past year compared with 674 remodelled stores. In omnichannel, it’s more important to optimise the existing footprint than to rapidly expand it.
The J-curve is playing out beautifully now, with Walmart noting double-digit incremental margins for online sales
But does e-commerce actually make a profit these days? For a long time, the market was nervous about e-commerce profitability, as platforms suffered substantial initial losses. But the J-curve is playing out beautifully now, with Walmart noting double-digit incremental margins for online sales. And thanks in part to the third-party marketplace model, inventory is up just 2.6% year on year, or less than half of group revenue growth of 4.9% — an important improvement in working capital efficiency.
Another important element is advertising and membership fees, which contributed nearly a third of operating income this quarter. As with Amazon, Walmart’s online platforms are used by consumers at the point of making a purchase. This makes them a dripping roast for advertisers, which in turn creates a revenue opportunity for the best e-commerce platforms.
Agentic commerce is also a major trend, with Walmart’s Sparky shopping assistant achieving an average order value 35% higher than that of non-Sparky customers. This strategy might be in its infancy, but Walmart certainly isn’t ignoring it.
The omnichannel push is a major driver of growth in adjusted operating income of 10.5% in the latest quarter. This is more than double the rate of revenue growth, so margins are heading the right way.
But the outlook is cautious, with financial 2027 constant currency sales expected to grow by between 3.5% and 4.5%. Operating income is expected to grow by between 6% and 8%. Omnichannel may be the primary growth driver right now, but Walmart still relies heavily on traditional in-store sales. And in this consumer environment, it is giving the market a word of caution. Predictably, the market hit the sell button based on that guidance, with Walmart down 7% over five days. The share price was probably due a breather.
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