Don’t look now, Amazon. Walmart is coming for your customers

The first sign that something had changed was the Topo Chico. It arrived on our porch one afternoon—a case of it—along with Graza olive oil and La Roche-Posay face wash. When our 4-year-old announced she would eat nothing but Uncrustables for the foreseeable future, a box arrived within the hour. The prices were lower than on Amazon, and we got them faster, with no delivery fee. It turns out that my husband had gotten hooked on Walmart—all without ever setting foot in a store.

Earlier this year, he discovered that our American Express card included a Walmart+ membership. He activated it on a whim. Since then, he’s been placing orders on the app almost daily, from go-to groceries to last-minute horseradish for Passover. Fifteen years of loyalty to Amazon Prime didn’t stand a chance.

We’re not alone. Something surprising is happening to America’s largest retailer. Walmart, the company that has for decades served as the nation’s destination for rural and working-class families, has quietly reinvented itself into a digital behemoth that is now taking direct aim at Amazon’s customers, who are more affluent and urban.

Walmart’s U.S. e-commerce sales account for approximately 18% of the company’s total revenue, amounting to more than $100 billion in the last fiscal year. Its e-commerce sales are growing roughly four times faster than its overall growth rate, increasing by 20% in the most recent quarter, the 11th consecutive quarter of double-digital growth. And five years ago, it launched Walmart+, a membership program that is a direct competitor to Amazon Prime, complete with benefits like a free Peacock subscription to rival Prime Video. (At $98 per year, Walmart+ is cheaper than Amazon Prime, which costs $139 annually.)

To be clear, Walmart is not about to dethrone Amazon in the realm of online shopping. With upwards of $440 billion in U.S. e-commerce sales in 2025, Amazon’s dominance is enormous and deeply entrenched. But something has shifted. Walmart has found the specific terrain—grocery delivery, last-mile fulfillment from stores, the seamless blend of digital and physical—where Amazon is weakest. And it’s exploiting that terrain with a discipline and speed that should make Amazon nervous.

Walmart’s Pitch to Affluent Shoppers

Since its founding in 1962, Walmart has targeted budget-constrained families by promising low prices. Those customers are still core to the business. But for the past several years, new shoppers have quietly been showing up—those with a household income well above six figures, who shop online and order things like prestige hair color from Madison Reed and premium pet food from the Farmer’s Dog.

Neil Saunders, managing director at GlobalData Retail, says the trend began when inflation spiked in 2022, in the aftermath of the pandemic. “Middle- and higher-income consumers migrated to Walmart because they realized they could buy the same products they were getting elsewhere, but a bit cheaper,” he says. “When this first happened, people thought Walmart would lose these new customers when people adapted to the new price levels, but this hasn’t happened.”

Indeed, during Walmart’s Q3 2025 earnings call, CEO Doug McMillon said households earning more than $100,000 accounted for 75% of the company’s market share gains in the quarter. A 2024 Brick Meets Click/Mercatus report found that Walmart’s affluent customer base grew almost five times faster than its average monthly active users in the first half of that year—and that this segment spends 1.5 times more per month than lower-income households. 

Where Walmart was once gaining on regional grocers like Kroger and discount competitors like Dollar General, it’s now pulling customers directly from the retailers that wealthier shoppers had previously called home, including Whole Foods, Trader Joe’s, and Target.

Winning over affluent consumers has been a long game for Walmart, says Andrew Lipsman, an independent analyst and consultant at Media, Ads + Commerce. Walmart has spent more than a decade investing in its e-commerce operation, which inevitably attracts wealthier consumers. “E-commerce generally skews more affluent, so the overall income skew of their customer base will increase as dollars shift to e-commerce,” Lipsman says.

Creating a robust online shopping experience also means that wealthier consumers have no reason to visit Walmart’s brick-and-mortar stores, which are more basic and warehouse-like than the retailers they might be used to, where a delightful, highly curated in-store experience is part of the sell. Walmart has been working to refresh some of its stores to make them more appealing, but it’s still far from a luxurious shopping experience. 

“Walmart is investing more in stores, but it’s not consistently better across every location,” Saunders says. “Online provides, especially that higher-income consumer, with an alternative channel through which to shop.”

Restocking Shelves With Premium Brands

When my husband first fell down the Walmart app rabbit hole, I’ll admit I was skeptical. Would we end up with a pantry full of brands I’d never heard of? As it turns out, no. Walmart carries Rao’s pasta sauce, Graza olive oil, Garofalo pasta—the same brands we were already buying at Whole Foods, at prices that made our prior receipts suddenly look embarrassing. I realized we had been overpaying for marinara sauce for years; the same jar of Rao’s at Walmart is nearly $2 less than at Whole Foods.

Julie Barber, EVP and chief merchandising officer for Walmart U.S., says the company has been broadening its brand assortment in ways that would have seemed unlikely a decade ago. Her team added the French pharmacy brand La Roche-Posay to the beauty aisle and trained in-store skincare consultants to help customers pick products.

On the grocery shelves, you can find pasta sauce from the cult New York restaurant Carbone and Glen Powell’s Smash Kitchen line of better-for-you condiments. Last year, Walmart launched BetterGoods, an in-house food brand that specializes in global flavors. And the company just announced that it’s rebranding Great Value, its largest private-label brand.

“We’re giving people access to an incredible value across our entire assortment,” Barber says. “We sell MacBooks. We sell Cheerios. We want to make sure that no matter what it is, you get the best price at Walmart.”

Locking In Customers With Walmart+

The Walmart+ program has been the critical mechanism for converting more affluent shoppers into loyal, high-frequency customers. Its pitch to time-pressed, higher-income households is straightforward: the same everyday low prices Walmart has always offered, now delivered to your door in under two hours, and sometimes in an under an hour.

Deepak Maini, SVP and GM of Walmart+, who came to Walmart from Amazon, says the program stands out from Amazon Prime because it gives customers the ability to shop both in store and online, “something that we can uniquely do differently than our competitors.” (Amazon declined to be interviewed for this story.)

Over the past five years, Maini’s team has added benefits to the program to make it even more competitive with Amazon Prime, including free pharmacy delivery, a Peacock streaming subscription, and the OnePay credit card offering 5% cash back on all Walmart purchases. Walmart+ currently costs $41 less than Amazon Prime. For a household that’s been conditioned to expect Amazon-style convenience, that price difference, combined with Walmart’s grocery expertise and delivery speed, is proving persuasive.

According to PYMNTS Intelligence, nearly one in four American consumers now subscribe to both Walmart+ and Amazon Prime memberships, up from just 12% in 2021. Walmart+ membership has grown to an estimated 30 million in the U.S., and while that remains a fraction of Amazon Prime’s 201 million, it is growing significantly faster. Walmart+ subscriptions grew more than 29% in a recent comparable period, while Amazon Prime grew by less than 3%.

That said, Saunders notes that Amazon has spent two decades building out its Prime program, which is very robust and hard for consumers to give up. It’s constantly adding new benefits to the program, including free Grubhub+, EV charging, and Alexa+. “Walmart is actively building an ecosystem around its loyalty scheme, but Prime is much stickier,” he says. “Amazon has made Prime so valuable that even if customers don’t use it for e-commerce, it is painful to give up.”

Walmart’s Secret Weapon: Grocery

If there is one arena where Walmart has closed the gap with Amazon, it’s in groceries. Walmart is the largest grocer in the U.S., commanding 21% of all grocery spending—more than double its nearest competitors Kroger and Costco, which each have just under 9% of the market. In the world of online grocery sales, Walmart is pulling ahead of Amazon, owning 28% of market share, compared with Amazon’s 22%.

That gap has been widening for years. The reason comes down to something Amazon’s billions of dollars cannot easily replicate: stores. Walmart operates more than 4,700 locations across the country, and the vast majority of Americans live within 10 miles of one. That physical footprint, once seen as a liability in the age of e-commerce, has become the company’s single greatest competitive asset in the race to deliver groceries fast. 

There’s a reason I can get my Uncrustables or Topo Chico within an hour. “It’s coming out of the store inventory,” says Tracy Poulliot, Walmart’s EVP of e-commerce and marketing. “Over the past 10 years, we’ve been on this journey to centralize a lot of these systems so we can optimize decisions for customers wanting to shop in store, online, via pickup or delivery.”

The result is a network that covers 95% of U.S. households with same-day delivery—a reach no dedicated e-commerce fulfillment infrastructure could match at that speed or cost. “We know speed matters,” Poulliot says. “It’s a really important part of convenience for consumers.”

More than 25% of Walmart’s orders are now “expressed,” which promises delivery in under an hour. That figure is striking when you consider the logistics involved: A human picker has to select the items from store shelves, hand them off to a driver, and get them to a customer’s door, often in less time than it takes to watch a sitcom.

AI is now threaded throughout that system, from the back end to the customer-facing experience. When it comes to logistics, algorithms determine which items should sit in which stores based on local demand patterns, order frequency, and delivery time windows—decisions that shift seasonally and dynamically. For consumers, the Sparky AI shopping assistant helps navigate inventory, plan meals, and restock recurring orders.

“The next frontier of convenience, we believe, is removing that cognitive burden through our digital channels in a way that’s just really hard to do in a traditional in-store environment,” Poulliot says.

The economics of all this are improving rapidly. Walmart reduced its U.S. net delivery cost by 20% per order in its most recent fiscal year, even as order volumes increased. The company now has four next-generation fulfillment centers, with roughly half of total fulfillment center volume automated—using autonomous shuttle aisles, AI-powered bin sequencing, and multistory buildings that double throughput while cutting unit handling costs by approximately 20%. 

It’s an e-commerce operation that has moved from margin drag to profit contributor, with advertising and membership revenue layered on top as the highest-margin streams in the business. “With its store network, Walmart has an inbuilt advantage,” Saunders says. “It doesn’t mean it will always triumph over Amazon, but at the moment it has the infrastructure and distribution that Amazon does not.”

How Amazon Is Beefing Up Its Grocery Game

Amazon has been scrambling to address its grocery weakness for nearly a decade, and its attempts have exposed just how hard it is to build a food business from scratch. In 2017, the company spent $13.7 billion to acquire Whole Foods in an explicit bet that physical stores were the key to winning grocery. In 2020 it launched Amazon Fresh, a mass-market grocery chain, pouring resources into dozens of locations across the country. But these stores never found a format that worked economically. 

In January 2026, Amazon announced it was closing all of its Amazon Go and Amazon Fresh physical stores—roughly 70 locations—admitting they had failed to create “a truly distinctive customer experience with the right economic model needed for large-scale expansion.” Some locations will be converted to Whole Foods; the company plans to open more than 100 new Whole Foods stores over the next several years, including a smaller urban format called Whole Foods Market Daily Shop.

Amazon is not retreating from grocery. In August 2025, Amazon launched same-day delivery of fresh perishables—produce, dairy, meat, seafood—and expanded the service to more than 2,300 cities and towns by December 2025. The early numbers have been striking: Perishable grocery sales through the same-day service grew 40 times over since January 2025, according to Amazon’s own figures, and fresh groceries now make up 9 of the 10 most-ordered items in markets where the service is available. 

Customers who add fresh groceries to their same-day orders shop approximately twice as often as those who don’t, a loyalty signal Amazon clearly finds encouraging. However, the structural disadvantage remains: Amazon is trying to build digitally what Walmart already has physically, embedded in communities across the country.

The Battle Is Just Starting

Walmart and Amazon are going toe-to-toe, but it’s not clear that these companies see each other as adversaries. “I don’t frame Amazon vs. Walmart as zero-sum,” Lipsman says. “The reality is that both have been gaining share in e-commerce for a long time, at the expense of everyone else. Having a strong competitor makes them both better.”

In other words, the real losers are the Krogers trying to build out digital delivery, Target watching its affluent shoppers drift away, and the thousands of neighborhood grocers that cannot match the fulfillment infrastructure or membership ecosystems of either giant.

Both Walmart and Amazon “very, very innovative, very entrepreneurial retailers,” Saunders says. “You might expect that with Amazon, which has always been pioneering. But the culture of Walmart is also very much about rethinking, testing, and experimenting. For a company of its size and age, that is quite exceptional.”

For now, they occupy different centers of gravity. Amazon’s power lies in the breadth of its marketplace, the stickiness of Prime, and its unmatched logistics for nonfood merchandise. Walmart’s edge is in grocery, in physical proximity to the American consumer, and increasingly in the loyalty of the affluent, time-pressed household that once belonged exclusively to Amazon.

A growing number of American households—including mine—subscribe to both Walmart+ and Amazon Prime, using each service for what it does best. The deeper question is what happens when the two programs are no longer complementary but interchangeable—when Walmart can deliver everything Amazon can, or vice versa. At that point, the real battle will begin.

For my family, that reckoning hasn’t arrived yet. The Walmart boxes keep coming, stacked on the porch next to the Amazon ones, full of Topo Chico and Garofalo pasta and the occasional emergency box of Uncrustables. 

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