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Is Amazon's Dominance Under Threat Due to Walmart & Others?

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The coronavirus hit-world has been a boon for the online retail market, which has been gaining from the scenario with seamless and fast delivery of essentials and groceries becoming integral part of the new normal as people refrain from stepping outside their homes on fears of contracting the deadly virus.

Spike in the online orders continues with apprehensions of a second wave of COVID-19 taking hold. This is abundantly clear from the solid performance of the e-commerce giant Amazon (AMZN - Free Report) , which has been witnessing overflowing orders since the onset of the pandemic.

Moreover, the social distancing protocol and stay-at-home restrictions, which have significantly hurt the sales of brick-and-mortar stores, have actually accelerated sales of Amazon, which carries a Zacks Rank #2 (Buy).

However, traditional retailers including Walmart (WMT - Free Report) , Target (TGT - Free Report) , Big Lots (BIG - Free Report) , Kroger (KR - Free Report) and Costco (COST - Free Report) are also leaving no stone unturned to capitalize on the immense growth opportunities present in the online retail space.

Per a report from eMarketer, the e-commerce sales in the United States are expected to hit $709.78 billion in 2020 by exhibiting growth of 18%, which is up from the prior projection of 13%.

These retailers are making every effort to enhance competitive prowess against Amazon, which has been a dominant force in the space on the back of its Prime enabled ultra-fast same-day delivery, one-day shipping and pick-up services.

Moreover, the retailers are trying all means to expand their delivery capabilities to grab a share in this promising e-commerce market.

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Walmart Challenges Amazon’s Dominance

Walmart, which has been expanding its e-commerce capabilities and same-day delivery capacity, witnesses more than 120 million American monthly visitorson its shopping site — Walmart.com. Hence, the company is a frontrunner when it comes to challenging Amazon’s dominance.

The company’slatest subscription-based service namely Walmart+ has the potential to challenge Amazon’s winning strategy. Notably, Walmart+ costing $98 per year subscriptionis likely to be launched in the later part of this month.

The latest service will pose direct competition to Amazon Prime. The service will comprise the most important member benefit— same-day delivery of groceries and general merchandise.

Other perks of Walmart+ subscription include early access to product deals and discounts on fuel at Walmart gas stations. Also, it will allow people to check out from Walmart stores without waiting in the queue via the company’s Scan & Go service. Further, the retailer has plans to roll out a Walmart+ credit card later on.

Further, Walmart reportedly intends to bring video entertainment features to its latest program.

We believe the company, which carries a Zacks Rank #3 (Hold), is expected to gain traction among customers on the back of the underlined service. Moreover, the service is cheaper compared to Prime subscription that costs$119 annually. This is likely to provide Walmart a further competitive edge against Amazon.

Apart from Walmart+, the introduction of Express Delivery service that promises to deliver orders in less than two hours remain noteworthy. Notably, the service allows customers to order above 160,000 products from Walmart’s food, consumables and general merchandise categories.

Additionally, the company’s recent tie-up with Shopify (SHOP - Free Report) remains a positive. Per the deal, both the companies introduced a channel to enable Shopify merchants to offer products on Walmart.com. This deal is likely to expand Walmart’s growth avenues in the e-commerce space.

Other Retailers in Fray

Efforts put in by other retailers like Target, Kroger, Costco and Big Lots to up their pickup and delivery game in a bid to strengthen e-commerce presence are hard to ignore amid this pandemic scenario.

Target’s huge investments to strengthen its same-day delivery services are yielding solid returns. Its Shipt buyout has expanded its same day delivery service, which remains a major positive. Notably, Shipt now operates in more than 1,500 outlets across over 200 markets.

Further, this Zacks Rank #3 company has recently rolled out fresh and frozen grocery pickup service which is likely to span across 1,500 stores in the United States.

Costco is gaining on its same-day prescription Rx delivery service. Notably, this service is available from 200 Costco locations. Apart from this, the two-day online grocery delivery and Instacart same-day delivery service offered by this Zacks Rank #3 company, remains noteworthy.

Meanwhile, Big Lots has joined forces with Instacart recently. The deal aims at providing same-day delivery service from nearly 1,400 Big Lots stores across 47 states in the United States.

Currently, Big Lots sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kroger is riding on grocery delivery service — Kroger Ship. Further, its partnership with Ocado,online grocery delivery firm, remains a major positive. Also, this Zacks Rank #1 company’s tie-up with Instacart is driving its online delivery game.

Amazon’s Status

Despite growing initiatives by the traditional retailers, Amazon’s solid Prime momentum continues to aid its dominant position in the online retail space.

Prime Free One Day service, AmazonFresh and expanding two-hour delivery service of natural and organic products such as meat and seafood, fresh produce and staples from Whole Foods Market are driving customer momentum.

Also, expanding Prime Video content with growing investments on original content remains encouraging for Prime membership.

Notably, Prime member base stands currently above 150 million users.

Further, the company has been spending heavily to expand fulfilment center network and build delivery stations, primarily to cut shipping costs and accelerate delivery. These initiatives remain commendable.

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