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US Online Grocery Showdown: Walmart and Amazon’s Duelling Strengths

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The US is the world’s largest market for online sales of food and beverages, with grocery e-commerce sales in the country totalling USD180 billion in 2022. Although a bevy of different retailers compete within the space, two giants of the industry – Walmart and Amazon – tower above the rest. Both of these retailers have invested billions in their respective bids to dominate the online grocery sector. Yet, even as these two leviathans battle for share, other operators demonstrate that it is possible not only to survive but also to prosper in US food and beverages e-commerce, given favourable conditions.

US Online Grocery Showdown chart1.svg

Walmart’s leading position in US food and beverages e-commerce is supported by its strength in curbside pick-up

Walmart and Amazon’s relative share of e-commerce sales across different food and beverages categories reflects each retailer’s unique strengths. For example, in terms of perishable foodstuffs, US consumers tend to prefer click-and-collect fulfilment options over home delivery.

This plays into the hands of Walmart and its vast network of stores, with approximately 90% of all US residents living within 10 miles of one. Presciently, Walmart began rolling out its curbside pick-up service in 2019, placing it in a strong position to leverage the pandemic-fuelled e-commerce boom in 2020 and 2021. Walmart is now the leading player in curbside pick-up in the US, with the service offered at 4,600 Walmart stores by the end of 2022.

Walmart has also invested heavily in developing its own proprietary same-day delivery service, offering customers this option from 3,900 of its US stores by the end of 2022. Still, with Walmart offering free curbside pick-up service on orders of USD35 or over, consumers have continued to utilise the service in large numbers even as they battle high inflation.

As a result, it is largely Walmart’s strength in curbside pick-up that has made it the online sales leader in perishable foods, according to Euromonitor International’s new E-Commerce system – which tracks e-commerce sales by industry, category, subcategory, brand, and retailer on a quarterly basis.

Walmart's online sales accounted for 31% of dairy products and alternatives, 21% of cooking ingredients and meals, and 32% of staple foods in the US in 2022

Source: Euromonitor International

All this means that Walmart currently reigns as the overall leader in US food and beverages e-commerce; even when excluding fresh food, Walmart’s market share as of Q1 2023 stood at 28%.

Amazon performs well in shelf-stable food and beverages that easily lend themselves to delivery

Although Walmart may command the overall lead in US food and beverages e-commerce, Amazon takes the top spot in individual categories.

In snacks, Amazon accounted for 26% of US online sales in 2022, and dominated in hot drinks, with a 56% value share of sales

Source: Euromonitor International

Amazon’s strength in shelf-stable categories is understandable when analysing the retailer’s typical mode of fulfilment. Amazon’s supply chain is strong in providing one- or two-day delivery of goods but less adept at providing same-day delivery. As a result, while Amazon’s model is not always a suitable fit for perishable foods, it is perfectly tailored for orders of shelf-stable products - such as hot drinks - where products ranging from coffee pods to tea can be easily packaged and shipped without cold chain logistics. Additionally, Amazon’s “infinite shelf” means its vast assortment of snacks is much greater than Walmart’s, which gives it an edge with consumers looking for variety across the category.

Despite Walmart and Amazon's significant advantages, other operators can still break through in food and beverages e-commerce

While Walmart and Amazon might be the clear leaders in US food and beverages e-commerce, the success of some other players means they cannot simply rest on their laurels. For example, in online sales alcoholic drinks, neither Walmart nor Amazon rank in the top two in the US.

Instacart and Drizly respectively accounted for 30% and 16% of online alcoholic drinks sales across the category in 2022

Source: Euromonitor International

Neither Instacart nor Drizly are “retailers” in the traditional sense. Instead, both are hyperlocal delivery services; third party service providers that legacy retailers can enter into partnerships with to offer same-day delivery and other services from their stores. In the US, all 50 states have their own regulations regarding online alcohol sales, creating enormous complexities for e-commerce retailers. This gives hyperlocal delivery services an advantage, as they are able to form direct partnerships with local retailers that are already licensed to sell alcohol in the areas in which they operate.

Walmart’s position as the overall US food and beverages e-commerce sales leader appears secure

US Online Grocery Showdown chart2.svgDespite Instacart and Drizly making inroads, in the first quarter of 2023, both Walmart and Amazon posted significantly faster year-on-year online food and beverages sales growth in the US than either service. As a result, the two juggernauts clearly remain the retailers to beat in the US online grocery space. With Walmart’s curbside pick-up strategy supporting its astounding growth of 55% during this period, its overall lead looks secure for the time being.

To obtain further insights from Euromonitor International’s new E-Commerce system, focusing on which retailers brands should prioritise forming partnerships with to boost digital sales across beauty and personal care, food and beverages, and home products categories, read our new report, Identifying Key Retail Partners for Brands to Expand E-Commerce Sales, and have a look at our on-demand webinar, Mastering E-Commerce Growth: How to Win Online Amid Uncertainty.

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