Amazon: Can It Maintain Its E-Commerce Dominance As Walmart and Costco Thrive?

Amazon (NASDAQ: AMZN) has long been the undisputed king of e-commerce, with a staggering 37% share of U.S. e-commerce sales. However, the rise of omnichannel retailing, which combines the convenience of online shopping with the accessibility of physical stores, has given competitors like Walmart (NYSE: WMT) and Costco Wholesale (NASDAQ: COST) a significant boost. As these retailers leverage their physical store assets to drive higher digital sales, investors may wonder if Amazon's pure-play e-commerce strategy is at risk of being left behind.

Walmart and Costco have both seen impressive growth in their e-commerce sales, driven by their omnichannel offerings. Walmart's e-commerce sales increased by 27% year over year in the 2025 fiscal third quarter, with store-fulfilled pickup and delivery playing a key role in its success. Costco, on the other hand, saw a 13% increase in e-commerce sales in its fiscal 2024 fourth quarter, with big and bulky items driving much of the growth. These retailers' ability to offer customers a seamless shopping experience across channels has proven to be a significant advantage.

Amazon, however, has been slower to adapt to the omnichannel trend. While it has made efforts to enter physical retail with Amazon Fresh, Amazon Go, and Whole Foods locations, it still lacks a large network of stores that can act as a network for omnichannel shopping. This lack of physical store presence may cause Amazon to lose some sales to competitors that can service customers with omnichannel options.

However, Amazon's core e-commerce business remains strong, and its logistics network is unmatched. The company's online stores and third-party sales together accounted for nearly $100 million, or about 62% of total sales in the third quarter of 2024. Although these segments grew slower than other segments in the quarter, they still represent a significant portion of Amazon's revenue.

Moreover, Amazon's focus on pure-play e-commerce has allowed it to maintain its competitive edge in the market. The company's robust logistics network enables it to offer faster and more convenient delivery options to customers, which can be a significant advantage in the e-commerce landscape.

In conclusion, while the rise of omnichannel retailing at Walmart and Costco may pose a threat to Amazon's e-commerce dominance, the company's strong e-commerce platform, logistics network, and diverse business segments will likely continue to drive growth and profitability. Amazon's ability to attract and retain customers will depend on its ability to innovate and adapt to changing consumer preferences, as well as its continued investment in its core e-commerce business.

Is AMZN Stock A Buy, Sell, Or Hold? We reiterate our Strong Buy rating on AMZN. While we acknowledge that Amazon may face increased competition from omnichannel retailers, we believe that the company's strong e-commerce platform, logistics network, and diverse business segments will continue to drive growth and profitability. Investors with AMZN shares can continue to hold them and observe how the company adapts to the changing retail landscape.