E-tailing update: Amazon’s grocery gambit

From the November 2025 edition of Supply Chain Management Review.

November 2025

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This represents my 10th Insights column about the evolution of consumer-based e-commerce—that I’ve termed e-tailing. Their purpose is to chronicle the evolution of e-tailing from the eyes of a supply chain analyst. They are primarily focused on the battle between the heavyweights—brick-and-mortar Walmart versus e-tailer Amazon—as a reflection of what has been happening in the retail industry.

For the past few years my focus had been on the planning changes that would be needed to accommodate uncertainties and severe supply shortages, such as those experienced during the COVID-19 pandemic. And more recently, what was happening post-COVID—when Amazon and Walmart were starting to bear the fruits of their labor, post-pandemic. Both gained substantially vis a vis retailing competitors.

My last e-tailing Insights update was titled “E-tailing update: Brick-and-mortar retailers struck back” in the November 2024 issue of SCMR. The subtitle stated “Two-channel shopping is adding pressure to Amazon to lure customers.” The summary stated that e-commerce online ordering and brick-and-mortar shopping have to be fully integrated in the emerging retail business model. Companies like Walmart, Costco, and Target are now success stories using this approach with grocery. Meanwhile, Amazon recognizes that it has fallen short with its grocery initiatives. I suspect that Amazon now views this issue as existential because if it doesn’t address it, the Amazon.com platform could become the new Sears catalog. Customers would come to the site only to benchmark the price of an item to get a better price at a store. So, look for Amazon to make a big move, in grocery or not. Either way, don’t count Amazon out in the long run.

Amazon announced its gambit

My prediction was correct about Amazon making a big move. Recently, it announced its gambit move in the strategic chess match with Walmart. An online Wall Street Journal (WSJ) article discussing it was titled “Amazon Launches Same-Day Fresh Grocery Delivery in 1,000 U.S. Cities” (Aug. 13, 2025). With the subtitle, “Online retail giant plans 2,300-city service by year’s end in quest to compete with Walmart.” To my recollection, it is telling that this is the first time Amazon has specifically targeted Walmart. That I’ve deemed the first behemoth two-channel (i.e., stores & online home delivery) company since Sears, back in the day, with stores and catalog home delivery).

Certainly, Amazon has always positioned itself as the top dog in e-tailing with home delivery. Its holy grail long-term goal is to achieve same-day delivery for the lion’s share of its customers. It has been expanding, fine-tuning, and digitizing its logistical network to achieve a fast-shipping goal—getting closer to the customer and shipping rapidly. It has been the most successful innovator in evolving distribution centers (DCs) into full-fledged fulfillment centers, including large-scale automation via robotics.

The article stated that same-day grocery delivery was launched in the 1,000 cities Amazon currently offers grocery delivery, and it will add 1,300 more by year end. On news of this, the stock market showed shares of Instacart-owner MapleBear, Inc., DoorDash, and Kroger declining—so the initiative targets others in the grocery supply chain. Furthermore, that “Amazon is the largest e-commerce company, but its grocery business hasn’t grown as fast as some rivals.” And “Walmart’s online business surpassed Amazon’s in terms of sales, according to estimates from eMarketer.” “With same-day deliveries to more than 90% of the country.”

The following five publications from the WSJ chronicle its progress this past year.

1. “Amazon CEO Says AI To Reinvent Operations,” (April 11, 2024).
2. “Amazon Steps Up Grocery Delivery,” (Nov. 11, 2024).
3. “Whole Foods Courts Shoppers with New Minimarket Concept,” (Dec. 2, 2024).
4. “Physical Stores Still Vex Amazon,” (Feb. 5, 2025).
5. “Whole Foods Staff to Join Amazon,” (Aug. 28, 2025).

Amazon has done a reasonable job of integrating Whole Foods into its website and making it more affordable by creating a private-label brand. For example, Amazon customers can return goods bought online to a grocery store location. However, I believe much of this has done little to build a grocery presence toward customers. Interestingly, up to now, Whole Foods employees were not Amazon employees. Do all Whole Food shoppers even realize that these employees were never part of Amazon?

Thus, apart from once in a while seeing a Prime delivery driver, they were the only human contact Amazon had with customers. Moreover, good luck getting a human rather than a computerized bot to answer a customer service question. Amazon’s supply chain (sans grocery) is largely a 100% virtual shopping experience, involving little human and even physical product contact. Yet Amazon wants to control the entire supply chain from DC to the customer’s door. Thus, it no longer has full confidence in third-party logistics providers (3PLs) to do home deliveries.

Moreover, starting with the “Amazon Go” concept introduced in 2018, “Amazon has closed dozens of branded retail stores in recent years” (WSJ, Feb. 5, 2025). These include branded retail stores including “bookstores, fashion outlets, and its ‘4-Star’ locations.” And “after a decade-long experiment with brick-and-mortar stores, Amazon’s dominance online has yet to translate into a successful strategy for connecting with shoppers in the real world…”

Speaking of Walmart

While it has taken a while, Walmart, on the other hand, has proven that it is not “an elephant that can’t dance” when it comes to online fulfillment. It innovated into providing store-based (rather than DC-based) fulfillment—including store pickups and returns, as well as home deliveries. Does it connect with its shoppers and local communities? You bet it does for its price-conscious shoppers. It abides by its “everyday low prices” slogan, even during these inflationary times. In addition, it offers its local residents and family members jobs and a possible career path with them. Even possibly hiring them as greeters during their retirement. And it may come to their aid when disaster strikes—such as it did in response to the aftermath of hurricane Katrina 20 years ago.

The following publications from the WSJ chronicle Walmart-related progress this past year.

1. “DELIVERY WARS – Walmart Races Amazon to Your Front Door,” (March 8-9, 2025).
2. “Walmart Taps Instacart Executive to Lead Its AI Ambitions,” (July 24, 2025).
3. “Walmart Wins Over More Shoppers,” (Aug. 22, 2025).
4. “Biggest Retailers Prosper in Tariff Economy,” (Aug. 22, 2025).
5. “Amazon’s Grocery Bet Won’t Knock Out Rivals,” (Aug. 22, 2025).
6. “Amazon Plans to Shut Fresh Grocery Chain in U.K. After Just 4 Years,” (Sept. 24, 2025).

Inflation and the threats of tariffs are driving some number of new price-conscious customers to Walmart. It is “absorbing enough of the cost to keep price hikes lower than the national average.” (Aug. 22, 2025). Also “it is winning over shoppers with grocery discounts, fast shipping, and in categories like more elevated fashion offerings.” So, while Amazon’s planned expansion of same-day delivery of grocery is certainly impressive, “Instacart, DoorDash and Walmart have competitive strengths of their own.” In particular, “Walmart’s thousands of stores are powering the most serious challenge Amazon has faced in its race to deliver everything, everywhere.”

Competitive assessment

Per the summary of the last e-tailing update, two-channel stores are apparently the current hot trend for brick-and-mortar retailers. Especially for busy one-stop shopping families. Because a typical family has to stock up on groceries at least a few times a month, there is a better shopping option than just online ordering with home delivery. A family might instead order some items online that they want to make sure are going to be there during a store visit. Then pick the items up along with the groceries and other household goods they need. The parents could declare these family “shopping” events by having lunch or dinner there as well. Many shoppers like these one-stop shopping visits which are enjoyable and allow one to browse. These are similar to the shopping models of grocery leaders like Walmart (the #1 grocer), Costco (#3), and Target (#8).

Generally, Amazon customers are more affluent and/or highly educated than Walmart customers. The former value convenience and will pay more for it—they prefer a largely no-hassle virtual shopping experience. On the other hand, Walmart shoppers are more rooted in the “real physical world” that might not be hassle-free, yet is filled with interactions with a retailer’s employees. As long as they get good products for the lowest price. And these will typically not include branded and fashion-oriented products—because those product suppliers do not want to sell at the lowest price.

They will need to evolve as the U.S. ages

So, generally after Amazon implements its extended supply chain, and inflation has abated, it and Walmart will remain the leaders in their respective markets. However, the Baby Boomer shopper base is aging, and creating a very robust “Longevity Economy.” This was covered in Insights column (September/October 2023) titled: “The ‘longevity economy’: Seniors need innovative supply chains.” It was subtitled: “As the United States gets older, there is much potential in developing products for older populations.”

I wrote the column to be self-serving—I am one of the oldest Boomers. Today there are not a lot of products developed for Boomers, whose health is declining in terms of their physicality and mental acuity. The Gerontological Society of America recognizes five phases of senior aging as: go-go, go-slow, slow-go, slow-slow, and no-go in its “Longevity Economics” report May 2018.

After finding that there is a dearth of products for them, many Boomers are currently taking “bucket-list” trips while they still have mobility. However, once they reach the latter phases of aging, they will be more homebound—if they choose to age in place. They will rely less on brick-and-mortar retailers, and more on e-tailers to provide them with basic needs such as food, clothing, shelter, and health-related products (that includes both goods and services such as installation and post-sales support). Senior homes will need to be wired to the worldwide web and their smart devices connected inside their homes.

Being tech-savvy myself, in my later phases, I will likely favor virtual supply chain e-tailers like Amazon. However, for example, when I bought my last smart TV at Best Buy, the Geek Squad integrated it into my household intercom system. It is comprised of Amazon Alexas on each of the three floors, plus regular TVs with Amazon’s streaming Firestick. If I had bought the TV on Amazon, who would have helped me? Today’s Amazon does not support the hardware it sells. Maybe it should.

In summary, both Walmart and Amazon will need to find suppliers for the goods and services Boomers will need. Because Amazon is more tech-savvy than Walmart, it will likely be able to do this. This may not be the case for less tech-savvy Walmart. However, since Walmart knows its customers well, I would not bet against it evolving more toward their e-tailing needs.

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