It's filled with fruits you can touch

and meat you can pick out yourself.

This is a fulfillment center.

It's filled with robots that pick out products

that will arrive at your door.

The first is Amazon,

a company that accounts for an estimated 40%

of all e-commerce sales in the U.S.

but also has dozens of physical grocery stores

and hundreds more counting Whole Foods.

The second is Walmart,

a company that took in around $327 billion

from its physical stores in the U.S. last year

but is also investing heavily in its e-commerce business.

These companies fight for their share

of the estimated $5 trillion U.S. retail market,

has started to blur the lines between the two.

- I think Amazon and Walmart are moving

in on each other's turfs because they're so big.

- They are fighting for dollars

and they want to be that place that people go to

for shopping in-person and online.

- [Narrator] So let's take a closer look

at how the Venn diagram that is Amazon and Walmart

is quickly becoming a circle.

What are the areas these companies are competing in today

and will their fight for retail dominance

eventually make them indistinguishable?

The competition between these two wasn't always obvious.

Amazon built its everything store for the online shopper.

- Where they have really made a mark

is by appealing to people with fast delivery,

for almost anything you can think of.

- [Narrator] Walmart designed its super centers

for the in-person experience,

putting stores near American homes and promising them

every day low prices.

- [Advertiser] Walmart, always low prices, always.

- [Narrator] A majority of retail sales still happen offline

but as online sales have grown each year,

so too, has this head to head competition.

- The American consumer is really fickle.

You can't just get people these days

by offering the lowest prices.

You have to offer them the lowest prices

and a whole range of other products and services.

And I think the biggest players are trying to do them all.

- [Narrator] For Amazon that has meant

expanding into groceries, not just for delivery either.

Adding to its network of more than 500

Whole Foods locations.

Amazon is pushing deeper

into physical grocery with a new brand.

Amazon Fresh.

- Amazon Fresh is more like your traditional grocery store.

So you'll find a wide range of items

from brands that you're probably familiar with.

And you'll probably also find items at low prices.

- [Narrator] If that sounds familiar,

it's not a coincidence.

Walmart is the undisputed leader in grocery.

- Walmart is a massive retailer that really

at its base is an American grocery chain.

It sells other things, but most of its sales and profits

come from selling groceries.

And it's the largest company doing that.

- [Narrator] Data from Numerator shows

Walmart accounted for roughly 21%

of overall grocery spending in the U.S. in the last year.

Amazon.com and Whole Foods meanwhile,

made up about 3% of spending in the sector.

But adding Amazon Fresh to the mix gives the company

a store that experts say is priced to compete with Walmart.

- Food is of huge value for them.

One because food is something

that consumers buy really frequently

and people I've spoken to in this space have said

that it essentially it gives Amazon access to more data

of what their customers are purchasing

and how they're behaving.

- Amazon has 27 Fresh stores so far,

but the company recently announced

it would refocus its physical retail efforts

in part on groceries.

And it's doing so with an Amazon twist.

- It also serves as an avenue to sort of try out

some of these technologies that they've come up with

like the Just Walkout technology.

- [Narrator] Just Walk Out, which allows customers to shop

and walk out of the store

without stopping at a cash register

is in place at 11 Amazon Fresh stores.

The company's Dash Carts which also allow customers

to skip the checkout lines by paying from the cart instead

are used at other locations.

It's this tech that Amazon sees

as its differentiating factor.

Why a customer might pick Amazon Fresh over Walmart.

And in grocery loyalty is key.

- One thing that is unique about grocery stores

is people are really habitual about where they go.

And once they do make the switch over

you will have a higher likelihood of holding onto them.

- Narrator] As Amazon looks to peel away

some Walmart grocery shoppers,

Walmart is eyeing a greater share of the e-commerce market

dominated by Amazon.

In 2021 Walmart added nearly 60,000 new sellers

to its online marketplace.

And the year before it launched Walmart+

a subscription service that offers paying members

free shipping and fast delivery.

- It's very clear that Walmart created a membership model

to mirror some of the success

that Amazon has had with Prime.

There's a loyalty factor.

There's a sheer revenue factor

and they would love to have that model

as part of their effort to keep sales growing.

- [Narrator] But in other ways, Walmart's e-commerce efforts

look very Walmart.

The best example, Buy Online Pick Up In Store.

- For Walmart, Buy Online and Pick Up In Store

has been one of their major successes.

It's also been a major part of their e-commerce growth

that counts as part of their e-commerce sales.

And that's a huge growth driver for them.

- But for some delivery is still more convenient.

Amazon, which offers delivery in as little as five hours

in some cases is often the fastest option here.

It's able to do this in part

by having more than 380 fulfillment centers worldwide.

Walmart has just 31 dedicated e-commerce fulfillment centers

but the company uses more than 3,500 of its stores

to send out online orders.

And it plans to attach around a 100 smaller

fulfillment centers to existing stores

in the next few years,

some of which are already in operation.

- Walmart is really trying to leverage stores

to catch up to Amazon on e-commerce.

Sort of ironically because they have the goods

in those stores.

And they're trying to use those stores

increasingly as sort of hubs for delivery.

- An example of that is Walmart's Inhome Delivery service

which brings orders from the store

straight into a shopper's home or fridge.

Walmart says this service will be available

to around 30 million homes by the end of this year.

But all of these efforts cost money.

And for Walmart, retail isn't enough.

- They wanna find some other profitable revenue pools

to do things like build lots of fulfillment warehouses

to offer fast shipping.

- [Narrator] That's something Amazon does well.

The company is now the third largest digital advertiser

after Google and Facebook.

Ad sales brought in $31 billion for the company last year.

Walmart which recorded 1.6 billion in ad sales last year

sees this as an opportunity.

- Walmart has really emphasized

building an advertising business.

They have hired a bunch of people.

They've restructured that side of their business

over the last few years

because they want to have another profitable revenue source.

Just like Amazon.

- [Narrator] It's clear, this competition

is changing Walmart and Amazon.

Shoppers don't need to go into a Walmart

to shop with the company nor do they need to trust Amazon

to pick out the right avocado for them

and low prices and fast delivery are now expected from both

but will these companies ever really be the same?

- I think that Amazon and Walmart

are getting more similar in some ways,

but they're so fundamentally different

in where they came from.

- [Narrator] Walmart, with its background in physical stores

is now using those to help grow its e-commerce business.

While Amazon is using the money it makes

from its digital offerings to support its physical growth.

- So they're crossing each other's paths.

They're getting on each other's turf,

but they're not the same.

- [Narrator] Even if the two

are starting to look more and more similar.

(light music)