Walmart has long been the undisputed champion of retail, reigning as the biggest retailer for over a decade. But now, after 12 years of dominance, Walmart has officially lost its title to Amazon. Here’s a look at what’s happening and how Amazon managed to pull off this impressive feat.

The Numbers Behind the Shift

For the last 12 years, no company outpaced it in revenue. But Amazon has now surpassed Walmart with its record-setting earnings. In the final quarter of 2024, Walmart reported $180.6 billion in revenue. However, Amazon brought in a higher total of $187.8 billion, marking the first time in over a decade that Walmart has fallen short in the revenue race.

To clarify, revenue refers to the total income a company generates before any expenses are subtracted. While it’s not the same as profit or sales, revenue is a key measure of a company’s size and success.

Why Did This Happen?

Walmart’s reign ended partly because Amazon has rapidly diversified its revenue streams. Unlike it, which primarily generates income from retail, Amazon’s revenue also comes from its hugely successful services like Prime Video and Amazon Web Services (AWS). These businesses, particularly AWS, have fueled Amazon’s growth. AWS provides cloud computing services, which has seen tremendous growth in recent years.

“Given the growth trajectories of the two companies, it was always likely Amazon would eventually overtake Walmart in revenue,” said retail expert Neil Saunders. Amazon’s expansion beyond retail has helped it gain a substantial edge.

Amazon’s Diverse Edge

While it still leads in areas like grocery sales, Amazon has excelled in online sales and technology services. Amazon’s e-commerce sales surged during the Covid-19 pandemic, with many people shifting their shopping habits to online platforms. Since 2019, Amazon’s U.S. sales have doubled, thanks to this long-term shift in consumer behavior.

Another key factor is Amazon’s success with AWS. The cloud business has doubled since 2020 and now makes up around 17% of Amazon’s total revenue. This significant boost from tech services has played a huge role in propelling Amazon ahead of Walmart.

Walmart’s Response

it remains a major player in retail, especially in grocery sales. It still leads the way in total annual sales, surpassing $600 billion in both of the last two years. However, the company recently reported a slowdown in profit growth, despite increased sales. Walmart’s stock dropped by 6% following its earnings report, indicating that investors are worried about the company’s ability to keep pace with the growing competition.

Walmart’s CFO, David Rainey, also expressed concerns that tariffs could affect the company’s bottom line. These challenges have added to the uncertainty, though Walmart remains confident about its future. It is focusing heavily on expanding its e-commerce presence to compete with Amazon’s online dominance.

Amazon’s Dominance in E-Commerce

Amazon’s strength lies in its ability to adapt and innovate. Its investment in technology and online shopping has made it a leader in e-commerce. While Walmart dominates in physical retail, Amazon’s digital model has allowed it to grow rapidly. As people continue to prefer the convenience of online shopping, Amazon’s ability to meet those needs has given it an edge in the competition for retail dominance.

A Future of Competition and Innovation

Although Amazon has surpassed Walmart in quarterly revenue, both companies continue to dominate their respective fields. Walmart’s deep roots in physical stores and grocery sales remain a powerful force, while Amazon’s continued expansion into new markets and industries will likely keep it at the forefront of retail innovation.

“Amazon is still a relatively young company, but its innovation and ability to create value for customers has been crucial to its success,” said Saunders. The competition between these retail giants is far from over, and it will be interesting to see how both companies evolve in the coming years.

Conclusion: Who Will Stay on Top?

While Walmart may have lost its crown as the biggest retailer, it’s far from out of the game. With over $600 billion in annual sales and continued investments in e-commerce, Walmart is still a giant in the retail world. Amazon, with its diverse revenue streams and relentless focus on innovation, has solidified its position as a major player across multiple industries.

The rivalry between these two companies is likely to continue, with each one striving to stay ahead in an ever-evolving marketplace. Only time will tell which company will continue to rise and who will face new challenges in the world of retail.