Who is leading the grocery race in America? Via Investing.com

Investing.com – Amazon (NASDAQ: ), with a market share of around 40%, continues to dominate the US e-commerce market thanks to its impressive Prime service, which offers free, free shipping and a wide variety of products in its market.

But despite Amazon’s strong position, Bernstein analysts believe that Walmart (NYSE: sell groceries.

Walmart’s focus on staples, which make up about 70% of its sales compared to Amazon’s 53%, positions the retailer well in the e-grocery segment. While the focus on low-end staples may present a challenge, Bernstein believes Walmart’s grocery strength is a huge opportunity. The research suggests that grocery is a key area where Walmart can excel in e-commerce.

The report goes on to compare the business practices of other leading retailers in the mass/group shopping space.

Purpose (NYSE: ) is known for being vulnerable to the e-commerce revolution due to its focus on selective manufacturing and heavy-handed retail fulfillment. On the other hand, Costco (NASDAQ: ) has partnered with Instacart (NASDAQ: ) for same-day food delivery, avoiding the high costs associated with in-house fulfillment.

Bernstein also examines the balance between first-party (1P) and third-party (3P) sales among these vendors.

Amazon uses a hybrid model with a third of its Gross Merchandise Volume (GMV) from 1P sales, while Walmart, Target and Costco rely heavily on 1P sales.

According to Bernstein’s analysis, retailers with large 3P marketplaces, such as Amazon, are in a better position to increase advertising and market rates. Walmart’s advertising revenue is currently a low single-digit percentage of its GMV, but there is potential for growth in the marketing and advertising sectors.

“We believe that WMT can play by growing its market but probably will not reach the level of AMZN as WMT balances between maintaining its e-grocery position and growing the business with and more 3P profits,” analysts led by Zhihan Ma said in a note. .

In general, analysts emphasize that the success of e-commerce, especially in the US, is driven by scale and the ability to control high labor costs. Although Amazon leads in non-grocery categories, Walmart’s strong grocery base, network equity, and highly profitable network position it to grow profitably in -grocery.

“WMT’s brand value leadership and price leadership in grocery, along with its extensive retail footprint and fulfillment capabilities give the company the right to win,” analysts explained. However, since retail is the traffic driver, WMT’s approach to online success will be different from AMZN’s.

They expect Walmart to continue to focus on 1P, grocery products, and pursue growth in other revenue streams while exploring automation to reduce e-commerce costs.