For years, Walmart’s relationship with e-commerce reminded me of a very large man trying to squeeze himself into a very small sports car. I respected the effort. I admired the determination. I also wondered whether someone was eventually going to remove a door.
Walmart understood that online shopping mattered. The company invested billions of dollars, bought technology businesses, built fulfillment capabilities, redesigned its website, expanded pickup, launched delivery services, introduced Walmart+, added third-party sellers, and generally did everything short of sending an executive to my house to place the order personally.
Still, the basic problem remained: Amazon had spent decades teaching consumers to begin almost every product search inside Amazon’s ecosystem. Walmart had stores, trucks, groceries, enormous purchasing power, and enough physical real estate to qualify as a minor geographical feature. Amazon had the digital habit.
Habits are difficult to break.
Then something changed.
Walmart stopped behaving as though its stores were obsolete buildings it needed to overcome. It began treating them as the foundation of its digital strategy. That decision may prove to be one of the most important strategic shifts in modern retail.
Instead of trying to become a slightly less convincing version of Amazon, Walmart began turning thousands of stores into local fulfillment centers positioned within relatively short distances of most American consumers. The same store where someone could buy laundry detergent, bananas, a television, motor oil, and a garden gnome at 9:30 on a Tuesday morning could also become the staging ground for a digital order delivered that afternoon.
The physical network was no longer a burden.
It was the advantage.
As of Walmart’s fiscal 2027 first quarter, which ended April 30, 2026, the company reported that global e-commerce sales had increased 26% from the prior-year period. Walmart said the growth was led by store-fulfilled delivery, advertising, and its marketplace. E-commerce added approximately 5.2 percentage points to Walmart U.S. comparable sales during the quarter.
Those are not the numbers of a retailer reluctantly dragging itself onto the internet.
They are the numbers of a company learning how to use its enormous physical footprint as digital infrastructure.
That does not mean Walmart has already won. It does not mean every e-commerce order is profitable, every customer will join Walmart+, or Amazon executives have begun polishing their résumés.
It means the competition has become more interesting.
The bull case argues that Walmart possesses a combination no other retailer can easily duplicate: enormous scale, trusted value pricing, grocery frequency, thousands of stores, expanding delivery capabilities, a growing advertising business, membership revenue, and a marketplace that can broaden selection without forcing Walmart to own every item.
The bear case argues that delivering low-margin products to individual homes remains a magnificent way to turn revenue into fuel costs, labor expenses, depreciation, and shareholder presentations about “long-term opportunity.” It warns that Amazon still dominates digital shopping behavior, Walmart’s profitability could be pressured by fulfillment expenses, and the company may need years of heavy investment merely to remain competitive.
Both cases contain uncomfortable amounts of truth.
So, can Walmart keep winning in e-commerce?
I believe it can, but the definition of “winning” matters. Walmart does not need to become Amazon. It needs to make online shopping profitable enough, convenient enough, and habitual enough that its existing customers stop dividing their lives between Walmart for groceries and Amazon for everything else.
That is a more realistic goal.
It may also be a more powerful one.
The Bull Case Begins in the Parking Lot
The strongest argument for Walmart’s e-commerce future is something digital investors once treated as an embarrassment: stores.
Walmart operates more than 4,600 locations in the United States. Those stores place merchandise, employees, refrigeration, parking, inventory, and pickup infrastructure near an enormous share of the population.
A traditional online retailer must move an item from a fulfillment center through a delivery network and eventually to the customer’s door. Walmart can do that too, but it can also fulfill many orders from a nearby store.
That proximity changes the economics and the customer experience.
If I need paper towels next week, nearly any online retailer can help me. If I need paper towels, cold medicine, diapers, dog food, and the exact breakfast cereal someone in my house has suddenly declared essential within the next two hours, local inventory matters.
Walmart’s stores function as an e-commerce shortcut.
Amazon has spent heavily building fulfillment centers, sorting facilities, delivery stations, and last-mile capabilities. Walmart spent decades building stores before the internet became the central battlefield. Those stores were designed for shoppers, not delivery algorithms, but they already contain the essential ingredients: products and proximity.
Walmart now has to make those assets operate efficiently in both worlds.
That is not simple. A store serving in-person customers while also fulfilling pickup and delivery orders can become a logistical ballet performed by people pushing large carts through aisles occupied by customers who have stopped directly in front of the milk to conduct a family conference.
But the potential is enormous.
The stores allow Walmart to provide pickup, same-day delivery, and expedited delivery without constructing an entirely separate national network from scratch. Every improvement in store-level inventory accuracy, order picking, routing, automation, and delivery density makes the system more useful.
That is the first major bull argument: Walmart already owns the difficult physical layer.
A competitor can build an attractive website. It can offer discounts. It can hire drivers. It cannot quickly create thousands of retail locations positioned near customers across the country.
Walmart’s parking lots are not glamorous. They do not appear in breathless technology documentaries beside slow-motion footage of robots.
They are still a competitive moat.
Grocery Is Walmart’s Habit Machine
The second bull argument is grocery.
Grocery may not offer the margins of software, luxury goods, or advertising, but it creates something incredibly valuable: frequency.
People do not buy televisions every week unless something has gone terribly wrong inside their homes. They do buy food regularly. Grocery shopping creates repeated contact with the retailer, repeated use of the application, repeated pickup or delivery experiences, and repeated opportunities to add other products to the basket.
That frequency helps Walmart turn occasional digital customers into habitual ones.
Once I am already ordering groceries, adding shampoo, batteries, socks, a phone charger, or a storage container requires almost no additional thought. Walmart does not have to convince me to begin a separate shopping journey. It merely has to place the product near the checkout button while my resistance is low.
This is where Walmart’s assortment becomes dangerous to competitors.
The company can combine food, household essentials, pharmacy items, apparel, electronics, home goods, toys, pet supplies, and general merchandise inside one order. The customer receives convenience. Walmart increases basket size. The delivery vehicle carries more revenue per stop.
Grocery also strengthens the membership proposition.
Walmart+ becomes more valuable when the customer uses delivery frequently. A person who orders once every several months may not care about a membership. A household that needs groceries every week can calculate the convenience with the speed of someone who has carried twelve bags through freezing rain.
The emotional sales pitch is not complicated:
Would you like your groceries brought to your door?
Would you like to avoid navigating the parking lot?
Would you like to avoid discovering that every checkout lane has been closed except the one containing a customer attempting to redeem a coupon printed during the Clinton administration?
Walmart+ is not merely competing with Amazon Prime on entertainment, shipping, or prestige. It can compete through relief.
Convenience is most powerful when it removes a chore people already dislike.
The Numbers Are Becoming Difficult to Dismiss
The company’s recent results strengthen the bull case.
In the first quarter of fiscal 2027, Walmart reported total revenue of approximately $177.8 billion, up 7.3% year over year. Global e-commerce net sales grew by roughly $8.5 billion, or 26%, primarily because of store- and club-fulfilled delivery.
Walmart U.S. comparable sales increased 4.3%, with e-commerce contributing approximately 5.2 percentage points to comparable sales. Walmart also reported double-digit percentage growth in Walmart+ membership fee revenue.
These figures matter because they suggest Walmart’s digital operation is no longer a side project attached to the main business. E-commerce is becoming a primary engine of sales growth.
At the end of fiscal 2026, Walmart had generated $713.2 billion in annual revenue. At that scale, producing double-digit e-commerce growth becomes mathematically significant. A small retailer can report 40% digital growth because it sold six items last year and found four additional customers. Walmart is adding digital volume to an already enormous base.
That scale creates advantages in purchasing, technology investment, delivery density, advertising reach, and supplier relationships.
It also creates a different kind of pressure.
A company generating more than $700 billion in annual revenue cannot rely on one clever product launch to transform its future. It must improve vast systems by small percentages. A few basis points of margin improvement can represent a meaningful amount of money. A few basis points of deterioration can make the earnings call sound like a hostage negotiation conducted with charts.
The recent growth says Walmart’s strategy is working.
The next question is whether the economics are improving along with the sales.
Advertising May Be the Profit Engine Hiding Inside the Shopping Cart
If Walmart’s e-commerce story were based only on selling products and delivering them to homes, I would be much more cautious.
Retail margins are thin. Delivery is expensive. Customers want low prices, fast service, perfect accuracy, no substitutions, free returns, and a cheerful driver who somehow finds the correct apartment despite instructions written by a person who has never visited the building.
That is a demanding business.
Advertising changes the equation.
Walmart possesses a valuable asset: purchase data. The company knows what customers search for, what they buy, how often they buy it, whether they purchase online or in stores, and how promotions influence behavior.
Brands will pay to reach those customers near the moment of purchase.
A cereal company does not merely want to show me an advertisement while I watch a video. It wants to appear when I search for cereal. A detergent manufacturer wants prominent placement when I am already deciding which detergent to buy.
This is high-intent advertising.
Walmart Connect, the company’s advertising operation, benefits from the traffic generated by stores, its website, its application, and marketplace sellers. Advertising generally carries much higher margins than selling groceries. As the digital audience grows, Walmart can sell more sponsored listings, display ads, and data-driven campaigns without placing another gallon of milk onto a truck.
In Walmart’s fiscal 2026 fourth quarter, Walmart Connect sales excluding Vizio grew 41%. The company has repeatedly identified advertising as one of the higher-margin businesses helping improve its overall profit mix.
This may be the hidden engine of Walmart’s digital strategy.
E-commerce brings customer attention and purchase activity. That activity attracts advertisers. Advertising income helps offset the cost of digital fulfillment. Better economics allow Walmart to invest in faster delivery and lower prices. Better service attracts more customers, producing more advertising inventory.
That is the flywheel investors want to see.
The bull case does not require Walmart to earn spectacular margins on every online basket. It requires the entire digital ecosystem—retail, membership, marketplace fees, fulfillment services, advertising, and data—to produce attractive economics when considered together.
Amazon followed a similar path. Its retail operation built the audience. Higher-margin businesses changed the financial profile.
Walmart is not reproducing Amazon’s model exactly, but it has clearly studied the homework.
The Marketplace Solves the Selection Problem
Traditional Walmart stores cannot stock everything.
Even a Supercenter has physical limits, although walking from one end to the other may cause me to question that claim.
Amazon trained consumers to expect almost unlimited selection. If Walmart wants to become a more complete digital destination, it must offer products beyond the inventory it owns.
The marketplace allows third-party sellers to list items on Walmart’s platform. Walmart expands selection without purchasing and storing every product. The seller gains access to Walmart’s customers. Walmart collects fees and may provide fulfillment, advertising, and other services.
In theory, everyone wins.
In practice, marketplaces require constant policing. More sellers can mean more counterfeit goods, poor-quality products, misleading listings, inconsistent delivery, fraudulent reviews, and customer service experiences that make people wonder whether they accidentally ordered from a folding table behind a gas station.
Trust is essential.
Walmart’s brand carries decades of consumer recognition. The company cannot allow its marketplace to become a digital flea market where every search produces fifteen strangely named brands selling the same object from the same factory.
If Walmart maintains standards while expanding selection, the marketplace can become a significant growth and profit engine. It can help Walmart compete in categories where its stores have historically offered limited options.
It can also make Walmart.com a destination rather than merely an ordering interface for the nearest store.
That distinction matters.
A customer using the website only for grocery pickup has a narrow relationship with Walmart. A customer who begins searching Walmart’s marketplace for furniture, auto accessories, appliances, electronics, gifts, and specialty products has a much broader one.
The marketplace gives Walmart permission to participate in more purchasing decisions.
Walmart Is Learning to Sell Time
Retailers traditionally sell products.
The strongest e-commerce businesses sell time.
They remove the time required to drive, park, search, wait, load, unload, and discover after returning home that the one item I actually needed never made it into the cart.
Walmart’s expedited delivery options are part of this shift. During the fourth quarter of fiscal 2026, sales through expedited store-fulfilled delivery channels grew more than 50%.
That growth suggests customers are willing to use Walmart for urgency, not merely planned shopping.
Urgency is valuable.
If I realize at 7:00 p.m. that I need supplies for a school project due tomorrow, price becomes only one part of the decision. Availability and speed become more important. The retailer capable of solving the immediate problem earns the order and perhaps a small portion of my loyalty.
Walmart’s local inventory gives it an opportunity to compete not only with Amazon but also with grocery delivery platforms, restaurant delivery services, pharmacies, specialty retailers, and convenience stores.
The company can become a general-purpose local delivery network.
That possibility extends beyond traditional retail. If Walmart can efficiently move products from nearby stores to households, it can use the same infrastructure for marketplace orders, pharmacy services, returns, and other commercial activities.
The store becomes a node.
The employee becomes part of a fulfillment system.
The parking lot becomes logistics infrastructure.
The retailer becomes a local commerce platform.
That is the ambitious version of the bull case.
Now for the Bear, Who Has Seen the Delivery Bill
The bear case begins with a painfully simple observation: revenue is not profit.
Customers love fast delivery. They love free delivery even more. Unfortunately, vehicles require fuel, drivers require compensation, orders require picking, technology requires investment, and products occasionally arrive looking as though they participated in a minor collision.
E-commerce fulfillment can be expensive, particularly for groceries. Grocery baskets may include refrigerated goods, frozen products, fragile items, heavy beverages, low-priced merchandise, and substitutions requiring customer communication.
The order must be picked accurately and delivered within a narrow window. A single missing item can damage the entire experience.
Walmart’s latest quarterly filing showed both the promise and the cost. The company reported improved gross profit mix in Walmart U.S., helped by advertising and other higher-margin businesses. At Sam’s Club U.S., however, increased e-commerce fulfillment costs tied to club-fulfilled delivery pressured the gross profit rate.
That is the tension in one financial report.
Digital growth can improve Walmart’s strategic position while making parts of the income statement less attractive.
The company believes scale, automation, delivery density, advertising, marketplace fees, and membership revenue will improve the economics. The bear asks how long that will take and how much capital will be consumed along the way.
Walmart’s operating expenses as a percentage of net sales increased in the first quarter of fiscal 2027. The company cited higher depreciation from capital investments, business reorganization costs, and increased healthcare expenses, among other factors.
Depreciation is the financial statement’s way of reminding investors that impressive infrastructure did not descend from the sky free of charge.
Automation, distribution centers, store renovations, technology platforms, delivery systems, and supply-chain upgrades require real money. Walmart has the cash flow to invest, but capital intensity still matters.
A retailer can grow digital sales rapidly and discover that it has created an extremely popular method of earning less money.
Amazon Is Not Waiting Politely
The second bear argument is competition.
Amazon remains deeply embedded in consumer behavior. For millions of people, Amazon is not merely a retailer. It is the default search engine for products.
That habit gives Amazon an enormous advantage.
It has a vast third-party marketplace, a mature fulfillment network, a powerful membership program, a major advertising business, extensive customer data, and a long history of training consumers to expect rapid delivery.
Amazon also possesses a financial weapon Walmart cannot duplicate: Amazon Web Services. Cloud computing profits have historically helped Amazon support investments across the broader company.
Walmart has advertising, memberships, and financial services, but it does not own a cloud platform generating operating income at AWS scale.
The competition is also broader than Walmart versus Amazon.
Target remains relevant in discretionary categories. Costco commands extraordinary membership loyalty. Grocery chains are improving their digital offerings. DoorDash, Uber, Instacart, and other delivery platforms want the local-commerce relationship. Chinese marketplaces compete aggressively on price and selection. Brands increasingly sell directly to consumers.
Everyone wants the same customer.
Walmart’s advantage is scale, but scale can also slow decision-making. Technology companies are accustomed to rapid experimentation. Large retailers must change systems while operating thousands of stores and serving hundreds of millions of weekly customers.
Walmart is renovating the aircraft while it is flying, carrying groceries, and asking whether anyone would like to apply for a credit card.
The Low-Price Promise Can Become a Margin Trap
Walmart’s identity is built around value.
That identity is especially powerful when consumers feel pressure from inflation, housing costs, healthcare expenses, and uncertain economic conditions. Shoppers trade down. Higher-income households visit Walmart more frequently. The company gains market share.
The same value promise limits pricing flexibility.
Customers may tolerate delivery fees for urgency, but they will resist if the total cost undermines Walmart’s low-price reputation. Marketplace sellers may want better economics. Employees need competitive wages. Drivers cost money. Fuel prices fluctuate. Theft, returns, and damaged goods create losses.
Walmart must somehow pay for convenience without making convenience feel expensive.
Membership can help spread delivery costs across recurring revenue. Advertising can subsidize retail margins. Automation can lower fulfillment costs. Larger order volumes can improve route density.
But none of these solutions is automatic.
If Walmart pushes too hard on advertising, search results may become less useful.
If it raises membership prices too aggressively, customers may cancel.
If it relies too heavily on marketplace sellers, quality may deteriorate.
If it charges too much for delivery, customers may return to pickup—or to competitors.
If it subsidizes delivery indefinitely, investors may eventually ask when the glorious digital future intends to contribute cash.
Retail strategy is frequently the art of moving a cost to a place where the customer does not immediately notice it.
There are only so many places.
Grocery Strength Can Also Be a Weakness
Grocery drives frequency, but it also carries lower margins than many general-merchandise categories.
If Walmart’s e-commerce growth is dominated by groceries and household staples, revenue may rise without producing the profit expansion bulls expect.
The ideal basket contains both essentials and higher-margin discretionary goods. The customer orders milk and eggs, then adds clothing, home décor, electronics accessories, toys, or beauty products.
But consumers do not always cooperate with the ideal basket.
Economic pressure can shift spending toward food and necessities. That mix may strengthen Walmart’s sales relative to competitors while constraining profitability.
Walmart’s recent results have shown strength in grocery. That is positive for market share and traffic, but the long-term digital thesis needs more than grocery volume. It needs a healthy combination of categories and services.
Advertising helps. Marketplace helps. Membership helps.
Still, the underlying merchandise mix matters.
Walmart cannot pay every bill with a sponsored cereal listing.
Customer Experience Is the Quiet Risk
E-commerce loyalty can be fragile.
A customer may use the same physical store for years despite occasional frustrations because it is nearby. Digital shopping reduces that geographic loyalty. A competing application is one tap away.
Order accuracy, inventory visibility, substitutions, delivery timing, product quality, returns, and customer service all shape the relationship.
Grocery substitutions are particularly dangerous because they require judgment.
If I order one brand of butter and receive another, I may accept it. If I order bananas and receive seven green objects capable of supporting a bridge, I become less enthusiastic.
The employee picking the order is making decisions on my behalf. The application must communicate those decisions clearly. Inventory systems must know what is actually on the shelf. Drivers must reach the correct address. Frozen items must remain frozen.
Every step creates another opportunity for my ice cream to become a beverage.
Walmart’s scale magnifies small failure rates. If a tiny percentage of orders go wrong across millions of transactions, a great many customers have disappointing experiences.
The company must improve digital service while maintaining the physical store experience. Employees cannot fulfill online orders efficiently if aisles are chaotic, inventory is inaccurate, or staffing is inadequate.
The technology and the store are not separate systems.
The website can promise perfection. The local operation must deliver it.
My Bull Case
I believe Walmart can continue winning in e-commerce because its strategy now fits the company it actually is.
It is not trying to erase the stores. It is connecting them.
It is not relying on product margins alone. It is building advertising, membership, marketplace, and fulfillment businesses around retail traffic.
It is not treating grocery as a low-margin inconvenience. It is using grocery frequency to create digital habits.
It is not waiting for customers to abandon physical shopping. It is allowing them to move between stores, pickup, delivery, and shipping according to the needs of each occasion.
That flexibility is Walmart’s strongest asset.
Retail analysts sometimes speak as though consumers must choose one permanent shopping identity. We are supposedly either store shoppers or digital shoppers.
In reality, I am whatever kind of shopper is most convenient at the moment.
I may visit the store when I want to browse. I may use pickup when I am already driving past. I may choose delivery when I am busy. I may order shipping when I do not need the item immediately.
Walmart can serve all four behaviors through the same relationship.
Pure-play e-commerce companies can provide excellent digital experiences, but they lack Walmart’s physical reach. Traditional retailers may have stores but lack Walmart’s scale, technology investment, or broad assortment.
Walmart sits in the middle, where physical and digital retail increasingly become one business.
The 26% global e-commerce growth reported in the first quarter of fiscal 2027 is strong evidence that customers are responding.
The continued growth in advertising and membership suggests the economics can improve.
The expansion of marketplace and expedited delivery suggests the platform is becoming more useful.
Those are real strengths.
My Bear Case
My concern is not that Walmart will fail at e-commerce.
My concern is that success may be expensive.
The company can continue producing impressive online sales growth while fulfillment costs, depreciation, wages, healthcare expenses, delivery subsidies, technology spending, and competitive pricing absorb much of the benefit.
Advertising may carry excellent margins, but Walmart must protect the customer experience. Membership revenue may grow, but Walmart+ still competes with one of the strongest consumer memberships ever created. Marketplace expansion may increase selection, but quality control becomes more difficult as the seller base expands.
Walmart’s stores are an advantage only if they operate efficiently.
A store with inaccurate inventory, inadequate staffing, congested aisles, and inconsistent fulfillment does not become a powerful digital node simply because someone mentioned “omnichannel” during an investor presentation.
Execution will determine whether the physical footprint is a moat or an expensive collection of buildings trying to perform too many jobs at once.
The bear case also asks what investors already expect.
A great business can be a disappointing investment if its valuation assumes years of near-perfect execution. Walmart increasingly trades as more than a defensive retailer. Investors recognize the advertising opportunity, digital growth, market-share gains, and improving business mix.
That recognition reduces the room for pleasant surprises.
The business may keep winning while the stock produces ordinary returns.
Those are separate questions, and the market enjoys teaching the distinction to people who discover it with actual money.
What I Will Watch Next
I am watching five areas.
First, e-commerce growth. I want to see whether Walmart can sustain healthy digital gains as comparisons become more difficult.
Second, fulfillment economics. Sales growth matters, but I want evidence that delivery density, automation, and process improvements are lowering the cost per order.
Third, advertising. Walmart Connect may be the clearest path to turning digital traffic into higher-margin profit. Continued growth would strengthen the entire thesis.
Fourth, Walmart+ membership. I want durable growth in paying members, engagement, renewal, and delivery use—not merely temporary sign-ups created by discounts.
Fifth, marketplace quality. More sellers and more products are useful only if customers trust what they are buying.
I will also watch the relationship between operating income growth and sales growth. If revenue rises faster than profit indefinitely, the digital story becomes less attractive. If higher-margin businesses allow operating income to grow faster than sales over time, the model becomes considerably more powerful.
That is the transition Walmart wants investors to believe is underway.
The company is trying to become a retailer whose profits are increasingly supported by services rather than solely by the difference between wholesale and retail prices.
If it succeeds, Walmart’s financial profile could become more resilient and more valuable.
If it fails, it will remain an enormous retailer operating a very popular delivery service with stubbornly expensive economics.
Final Verdict: The Bull Is Ahead, but the Bear Still Has the Receipts
My conclusion is cautiously bullish on Walmart’s e-commerce business.
The company has stopped treating e-commerce as a separate channel and begun integrating it into the entire organization. Stores provide proximity. Grocery provides frequency. Walmart+ provides recurring revenue and loyalty. Marketplace provides selection. Advertising provides higher-margin income. Fulfillment services provide another potential revenue stream.
Together, these pieces form a credible ecosystem.
The latest growth rates show that this ecosystem is gaining momentum. Global e-commerce sales rising 26% in a quarter is not cosmetic progress. Store-fulfilled delivery is solving real customer problems, and Walmart’s enormous physical network gives it an advantage that would be difficult and extraordinarily expensive for another company to reproduce.
But I am not declaring victory.
Retail history is filled with companies that grew sales, celebrated scale, and eventually discovered that customers had been receiving most of the economic benefit.
Walmart must prove that convenience can become profitable, not merely popular.
It must use advertising and membership revenue without weakening trust. It must expand marketplace selection without importing marketplace chaos. It must automate fulfillment without allowing the store experience to deteriorate. It must keep prices low while paying the very real costs of speed.
That is a demanding list.
Fortunately for Walmart, demanding lists are practically its business model.
Can Walmart keep winning in e-commerce?
Yes, I believe it can.
Not because it will defeat Amazon by becoming Amazon with larger parking lots. Not because every delivery order will suddenly produce software-like margins. Not because customers have developed emotional devotion to ordering paper towels.
Walmart can keep winning because it has finally understood the role its stores can play in a digital economy.
The company spent decades placing inventory near American households. E-commerce has given that old advantage a new purpose.
The bear is correct that delivery costs are real, competition is brutal, and execution will be difficult.
The bull is correct that Walmart possesses assets, scale, customer frequency, and data that few companies can match.
For now, I give the bull the advantage.
But I am keeping the receipts.
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