Earlier this week we dissected the similarities and differences between Amazon’s “Why” approach to innovation and Walmart’s “And” attitude. So, which strategy will lead to an ultimate winner in this fierce battle for retail supremacy? Only time will tell, but perhaps no other company needs to be a “Why” company if Amazon is already filling that role.
If you missed the first part of this series detailing the two companies’ different approaches, check it out here.
Walmart’s First-Mover Advantage Remains in the Store
Naysayers might be inclined to point out that sitting back and allowing just one company to push the needle will lead to inevitable gaps in innovation, but Walmart is certainly continuing to innovate in its biggest stronghold — the store (notably, an area where Amazon has had less success) — and that doesn’t seem likely to stop.
In just the last year, Walmart has:
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- Begun testing beauty bars in 40 locations and pet centers at five stores;
- Begun rolling out digital shelf labels with chainwide adoption planned for 2026;
- Added in-home customer sampling to its suite of data insights available to suppliers;
- Teamed up with AI-powered agriculture platforms Cropin and Agritask to enhance is produce sourcing and partnered with Denali on food waste recycling;
- Begun piloting an app that offers blind customers assistance in stores;
- Experimented with AI applications to better manage inventory across its supply chain;
- Bought a mall in Pennsylvania (and just bought a second one in Pittsburgh);
- Advanced its “Adaptive Retail” strategy with gaming and store tie-ins on Spatial and Minecraft; and
- Released a shoppable Super Bowl tie-in with Hellmann’s mayonnaise.
Where Amazon is Looking to Innovate Next
The jury’s out on whether Walmart is leading the innovation charge or following in Amazon’s wake in certain areas (retail media and Prime membership are two good examples of the latter). Regardless, digging into the “Why” questions that Amazon is currently asking gives a very interesting picture of where that company, and perhaps as a result the retail industry writ large, might be headed next.
Lucky for us, Amazon CEO Andy Jassy shared some of the “Why” questions he and his team are turning their attention to now in his annual letter to shareholders. We took a look at those questions and what we know about both retailers’ moves in these spaces so far.
Why does healthcare have to be so stressful?
This was actually the last question that Jassy shared, but perhaps the most interesting one because in many ways it falls into the realm of things that aren’t traditionally a concern for retailers.
The “medtail” movement is changing that, with Amazon, Walmart and many other retailers moving heavily into the healthcare space. And while the increasing number of medical-related services that these companies are offering might very well improve the healthcare experience, altruism isn’t the only motivator. Healthcare’s high profit margin is also a big draw. Despite some headwinds in recent years, EBITDA for the U.S. healthcare sector is projected to increase 7% annually to reach $987 billion in 2028, according to McKinsey.
In fact, healthcare’s fiscal appeal led NYU Professor Scott Galloway to predict that Amazon would move into the space back in 2020, well before the company’s- 2022 acquisition of primary care firm One Medical: “Basically every CEO has to be able to convince investors their stock price has a good chance of doubling in five years,” explained Galloway in a 2020 interview with GeekWire. “For Amazon to do that, even if they get operational leverage, they’re running into the law of big numbers, which means they probably have to add somewhere between $150 billion or a quarter of a trillion dollars in top-line revenue — add that — in the next five years. That helps us predict what businesses they are going into.
“Now, what does Amazon do? They come into an industry and they raise trust and satisfaction,” Galloway added. “And if you look at the industry where all roads lead to — high margin, huge industry, lack of consumer satisfaction — all roads lead to the same place. That’s healthcare.”
Since its acquisition of One Medical, Amazon has been moving full steam ahead into healthcare, including offering the subscription telehealth service as a reduced-price add-on benefit for Prime members, launching a service to help people with chronic conditions access benefits available to them and continually beefing up its pharmacy offerings.
But Walmart isn’t looking to be left behind in the medtail rush, especially since pharmacy has long been part of its core offering. Last year, that company began leasing clinical space in its stores for senior-focused primary care centers, although it has found that actually running medical facilities can be an expensive proposition; also in 2024, the company shut down its 51 Walmart Health centers, calling the business “unsustainable.” Instead, Walmart now seems focused on the digital side of the equation, as is Amazon, with enhanced offerings like same-day prescription delivery and streamlined fulfillment via robotics. In fact, just this week the company debuted a new shopping experience for customers on Medicare.
Why is AI so important?
Not surprisingly AI will be a key focus of innovation and investment at Amazon, with Jassy answering his own question by predicting that generative AI “is going to reinvent virtually every customer experience we know and enable altogether new ones about which we’ve only fantasized.”
He also added a warning for other companies: “If your customer experiences aren’t planning to leverage these intelligent models, their ability to query giant corpuses of data and quickly find your needle in the haystack, their ability to keep getting smarter with more feedback and data, and their future agentic capabilities, you will not be competitive.”
Amazon wants to be at the bleeding edge of this, which is why the company is already building more than 1,000 Gen AI applications that, according to Jassy, are aimed at “meaningfully changing customer experiences in shopping, coding, personal assistants, streaming video and music, advertising, healthcare, reading and home devices.” And that’s not including the “key primitives” (or building blocks) for AI development that AWS is working on. Jassy concluded by calling AI “a once-in-a-lifetime reinvention of everything we know.”
Walmart also is moving heavily in this space across all areas of its business, although without an AWS-equivalent division that development at the moment seems to be focused primarily on internal systems and processes. Still, Walmart has recently shown an Amazon-style penchant for renting out tech it’s developed internally to other companies as a white-label service, so there’s a possibility it will eventually do the same with AI applications.
Why haven’t personal assistants taken off yet?
Jassy sees great potential in this realm, and also views Amazon as having a head start with Alexa. But Walmart has been playing in this area for a while as well, with a range of new assistive AI offerings already available on its digital platforms and in stores. We also know there’s plenty more in the works thanks to the accidental reveal of an internal Walmart Teams chat last week at a Microsoft Build talk.
Why can’t we get items to customers even faster, and does it matter?
According to Jassy, the world has not yet reached the moment where gains in delivery speed are not worth the expense and effort. In fact, Jassy said that so far, every time “we promise faster delivery times, customers complete purchases at a meaningfully higher rate and shop with us more frequently,” and as such he plans to continue to up the ante.
This increasing speed of delivery at Amazon will continue to be enabled by the company’s regionalization of its fulfillment network as well as new product “placement algorithms,” all of which sounds very similar to what Walmart is doing with its supply chain transformation (see Part 1 for more details), albeit in a slightly different order. Walmart’s stores, for example, are already hyper-regionalized, and Walmart U.S. President and CEO John Furner said the company will be able to deliver to 95% of American households within three hours later this year.
Why can’t people in small towns enjoy the same fast delivery speeds as people in cities?
This question isn’t a big surprise given that Amazon just announced plans to spend $4 billion to build out its rural delivery network. It is, however, a direct challenge to Walmart, which has historically been the go-to for this consumer set.
Why can’t we help the hundreds of millions of people without broadband connectivity?
Definitely a question that wouldn’t normally fall to a retailer to answer, but this is Amazon, and Jassy said he believes the company’s Project Kuiper — a low-Earth-orbit satellite internet network, akin to Elon Musk’s Starlink — while being capital-intensive to launch, will eventually be a “meaningful ROIC [return on invested capital] business for us.”
Thus far, however, there’s been no indication that this will be one of the “why’s” that Walmart chooses to follow.
Regardless of where these two companies head next, one thing is clear, both Walmart and Amazon, are set to continue shaping the retail landscape, as they already have for decades.
Check out the first story in this series: Battle of the Retail Giants Comes Down to Amazon’s ‘Why’ vs. Walmart’s ‘And’
