The tech world has passed a big milestone, which came and went with relatively little fanfare. After years of gaining ground on Walmart as the world’s largest retailer by revenue, Amazon has now surpassed it. In its Q4 earnings, Amazon reported full-year 2025 revenue of $717 billion, passing Walmart’s $681 billion — a defining moment in the long-running competition between the two giants.
To be fair, this is a complex comparison of two different retail models, given a large chunk of Amazon’s revenue from divisions like AWS ($129 billion) and Amazon’s advertising business ($68 billion). That leaves its core e-commerce piece at about $520 billion, which still falls below Walmart’s $681 billion.
But that’s sort of the point. Amazon’s full revenue picture doesn’t diminish its place in this comparative exercise but strengthens it. The diversification and platform-driven retail ecosystem that Amazon has established in these other revenue centers point to its digitally-native advantages in reinventing retail.
That reinvention stems from the agility that’s gained from sidestepping physical store shelves. That in turn sidesteps physical constraints and overhead, and unlocks greater scale in the core e-commerce platform business. It also unlocks expansion opportunities into adjacent digital businesses that dovetail with the company’s retail ecosystem strategy.
Amazon Embeds Local Commerce Into Its AI Strategy With New Alexa+ Integrations
Front Door
Unpacking that a bit further, let’s look at Amazon Web Services (AWS). Scalable cloud computing infrastructure didn’t exist when Amazon needed it. So it built it as an internal resource. Then it realized that the advantages it gained from the product were a big enough demand signal that it could spin it out into one of the most successful infrastructure platforms in the world.
And with its rapidly growing advertising business, Amazon realized it was sitting on all of the ingredients that make online ads perform. It has robust first-party data, which offers privacy and practical advantages. Buying intent on Amazon is meanwhile even greater than on Google, given the shopping mode and mindset of those who show up at its door.
Speaking of showing up at the front door, Amazon conditioned users to do just that — direct navigation, followed by on-site search. That’s a rare behavior, as most websites don’t get direct navigation traffic but rather deep links from Google. But doing this let Amazon build a contextual search ad business inside its retail platform.
Now, Amazon advertising is one of the fastest-growing digital ad businesses on earth, along with Apple’s attempts (and OpenAI making moves). In any case, Amazon continues to build new businesses — everything from Whole Foods to Prime Video — on adjacency and platform economies of scale.
Born on Third Base
All the above is partly a platform advantage that compounds over time, as Amazon’s foundational pieces enable new ventures to be ‘born on third base.’ But to be fair, Amazon created those foundational pieces and is smart enough to leverage them — not to mention executing the new businesses, which isn’t a given.
It’s also worth noting that, though it’s digital-first, Amazon’s greatest achievements have been with atoms, not bits – the physical infrastructure of commerce. In other words, Amazon’s global logistics network. It has squeezed every possible efficiency out of its supply chain and delivery systems, creating a logistics-driven competitive advantage that generates value on razor-thin margins, amplified at massive scale.
Of course, much of the above aren’t new observations nor insights, but we raise them to compare Amazon’s digital-first retail strategy to an inverse expansion at Walmart. In other words, Walmart’s move into eCommerce via Walmart.com hasn’t been as effective as Amazon’s dealings in the analog realm.
That brings up another question about whether it’s easier to steer a massive business from a digital-native platform into the physical world, or vice versa. Either way, Amazon is now winning the race against Walmart, validated in the latest figures showing it surpassing the retail giant in total annual revenue.
