Amazon's Bold Grocery Play: The Walmart Challenge

For years, Amazon was cast as the great disruptor of retail. Now, in the grocery aisle, it's playing a different game: catch-up. The e-commerce giant is rolling out a series of bold, Walmart-inspired initiatives to close the gap with its formidable rival.

Internal documents reveal a strategic pivot toward massive warehouses, new distribution layers, and repurposed store networks. The goal is to master the complex world of perishable goods and win over shoppers who prioritize fresh food and convenience.

The shift reflects a hard-won lesson: mastery of e-commerce does not automatically translate to dominance in groceries, especially for perishable items that drive frequent shopping. Walmart's dense network of stores and distribution centers has proven difficult to replicate.

Amazon is now reshaping its retail infrastructure to compete head-on with Walmart's Supercenter model. The company is rolling out several key initiatives:

• SSD Supercenters: Massive warehouses designed for sub-same-day delivery
• 1DC Network: A new upstream distribution layer for high-velocity items
• Micro-fulfillment: Installing logistics hubs inside Whole Foods stores
• Project Taylor: Expanding sub-same-day delivery across Europe

These moves signal a fundamental change in Amazon's approach to the grocery business.

The numbers tell a stark story. As of September, Walmart commanded approximately 21% of the US grocery market, both online and in-store. In contrast, Amazon and Whole Foods each held roughly 1.6% market share.

Walmart's advantage is physical and logistical. With over 5,000 locations, an estimated 90% of the US population lives within 10 miles of a Walmart store. This proximity gives it a powerful edge in selling fresh food and other perishables.

It reveals a degree of Walmart jealousy that we didn't expect.

That sentiment comes from Michael Levin and Josh Lowitz, cofounders of Consumer Intelligence Research Partners, describing Amazon's new megastore concept as "mind-blowing."

Amazon's most visible response is the SSD Supercenter. Unlike traditional same-day warehouses, these facilities are designed to be larger to close the selection gap with Walmart in groceries.

Internal planning documents show Amazon intended to launch at least five such sites last year. One facility planned for the Chicago area is roughly 225,000 square feet—bigger than a typical Walmart Supercenter. It's designed to let customers buy fresh groceries, household essentials, and general merchandise all in one trip.

The company aims to add products not currently sold on its site and maintain in-stock targets above 95%. However, sub-same-day grocery delivery remains a small part of its business. At the end of September, only 5% of eligible customers used the service.

Beneath the surface, Amazon is re-engineering its entire logistics network. The new 1DC (one distribution center) layer stores frequently purchased products and replenishes fulfillment centers as demand emerges.

This represents a move from a "push" system, based on forecasts, to a "pull" system where fulfillment centers draw inventory as needed. By the end of 2025, Amazon planned to operate a dozen of these centers, capable of moving at least 20 million units a week.

Meanwhile, Whole Foods is being repurposed as logistics infrastructure. Micro-fulfillment centers are being installed in the back of select stores, turning them into local hubs for online orders. One upgraded site in suburban Philadelphia is expected to fulfill roughly 100,000 e-commerce units per week.

Everything hinges on solving one of the hardest problems in logistics: perishables. Internal plans show Amazon aiming to expand its perishables distribution capacity from 2.6 billion units in 2025 to 3.3 billion by the end of 2026.

Company documents stress that delivering high-quality perishables quickly and reliably is essential to scaling the business. The goal is expansive: making perishables available to "100% of Prime customers" as quickly as possible.

Amazon already serves more than 150 million US grocery customers and offers same-day delivery in over 9,000 cities and towns. The company added perishable groceries to its Same-Day Delivery service in 2025, now available in 2,300 locations.

Amazon's grocery strategy has evolved from disruption to imitation, recognizing that Walmart's physical network provides a decisive advantage in the perishables market. The company is betting that scale, speed, and a reimagined supply chain can close the gap.

Key developments to watch include the rollout of SSD Supercenters, the expansion of the 1DC network, and the integration of Whole Foods as a logistics hub. Success will depend on Amazon's ability to master the delicate balance of speed, quality, and cost in delivering fresh food.

As the competition intensifies, both retailers are leveraging their core strengths: Walmart's vast physical footprint and Amazon's technological prowess in logistics and delivery.