In the public discourse of competition policy, few narratives are as persistent as the “entrenched monopolist.” The narrative asserts that once a digital platform achieves a certain scale, network effects create an insurmountable moat, rendering the incumbent immune to competitive pressure. For years, this has been the prevailing argument made by antitrust hawks regarding Amazon’s position in the U.S. e-commerce sector. However, looking at the empirics of 2024 and 2025, it is becoming increasingly clear that this view of the market fails to capture the dynamic reality on the ground.
The latest data from the retail sector suggests that we are witnessing dramatic changes in a fiercely contested retail sector. The resurgence of traditional retailers like Walmart demonstrates that the digital economy is far more contestable than antitrust hawks often admit. Through aggressive investment in logistics, third-party marketplaces, and retail media networks, these historically brick-and-mortar competitors are structurally altering the economics of retail by blending online and in-store features and rapidly eroding Amazon’s lead.
Sellers Increasingly Multi-home
To understand the shifting landscape, one must first look at the supply side. E-commerce platforms are two-sided markets, and for several years, Amazon was the fastest-growing venue for third-party sellers seeking national reach. That is no longer the case.
Data indicates rapid catch-up growth by Walmart. Walmart announced that its U.S. third-party seller Marketplace grew 34% in Q4 2024. By mid-2025, Walmart Marketplace surpassed 200,000 active sellers, achieving an annualized growth rate that significantly outpaces Amazon’s. In the first five months of 2025 alone, Walmart added roughly 44,000 new sellers to its Marketplace, a pace that dwarfs the steady state of more mature platforms. While Amazon’s seller base remains larger in absolute terms, the rate of change is the crucial economic indicator. It signals that the marginal seller is increasingly multi-homing by listing products across multiple platforms to reach different demographics.
This is rational economic behavior. Sellers are diversifying risk and rejecting exclusivity. The influx of international sellers to Walmart echoes the globalization of supply chains that fueled Amazon’s early rise and proves that when a high-growth alternative exists, purportedly insurmountable moats can prove to be shallow puddles.
Physical Stores Provide a Logistics Bridge Over Any Fulfilment Moat
For a decade, the primary argument made by antitrust hawks for Amazon’s supposedly unassailable position was its logistical infrastructure, particularly Fulfillment by Amazon (FBA). The capital expenditure required to replicate two-day delivery nationwide was viewed by antitrust hawks as a barrier to entry so high that no other firm could cross it.
This analysis, however, ignored the latent assets of traditional retailers. Walmart successfully leveraged its massive physical footprint, where 90% of the U.S. population lives within 10 miles of a store, to build its own last-mile logistics network. By 2025, the adoption of Walmart Fulfillment Services (WFS) had become a key driver of this growth, offering sellers a 50% boost in Gross Merchandise Volume (GMV) on average.
Target, similarly, has demonstrated the value of using its network of brick and mortar stores as fulfilment hubs. 75% of Americans live within 10 miles of a Target store. In Q4 2024, Target reported digital comparable sales growth of 8.7%, driven largely by its same-day delivery services.
By utilizing stores as forward fulfillment centers, retailers with large networks of brick-and-mortar stores have arguably achieved a more capital-efficient last-mile solution than a pure-play warehouse model. The result is a convergence in service levels: consumers can now get two-day or same-day delivery from multiple providers. When service quality converges, the market commoditizes, and price competition intensifies, providing a clear win for consumer welfare.
Retail Media Networks Drive Competitors’ Flywheel Effects
Perhaps the most significant development from 2024 to the present has been the explosion of retail media networks (RMNs). Advertising revenue is high-margin, and for years, antitrust hawks claimed it was an Amazon revenue stream that brick-and-mortar competitors could not access. RMNs now allow brands to advertise in stores and on third-party online marketplaces and retailer websites, and leading brick-and-mortar retail brands are seeing huge returns.
As a result, that profit engine is being replicated by Amazon’s competitors. Walmart Connect, the retailer’s advertising arm that reaches about 150 million Americans every week, grew 27% year-over-year in 2024, reaching approximately $4.4 billion in revenue. While still smaller than Amazon’s ad business, its growth velocity is superior. Economically, this is vital because it changes the profit equation for the challenger. High-margin ad revenue allows Walmart to subsidize its logistics and marketplace fees, creating a flywheel effect.
As CFOs at traditional retailers openly discuss digital profits and losses where ad revenue drives operating income, we are witnessing the emergence of fully funded competitors capable of sustaining prolonged price wars. This deepens the competitive intensity of the market, forcing all players to innovate faster to retain advertiser and consumer loyalty.
Lock-in Proves Elusive
The antitrust hawks’ “lock-in” theory claimed that Prime membership makes consumer demand highly inelastic, meaning that members would not shop elsewhere. The data refutes this. Cross-shopping behavior is at an all-time high. A 2023 study found that 84% of Amazon Prime members also had a paid membership with one of the four leading Big Box stores (Costco, Sam’s Club, BJ’s, and Walmart+). The modern consumer is price-sensitive and platform-agnostic, often checking prices across multiple sources. A single consumer might check on Amazon, Walmart, and Google Shopping simultaneously. The lattermost option can allow consumers to check prices across countless venues and retailers simultaneously.
While Amazon maintains a lead in third-party marketplace sales for now, Walmart’s e-commerce revenue is growing from a smaller base at a rapid rate that could lead it to pass Amazon in total online sales revenue. In high-frequency categories like online grocery, Walmart already had about 50% higher market share than Amazon in 2024, with Walmart at 27% and Amazon at just 18.5%. The rapid scaling of Walmart’s marketplace proves that lock-in is a myth. When a competitor offers lower prices or better convenience (such as easier in-store returns), consumers switch. Moreover, the resilience of other retailers like Target that operate online marketplaces and have the physical footprint to compete on logistics means that this competition isn’t limited to just Walmart and Amazon.
The Market Worked Quickly
The economic evidence from 2024 and 2025 paints a picture of a robust, dynamic market. The purported dominance of Amazon in the early 2020s, to the extent that it existed at all, was a temporary equilibrium that invited entry and innovation from rivals. Walmart and other traditional retailers have successfully bridged the technological and logistical gaps, transforming themselves into formidable omnichannel retailers. More and more retailers are following Walmart’s lead, creating their own bridges over the narrow gap that was once mistaken for a moat.
For policymakers, the lesson is clear: caution is required. Interventionist policies designed to break up or shackle the market leader are often based on a snapshot of the past, failing to account for the speed at which market forces erode competitive advantages. The rise of Walmart’s marketplace, the success of omnichannel logistics, and the booming competition in retail media all suggest that the market is working exactly as it should to drive down prices, expand choice, and force incumbents to fight for their position. Notably for policymakers, neither regulation nor court-ordered structural separations played any meaningful role.
