Walmart just made major strides in key area where Amazon excels

At a time when so many retailers are struggling to survive, Walmart is thriving. And there's a big reason for that.

Walmart is known as not just an essential retailer, but also a source of affordable goods.

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Whereas rival big box giant Target may be known for its fun, playful inventory, the Walmart name tends to be synonymous with low prices.

Plus, while Target certainly takes up its fair share of real estate, Walmart's footprint is much larger.

Walmart has more than twice as many store locations as Target. And Walmart Supercenters can easily be 50% larger than your typical Target store.

At a time when consumers are spending their money more carefully due to factors like inflation and recession worries, many retailers are losing business.

But during Walmart's most recent earnings call, the company reported that U.S. customer transactions increased 1.6% during the quarter compared with the same quarter a year ago. The amount customers spent individually also increased, which tells us that Walmart is clearly doing something right.

Walmart makes major strides in a key area Amazon is known for.

Image source: Getty Images

Walmart faces steep competition from Amazon

Some people might assume that Walmart's biggest competitor is Target. But actually, it's Amazon.

Both companies have a huge share of the market for similar reasons — a massive selection of inventory and competitive prices.

This isn't to say that Walmart doesn't have to pay attention to competing brick-and-mortar businesses.

Not only does Target have the ability to take customers away from Walmart in key categories like beauty and fashion — both of which it excels in — but from a pricing perspective, Walmart has Costco to contend with.

Yet the retailer Walmart seems to be gunning for is Amazon. And there's a key area where Walmart is undoubtedly catching up.

Walmart picks up the pace on delivery speed and reach

If there's one area where Amazon has a key advantage over Walmart, it's delivery.

Amazon mastered the art of fast shipping long ago. It's not unusual to place an order on Amazon and have a package show up just hours later.

Walmart's extensive network of brick-and-mortar stores give consumers easy access to the products they want and need — as long as they're willing to drive over.

But Walmart has recently made great progress in improving its delivery speed. And if it continues on that path, it might soon be able to match Amazon in that regard.

This effort on Walmart's part isn't new — it's been ongoing. The company announced earlier this year that it's using new technology to better map out routes and reach consumers in areas that have long been harder to access.

In fact, Walmart says its delivery program is able to reach 93% of U.S. homes already.

During the company's most recent earnings call, CEO Doug McMillon pointed out that Walmart is highly focused on this key area with the goal of bringing its products to more households efficiently.

“Delivery speed continues to help drive our business,” he said. “We'll soon reach 95% of the population in the U.S. with delivery options of three hours or less.”

Walmart's efforts are really paying off, as evidenced by the fact that e-commerce sales rose 21% year over year during the company's past fiscal quarter.

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If Walmart is able to keep improving on delivery speed while expanding its reach, it could gain a serious advantage over Amazon. It could also see a huge increase in Walmart+ subscribers, which could be another key revenue driver for the company.

Maurie Backman owns shares of Amazon.