Wal-Mart has 2 huge advantages that should terrify Amazon

Walmart is no longer playing catch-up with Amazon, according to Barclays.

Walmart has shifted to "playing offense" against its biggest rival, and the retailer has two strengths giving it a key advantage: its physical stores and its grocery business.

"Walmart has an omni presence – Amazon does not – and Walmart can leverage its 3,522 US Supercenter units to gain a meaningful advantage over Amazon," analysts wrote in a research note published Wednesday.

Walmart is already using its stores to get a leg-up over Amazon online. The retailer rolled out a new discount last week on items that shoppers buy online and then pick up in one of Walmart's 4,700 stores — including those 3,522 Supercenters. This cuts down on shipping costs for Walmart, and Walmart passes those savings on to customers.

See photos of Wal-Mart stores over the years:

25 PHOTOS
Wal-Mart stores through the years
See Gallery
Wal-Mart stores through the years

Sam Walton's original store, Walton's Five and Dime, in Bentonville, Arkansas. 

(Photo by user Bobak via WikipediaCC BY-SA 2.5)

Family shopping at a Wal-Mart store. (Photo by Ralf-Finn Hestoft/Corbis via Getty Images)
MILFORD - JUNE 1: Shoppers checking out in a Walmart store on June 1, 1996 in Milford, PA. (Photo by Waring Abbott/Getty Images)
Daniel Deloria shops at Walmart in Oxnard with his family. A new ordinance proposed by Supervisor John Flynn would limit the number of food items at Walmart and Costco in Oxnard.. (Photo by Carlos Chavez/Los Angeles Times via Getty Images)
(Original Caption) Asda and Wal-Mart open their first 24 hour super store in Bristol.This follows one year after the US giant Wal-Mart's 6.7 billion pound takeover of Asda.The revamped US style store is 60% cheaper. (Photo by Alex Smailes/Sygma via Getty Images)
389833 01: (FILE PHOTO) This file photo dated May 25, 2001 shows customers entering and exiting a Wal-Mart store in Quincy, MA. Six women filed a lawsuit against the retail giant June 20, 2001, claiming that the employer routintely discriminates against its female workers. They are seeking class-action status on behalf of Wal-Mart''s 700,000 current and former female employees, which, if granted, would be the largest discrimination case of its kind in US history. (Photo by Darren McCollester/Getty Images)
Exterior of Walton's five and dime, a Walmart museum and tourist attraction site of Walton's first store near Walmart headquarters in Bentonville, Arkansas. (Photo by Brian Vander Brug/Los Angeles Times via Getty Images)
ROLLING MEADOWS, IL - JULY 26: A man leaves a Wal-Mart store July 28, 2003 in Rolling Meadows, Illinois. Wal-Mart said that sales in the month of July at its U.S. stores that were open at least one year could top expectations. Warm weather has helped turnaround slower retail sales following the cooler weather of May and June. (Photo by Tim Boyle/Getty Images)
Wal * Mart Supercenter Store front entrance and parking lot in Southeast USA (Photo by Visions of America/UIG via Getty Images)
Fairfax, UNITED STATES: (FILES) This 28 November, 2003, file image shows shoppers leaving the Wal-Mart store in Fairfax, Virgina. Wall Street shares traded higher Monday, with sentiment lifted by some merger and acquisition announcements and robust monthly sales from retail giant Wal-Mart. AFP PHOTO/FILES/Paul J. RICHARDS (Photo credit should read PAUL J. RICHARDS/AFP/Getty Images)
ST. CHARLES, IL - JUNE 23: A female Wal-Mart employee walks through a parking lot as she returns to work at a Wal-Mart store June 23, 2004 in St. Charles, Illinois. A federal judge has ruled that Wal-Mart may be sued for sex-discrimination, the suit will be the largest class-action civil rights case in U.S. history. (Photo by Tim Boyle/Getty Images)
CHINA - NOVEMBER 02: A cyclist passes by customers Tuesday November 2, 2004 outside a Wal-Mart Supercenter in Shenzhen, China. Wal-Mart Stores Inc., the world's largest retailer, said it plans to open as many as 15 new stores in China next year, expanding in the world's fastest-growing economy as the government lifts curbs on foreign store operators. (Photo by Dennis Owen/Bloomberg via Getty Images)
TRINIDAD, CO - MAY 15: Mountains loom over a Wal-Mart store May 15, 2005 in Trindidad, Colorado. Wal-Marts are now nearly ubiquitous on the American landscape, with over 3,000 stores coast-to-coast. With growth, Wal-Mart continues to weather criticism of low wages, anti-union policies as well as accusations that it has homogenized America's retail economy and driven traditional stores and shops out of business. (Photo by Chris Hondros/Getty Images)
MIAMI - NOVEMBER 25: People stand in front of a Walmart store before the doors open at 5am on the day known as 'Black Friday' November 25, 2005 in Miami, Florida. The day after Thanksgiving traditionally kicks off the Christmas shopping season in the U.S. (Photo by Carlo Allegri/Getty Images)
CHICAGO - SEPTEMBER 21: Wal-Mart employee Anna Hines walks through the parking lot of the soon-to-opened Wal-Mart September 21, 2006 in Chicago, Illinois. The controversial new Wal-Mart, Chicago's first, is set to open September 27, 2006 in the wake of a defeated Chicago wage law that would have set minimum 'living wage' requirements for big box stores. (Photo by Tim Boyle/Getty Images)
UNITED STATES - MAY 08: Shoppers leave a Wal-Mart store in Trevose, Pennsylvania, U.S., on Thursday, May 8, 2008. Wal-Mart Stores Inc., the world's largest retailer, posted first-quarter profit that rose more than analysts estimated after it cut prices on groceries and pharmacy items to lure consumers strained by higher food expenses and $3.70-a-gallon gasoline. (Photo by Mike Mergen/Bloomberg via Getty Images)
UNITED STATES - NOVEMBER 28: Shoppers crowd a Wal-Mart store in Oakland, California, U.S., on Friday, Nov. 28, 2008. U.S. retailers opened their doors at midnight and discounted merchandise as much as 70 percent on the day after Thanksgiving to entice customers during what may be the worst holiday shopping season in six years. (Photo by Chip Chipman/Bloomberg via Getty Images)
CHINA - JULY 16: The Wal-Mart Stores Inc. logo is seen outside a store in Beijing, China on Thursday, July 16, 2009. Wal-Mart announced today that it will sponsor the USA National Pavilion at the Shanghai World Expo in 2010. (Photo by Adam Dean/Bloomberg via Getty Images)
ROLLING MEADOWS, IL - JANUARY 12: A Sam's Club store sits next to a Walmart store January 12, 2010 in Rolling Meadows, Illinois. Wal-Mart Stores Inc., the parent company of Sam's Club, announced that it will cut approximately 10 percent of its 110,000 Sam's Club workforce as it tries to revive the big box retailer's sagging sales. (Photo by Scott Olson/Getty Images)
A Wal-Mart Stores Inc. store stands in Princeton, Illinois, U.S., on Wednesday, March 16, 2011. More than 100 Wal-Mart Stores Inc. workers paint a similar picture in sworn complaints about the company: Local managers made sexist decisions about promotions and pay, and top officials did nothing to stop them. The U.S. Supreme Court is poised to consider whether those allegations warrant a class-action suit of unprecedented size. Photographer: Daniel Acker/Bloomberg via Getty Images
The exterior of a Walmart Express store as seen in Chicago, July 26, 2011. (Photo by John Gress/Corbis via Getty Images)
CHICAGO, IL - AUGUST 15: Customers shop at a Walmart Neighborhood Market store on August 15, 2013 in Chicago, Illinois. Walmart, the world's largest retailer, reported a surprise decline in second-quarter same-store sales today. The retailer also cut its revenue and profit forecasts for the fiscal year. (Photo by Scott Olson/Getty Images)
Signage points customers to Walmart.com at the pharmacy exit during the grand opening of a Wal-Mart Stores Inc. location in the Chinatown neighborhood of Los Angeles, California, U.S., on Thursday, Sept. 19, 2013. Wal-Mart Stores Inc. will phase out 10 chemicals it sells in favor of safer alternatives and disclose the chemicals contained in four product categories, the company announced Sept. 12. Photographer: Patrick T. Fallon/Bloomberg via Getty Images
A Wal-Mart Stores Inc. location stands in Brasilia, Brazil, on Friday, Jan. 15, 2016. Wal-Mart Stores Inc. plans to close 269 stores, including its experimental small-format Express outlets, in a push to streamline the chain that will affect 16,000 jobs. The effort includes the closing of 60 money-losing stores in Brazil, a country where Wal-Mart has struggled. Photographer: Lula Marques/Bloomberg via Getty Images
HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

Walmart is also dominating Amazon when it comes to groceries, a category that Amazon entered in 2007 with the launch of a delivery grocery service called AmazonFresh.

Amazon has been ramping up its investment in the category lately with plans to open physical grocery stores, but Walmart is still far ahead of Amazon in the grocery market, according to Barclays.

STOCK PRICE FOR WMT

Full price information

"Walmart dominates in food in the US with (for the most part) the most attractive prices in food retail nationally," analysts wrote. "Amazon has not yet solved for fresh, nor are price points in non-perishables attractive. In addition, pricing in non-perishables is fairly complicated and inconsistent – a function of the fact that many items are from third party vendors."

Walmart offers in-store pickup for groceries ordered online at 600 stores nationwide. That number will increase to 1,100 stores this year, according to the company.

Walmart is also testing grocery delivery in several markets.

"If Walmart can solve for the last mile in fresh/food with simple, clear, and low pricing, Walmart would leapfrog Amazon in food delivery," the analysts wrote.

This would give Walmart an advantage in non-food categories, like general merchandise, as well, according to the analysts.

Overall, the analysts estimate that Walmart's ecommerce sales grew 36% in the fourth quarter, compared to 20% growth for Amazon in the period.

"Walmart has clearly decided to not only aggressively address its ecommerce inadequacies – the company appears to be trying to take Amazon head on," the analysts wrote.

NOW WATCH: The owner of New York's oldest deli explains how Katz's is able to sell 15,000 pounds of pastrami a week

See Also:
Ivanka Trump's brand is flourishing — here are 24 retailers that still sell her products
Walmart's possible takeover of Bonobos is infuriating some fans of the high-end menswear brand
Walmart and Target could beat Amazon on drone delivery

SEE ALSO: Walmart has a new kind of discount — and it's impossible for Amazon to beat

Read Full Story

Can't get enough business news?

Sign up for Finance Report by AOL and get everything from retailer news to the latest IPOs delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.