Amazon Scales Up Same-Day Delivery in Rural Areas, Where Walmart Has an Edge

Retailers are racing to snag e-commerce sales in rural America. 

Amazon (AMZN) aims to expand its same-day and next-day delivery to 4,000 “smaller cities, towns and rural communities” by the end of 2025, the company said in a press release Tuesday.The e-commerce giant is investing $4 billion in tripling the size of its delivery network, yet has a ways to go to match Walmart’s (WMT) reach in smaller communities, Morgan Stanley said.

“The battle for the rural last mile in America is intensifying,” Morgan Stanley told clients in a research note Monday.

“As Kong (WMT) fights Godzilla (AMZN) in the battle for retail and eCommerce supremacy, the favored weapon of choice has often been delivery/logistics,” the analysts said.

Winning over rural communities is a “$1 trillion opportunity,” according to Morgan Stanley. One-fifth of nationwide spending on goods, excluding cars and gas, occurs in non-metropolitan counties, the analysts said.

Rural residents’ grocery spending is particularly sought-after as retailers see an opportunity to close the gap in online food shopping, Morgan Stanley said. About 72% of urban households bought groceries online in the past three months, compared to 41% of rural residents, according to surveys cited by Morgan Stanley.  

Walmart has about 25% of the domestic grocery market share and has ramped up its delivery service in recent years, the note said. The company intends to offer same-day delivery to 95% of the population by the end of the calendar year. 

Amazon is the fourth-largest player in the grocery industry, behind Walmart, Costco (COST) and Kroger (KR), Morgan Stanley said. It plans to stock commonly ordered items, such as coffee pods and diapers, at existing delivery stations, and use the facilities to cater to regional preferences like the popularity of wild bird food in Dubuque, Iowa.

The two companies collectively account for about 20% of rural market share, Morgan Stanley estimates, with Walmart having a substantially bigger foothold. Their success in rural America may also come at the expense of other retailers that sell staples, including Dollar General (DG), Dollar Tree (DLTR), and Tractor Supply Co. (TSCO), as well as shipping giants like United Parcel Service (UPS) and FedEx (FDX), the analysts said. 

As of Tuesday’s close, shares of Walmart have added roughly 9% in 2025 so far, while Amazon shares dropped 3% in the same period.

This article has been updated since it was first published with the latest share price information.