Walmart (WMT -0.18%) might have gained market share in U.S. e-commerce last year, but it didn't come from Amazon (AMZN -0.07%).

The big-box retailer stepped up its e-commerce operations in 2022, growing total online revenue by 12% in the U.S. for the full year. That's faster than the U.S. Census Bureau's estimate of 6.5% growth for overall internet retail sales. It also compares favorably to Amazon's reported online store sales, which actually declined on a constant-currency basis last year.

But looking at those reported numbers doesn't paint the full picture of what's going on in online retail in the U.S. Amazon investors who are worried Walmart is eating into its market dominance may want to take a closer look.

The truth requires an apples-to-apples comparison

The 12% number reported by Walmart encompasses its entire e-commerce operations: first-party sales, third-party services, and advertising. Therefore, it should be compared to Amazon's overall e-commerce operations.

While online sales stagnated last year for Amazon, it still grew its third-party seller services and advertising businesses. In fact, North American sales increased by 14% on a constant-currency basis. If you back out the slower growth from physical stores during the year, Amazon's online-related sales grew at an even faster pace. Amazon's North American sales sans physical stores may be the best comparable to Walmart U.S.'s reported 12% increase.

Walmart also said it generated over $80 billion globally from e-commerce last year. That's up from the $73.2 billion it generated last year, or over 9% growth. That is, indeed, faster than Amazon's overall e-commerce-related revenue growth of less than 6%. That suggests Walmart is still seeing strong progress in e-commerce in international markets. But one area of particularly strong e-commerce growth for Walmart is China, where Amazon provides limited marketplace services.

In other words, it doesn't seem like Walmart's growth is coming at the expense of Amazon's.

What to watch going forward

There are a few areas for investors to pay attention to as Walmart continues to try to battle Amazon in e-commerce.

First is the retail media advertising business. Walmart broke out its ad revenue for the first time during its fourth-quarter earnings call, letting investors know it generated $2.7 billion in revenue from ads last year. That pales in comparison to Amazon's $37.7 billion in revenue, but Walmart is growing faster. Total ad revenue grew 30% for the year, with Walmart Connect in the U.S. growing even faster. By comparison, Amazon's advertising business grew just 21% last year.

Walmart's ad business could face tougher comparables in the second half of 2023 after it made changes to its advertising business mid-year last year.

Importantly, Amazon guided for first-quarter sales growth between 6% and 10% on a constant-currency basis, which disappointed analysts. While that includes its cloud computing business, it's stronger than Walmart's outlook for 4.5% to 5% sales growth. Walmart also disappointed with full-year guidance of just 2.5% to 3% and comparable sales growth of just 2% to 2.5%. In other words, Walmart expects a marked slowdown in growth.

It seems likely Amazon will continue to outpace Walmart's e-commerce growth once again in 2023, even as the competitor may outpace other players in the space. Amazon remains the dominant force in online retail, with a massive network of merchants and customers leading it to grab even more market share.