Amazon (NASDAQ:AMZN) is set to overtake Walmart (NYSE:WMT) as the biggest U.S. retailer by 2025, according to a new report.

Yet just like Major League Baseball did to Roger Maris after he passed Babe Ruth's home run record in 1961, Amazon will need to tack an asterisk onto the achievement, because its growth isn't the milestone it initially appears.

In a report by Bloomberg, e-commerce data company Edge by Ascential says within four years consumers will purchase $632 billion worth of goods from Amazon, compared to $532 billion at Walmart. This is where the caveat is needed.

Amazon and Walmart have different business models. Where the e-commerce giant started off as an online retailer, today it operates more like a flea market charging rent to its 2 million or so third-party retailer tenants, who account for the vast majority of those sales.

In contrast, despite Walmart having a growing e-commerce presence and third-party platform, its sales are still mostly its own. When comparing apples to apples, then, Edge by Ascential admits Walmart will continue to be the retail behemoth it is today.

To account for the different business models, the data analytics company examined the gross merchandise volume of the two companies, a metric that measures how much consumers spend, regardless of where the product originates. In that way, Amazon is a juggernaut whose growth Walmart will be unable to impede by investing in its own digital sales platform.

Even though Walmart's online sales grew 79% last year, it's clear Amazon remains a continuing threat, which is why last year it launched its own Prime-like member loyalty program, Walmart+.

Amazon
Amazon is the target of lawsuit accusing the global retail giant of keeping women and Black employees down while publicly talking up the need for diversity and social justice AFP / INA FASSBENDER

This article originally appeared in the Motley Fool.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends the following options: long January 2022 $1920.0 calls on Amazon and short January 2022 $1940.0 calls on Amazon. The Motley Fool has a disclosure policy.

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