In a recent briefing, Walmart CEO, Doug McMillon, told analysts the following;

“As we bring more customers, sellers, and suppliers into our ecosystem, it expands our ability to monetize those relationships. A great example is our advertising business. Globally, it’s been growing at a high rate, with high margins and is now a $2.1 billion business in only a few years, and we expect this strong growth to continue.”

“The business model is changing. I think that’s the headline. We’ve got a business that’s becoming increasingly digital. The eCommerce business, first-party, third-party is growing. It gives us the opportunity to grow advertising income. It’s grown at a fast rate, and it’s growing across markets.

Insider has noticed recently that both Walmart and Amazon have begun reporting the revenue they collect from their advertisers as a part of their quarterly and annual earnings information.

In 2021, Walmart reached $2.1 billion and Amazon collected a whopping $31.16 billion in advertising revenue from sellers on its platform. For Amazon the $31 billion was a 32% increase over 2020.

Insiders Take: While the percentage of total revenue for Walmart and Amazon is fairly small, Advertising Revenue is a highly profitable business segment as compared to selling retail goods which is a high volume low margin business.  The size and scale of these two companies allows for a tremendous opportunity to create higher profit margins through leveraging their size and selling advertising to the brands that use their distribution channels.

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