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How the giant is growing its retail business through click-and-collect grocery, subscriptions, and retail media
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Walmart is one of the biggest and most accessible retailers in the country. It’s the second-largest retailer by US ecommerce sales, behind Amazon, thanks in part to its strengths in grocery and its third-party marketplace.
Though its core retail business is going strong, Walmart is also investing heavily in its other business units, including its retail media network, a B2B membership program, fulfillment services, financial and payment services, and healthcare services.
In this guide, we break down Walmart’s business units; where it could be facing competition; and what this all means for retail marketers, advertisers, and more.
Founded in 1962, Walmart has evolved from a brick-and-mortar retail store in Arkansas to a global retail powerhouse with multiple banners. Ninety percent of the US population lives within 10 miles of the nearly 4,616 Walmart stores across the country, per the retailer. These retail stores give Walmart US a vast network of distribution centers and supply chain networks. Outside the US, Walmart International operates more than 5,200 physical locations across 19 countries.
The Walmart Inc. corporation also includes Sam’s Club, a club retailer that was founded by Sam Walton in 1983 to help small businesses save money on merchandise purchased in bulk. Today, there are nearly 600 Sam’s Club stores in the US.
Walmart’s business model includes its physical retail and ecommerce business, its retail media network, a B2B membership program, fulfillment services, financial and payment services, and healthcare services.
Here’s a deeper dive into each business unit:
Walmart’s retail business includes its 4,616 Walmart US locations across the country, Walmart.com, and the Walmart mobile app. The grocery category is one of the driving forces of Walmart’s ecommerce and in-person retail success. The retailer also hopes to drive retail sales through its Walmart+ membership program.
Despite the fact that its ecommerce business has more than tripled from 2019 to 2024, Walmart is still a distant second in a market dominated by Amazon. Walmart Inc. will grow its US ecommerce sales by 13.5% in 2024 to reach $94.11 billion, a fraction of Amazon’s 2024 US ecommerce sales, totaling $492.23 billion, per EMARKETER’s forecasts.
Walmart’s US ecommerce business is being driven both by its strength in grocery and its third-party marketplace.
Grocery
Walmart’s digital grocery business surged in 2020 as consumers leaned on online shopping and delivery during the pandemic. But even now that pandemic-era habits have normalized, Walmart’s grocery business is still booming as inflation on food and beverage prices has increased average transaction values and attracted more higher-income consumers looking to save money.
In 2024, Walmart Inc.’s US grocery ecommerce sales will reach $58.92 billion and make up 26.9% of total grocery ecommerce sales in the US, per EMARKETER’s November 2023 forecast.
Click and collect, online grocery ordering that a customer picks up either in-store or curbside at the store, will be a big contributor to Walmart’s grocery success, according to EMARKETER’s The Power of Walmart report. Click and collect’s share of total grocery ecommerce sales will continue to grow through 2027, when it will represent 40.7% of total US grocery ecommerce sales, per a January 2024 EMARKETER forecast. This shift will directly favor Walmart, giving it an advantage over Amazon and Instacart, its two biggest competitors in digital grocery.
Walmart Marketplace
In 2024, EMARKETER forecasts Walmart’s marketplace ecommerce sales will reach $10.60 billion, a 17.5% increase YoY. A retail marketplace is an ecommerce site selling products from multiple third parties, sometimes in addition to their own products.
By October 2023, Walmart Marketplace had doubled in size within 18 months to reach 100,000 active sellers, according to Marketplace Pulse research. It also offers around 400 million SKUs from marketplace sellers, per EMARKETER’s US Retail Ecommerce Marketplaces Forecast 2023 report.
To keep current sellers loyal and attract new ones to the platform, Walmart announced a slate of new marketplace features at its seller summit, including enhanced fulfillment and logistics services for merchants.
Walmart+, the company’s subscription membership service, launched with a bang in September 2020 but has struggled to sustain its initial growth, per The Power of Walmart. Five months after its launch, Walmart+ had between 7.4 million and 8.2 million members, according to Consumer Intelligence Research Partners as reported by Forbes.
“Walmart hasn’t disclosed the number of Walmart+ subscribers, but estimates from Morgan Stanley, cited by The Wall Street Journal, claimed Walmart+ had 16 million members in May 2022, up from 15 million in November 2021. Consumer Intelligence Research Partners said subscribers reached 11 million in July 2022, which was unchanged from April 2022,” as detailed in The Power of Walmart.
In 2024, the number of Walmart+ users will grow 8.8% to reach 31.8 million, according to EMARKETER’s March 2023 forecast.
Twenty-five percent of respondents ages 18 to 34 had access to a Walmart+ membership, according to a December 2023 EMARKETER survey conducted by Bizrate Insights. That’s a higher figure than for other age groups.
In the hopes of competing better with Amazon Prime, Walmart has added a variety of perks to its Walmart+ membership, including a cash-back rewards program, a members-only sales event, free home pickup for returns, and exclusive access to a limited-edition Oreo flavor, per EMARKETER’s Retail Memberships Forecast 2023 report. However, Prime still offers more comprehensive media features than Walmart+, including video streaming, music, and podcasts.
In early 2023, Walmart said it would begin marketing its private label products as less expensive alternatives to name-brand goods. In addition, CEO Doug McMillon said the retailer would keep its private label brands—which include Great Value, Equate, George, and Wonder Nation—priced low in an effort to bring inflation down.
Consumer preference for private label has remained strong despite easing grocery inflation, with 90% of consumers saying they are likely to keep purchasing store brands even if inflation and grocery prices fall, per a report by FMI—The Food Industry Association.
Though ad revenues remain a small fraction of its business, Walmart Connect will be the fastest-growing retail media network we track in 2024, growing 39.5% to reach $4.45 billion in ad revenues, per EMARKETER’s October 2023 forecast.
Once again, Walmart is a distant second to Amazon, which will generate $44.26 billion in US ad revenues in 2024.
Walmart’s advertising capabilities include search, display, connected TV (CTV), social, and in-store digital media.
To help advertisers better understand and leverage its retail media network, Walmart introduced an ad certification program that covers the breadth of Walmart’s ad capabilities, including on-site, off-site, in-store, and omnichannel ad formats.
As the retail media channel evolves, Walmart’s physical footprint, strong ties to consumer packaged goods brands, and partnerships with streaming and social platforms will help it attract and keep advertiser clients looking to reach customers across many different channels.
Outside of its core retail business, Walmart has several other business units, including a B2B membership, fulfillment services, financial and payment services, and healthcare services.
Launched in January 2023, Walmart Business is a membership for small and medium-sized businesses that offers free shipping, free pickup and delivery from store, as well as rewards and savings opportunities.
Since then, Walmart has also launched a Walmart Business app, revamped the ordering process to make it easier to order in large quantities, partnered with professional services platform Angi, and added a tool to help businesses track their organizational spending.
With this membership service, Walmart hopes to gain a piece of the $2.091 trillion in B2B ecommerce site sales that EMARKETER forecasts for 2024.
Walmart Fulfillment Services (WFS), which launched in February 2020, is tightly linked to the expansion of Walmart Marketplace and is crucial to fueling an Amazon-style flywheel, according to The Power of Walmart.
“Third-party sellers are strongly encouraged to take advantage of WFS benefits, which include prioritized search results that highlight two-day shipping, management of customer service, and acceptance of returns via Walmart’s extensive store network, including the recent addition of curbside returns,” the report said.
In October 2023, Walmart announced plans to open its fifth “next-generation” fulfillment center in Stockton, California, in 2026. The 900,000-square-foot facility will increase its fulfillment capacity for West Coast online orders. The retailer said that the next-generation facilities operate far more efficiently than its other centers because they use automation to condense its 12-step fulfillment process down to five steps.
Walmart offers low-cost banking and alternative financial services at more than 4,700 Walmart stores, which contribute close to $2 billion to the retailer’s bottom line, per The Power of Walmart. Usually housed within its MoneyCenter store-within-a-store concept, shoppers can find prepaid cards and gift cards as well as a host of payment-related services, including check cashing, tax preparation, and money transfer services. Customers can also pay bills, reload prepaid accounts, and apply for Walmart’s private label and co-branded credit cards. In fact, 700 retail store locations include full-service bank branches operated via lease agreement.
Walmart Pay, the retailer’s proprietary mobile wallet, lets customers make mobile payments at its more than 3,500 US Supercenters (i.e., larger stores that offer full ranges of merchandise beyond grocery). It lets customers select a payment method (including credit, debit, prepaid, and gift cards) before using the app to scan a QR code displayed on the register. It cannot be used at fuel pumps or Sam’s Club stores.
“Walmart’s healthcare ambitions are decidedly retail-centric: It aims to give consumers another reason to visit a Walmart Supercenter. That philosophy is built into the 48 Walmart Health clinics now operating in five states. But that modest footprint isn’t going to impact the US healthcare industry in any major way,” per The Power of Walmart.
However, its health and wellness division (including Walmart Health), is a tightly integrated part of its flywheel.
Walmart faces competition from both the ecommerce and physical retail sides.
Amazon is the top ecommerce retailer in the US. In fact, it’s larger than the next 15 largest US ecommerce retailers combined. In 2024, Amazon will grow its retail ecommerce sales by 11.5% to reach $492.23 billion, according to EMARKETER’s November 2023 forecast.
To better compete with Amazon and steal market share from its Prime Day events, Walmart has begun hosting its own version of the sales event during the same time period.
As a third-party marketplace platform, Shopify directly competes with Walmart’s marketplace model. Shopify’s retail ecommerce sales will reach $117.34 billion in 2024, an 8.5% increase YoY, per EMARKETER’s April 2023 forecast.
Previously, Shopify also offered logistics services, but in May 2023, the company announced it would offload the offering to cut costs.
Target competes with Walmart in both brick-and-mortar and ecommerce sales, but without Walmart’s strong grocery business, it struggles to keep up. In 2024, Target’s US grocery ecommerce sales will grow 7.5% to reach just $8.10 billion (compared with Walmart Inc.’s estimated $58.92 billion), per EMARKETER’s November 2023 forecast. Target’s total US retail ecommerce sales will grow slower at 4.1%, reaching $21.01 billion in 2024.
Walmart’s flywheel—powered by its ecommerce, advertising, and fulfillment businesses—enable marketers to promote, sell, and ship their products to customers across the US. The retailer’s physical reach helps brands connect with hard-to-reach customers, like older generations who prefer to shop in-store or those in rural areas.
Walmart’s innovation within its retail media business also provides value to its advertisers. New ad formats like CTV and in-store media offer creative ways to engage with customers, while its ad certification program ensures marketers are able to maximize the effectiveness of their campaigns.
The retailer’s other business units, including its healthcare and payment networks, help the retailer embed itself into every facet of customers’ lives, giving advertisers a multitude of touchpoints to reach their audience.
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