Walmart Connect, the US retailer’s massive retail media network arm, posted a 26% rise in first quarter revenues, with its ad revenues up 24% across the same period – both driven by a massive surge in the company’s ecommerce growth, especially around its marketplace offering.
According to CEO Doug McMillon, ecommerce contributed 67% of the incremental growth in the quarter, with Walmart US growing its ecommerce business by 22% in Q1, led by store-fulfilled pickup and delivery and marketplace – an increase of 17% since the last quarter. ‘Bricks and mortar’ business only increased by 1% in the same period.
The Walmart Marketplace is now contributing to growth. The number of marketplace sellers grew 36% in the US and 50% in Mexico.
Walmart Connect grew by 26% in the US and the international advertising business increased 27%, with Walmart marketplace sellers driving more than half of the growth in Walmart Connect and total active advertiser count grew by 19%.
One more detail: Walmart launched a data analytics product suite a few years ago called Walmart Luminate. Walmart say that Luminate can be used for ‘optimising retail strategies from product assortment to product development’. Another way to think about Luminate is that it is Walmart’s version of Amazon Marketing Cloud or Tesco’s Dunnhumby.
The Luminate business doubled in Q1. Luminate is now going international to Canada and Mexico, and it claims that 90% of Walmart’s largest suppliers have a Walmart Luminate subscription, with smaller suppliers accounting for approximately 50% of our total subscriptions. This will likely increase as CEO McMillon announced a self-serve solution to directly link Luminate insights into their Walmart Connect campaigns.
According to retail media expert Colin Lewis, “the total economics of the Walmart ecommerce business is improving thanks to Walmart Connect, Walmart Fulfilment Services and its membership programme”.
For lessons for the retail media ecosystem
What can Retail Media focussed brands and Retail Media Networks take away from all of this? According to Lewis there are raft of lessons for the wider retail media and brand sectors:
- Knowing the Walmart Roadmap – One way to frame the Walmart Connect tech and feature roadmap is ‘whatever Amazon Advertising is doing, but 18-months to two years later. The truth of this statement can be found in their most recent announcements around Luminate and their ecommerce growth.
- Luminate will become a major part of supplier JBPs – Indeed, research group Stratably suggests that adoption in is “driven more by merchants’ asks rather than brands’ voluntary interest in the insights”. Few international retailers have the capabilities of Walmart Luminate and Amazon Marketing Cloud, but as they build out their capabilities, deep insights and analytics will become a standard part of the Retail Media landscape.
- Walmart are creating their own version of the Amazon Flywheel – Walmart CEO McMillon has been quoted as saying “selling advertising is another important piece of the flywheel because it helps suppliers and Marketplace providers sell more while creating a new profit opportunity for us.
- Self-service drives growth – getting suppliers – in particular marketplace suppliers – to plan and buy campaigns ‘democratises’ access to Walmart inventory, allowing them to scale with less headcount. This is something that retailers internationally have been reluctant to do, but it is the only way to scale once initial growth levers have been ‘pulled’ by working with Tier 1 suppliers. The majority of Walmart Connect spend is still sponsored search, so widening access will improve growth.
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