Merchandising used to be a simple proposition where store owners stocked their shelves with merchandise, competed with competitors on price, and tried to lure customers through the doors.
Large sellers, of course, have always had a price advantage because they can make large orders. A chain like Walmart actually works with partners to see where they can cut costs on an item or lower the price by placing a larger order.
Selling prices, however, no longer depend solely on what the seller paid for the item and the markups required to cover the top and bring a profit. Now, what an item sells for can be affected by things like paid memberships and, in Walmart’s case, advertising.
In many ways, Walmart’s business has become similar to Costco’s, where a large percentage (about two-thirds at the warehouse club) of its profits comes from places other than customers buying items from its shelves.
Walmart has quietly built a $6 billion ad business
As a consumer, you may not even realize that Walmart has an ad business. That’s because it’s not just about showing regular ads, directing customers to products, and using other traditional advertising methods.
To understand how Walmart built a $6 billion ad business, you have to understand its purchase of television company Vizio about 18 months ago.
Walmart’s Chief Growth Officer Seth Dallaire explained during the Sixth Annual Retail and Consumer Conference that the TV hardware business “sits right next to the advertising businesses we run.”
He noted that he is often asked why Walmart would buy a television manufacturer.
“And the truth is that we sell a lot of TVs at Walmart. And the television business is no longer a wholesale, sell-to-sell, and keep a margin. The real television business is now post-sale,” he said.
More Walmart:
Selling a Vizio TV to a customer creates a long-term opportunity for Walmart to have access to their living room, bedroom, and other places where people watch TV.
“It’s driven by the technology and the applications that sit behind the glass on these devices. So that’s the advertising space, connected TV advertising, which is in line with what we’re doing with advertising products in our com businesses and stores,” he added.
Walmart owns the Vizio TV brand. Shutterstock
Walmart makes a lot of money from ads
“For the quarter, our advertising business grew more than 30% in each quarter, including 36% of Walmart’s US membership fee revenue grew 17% in the business, led by Walmart US Together, these revenue streams represent approximately 1/3 of operating income,” CEO John Furner shared during Walmart’s first quarter earnings call.
Walmart has been on the brink of not only controlling what consumers see at home when they watch their Vizio TVs, but also the in-store experience, according to analyst Andrew Lipsman.
“For decades, the store was treated as a sales channel,” says Beet Retreat LA. “But it’s actually a high-quality media outlet with a large audience, contextual relevance and proximity to the point of purchase.”
He said the industry has yet to take full advantage of the creative opportunities within the physical store. Repurposing TV commercials will not be enough.
“It’s a completely different context,” Lipsman emphasized. “There are three-dimensional creative possibilities that we haven’t even begun to explore.”
He noted that the market is dominated by a small number of large players.
Amazon’s expansion from Prime Video ads to partnerships with Netflix, Hulu, NBCUniversal and others gives the company influence over half of the ad-supported streaming market, according to Lipsman. Walmart’s push into CTV with Vizio will accelerate this trend.
“With that much scale powered by performance data, we’re putting CTV right in the CMO’s sights,” he said. “They’re going to get information they’ve never had before. It’s going to change everything.”
Retail media is in its early stages
Walmart made more than $6 billion in advertising revenue last year, according to Dallaire.
RTMNexus CEO Dominic Miserandino shared his experience using Walmart’s advertising network for his clients with TheStreet.
“In fact I have been advising several retailers on their retail media network strategy. And it is a very interesting change because retailers have all the data according to their customers, which allows targeting, but in addition, they have an audience of X time, whether they are in the store or on the site,” he shared by email.
That can lead to big sales.
“So some marketers are realizing that if they own that audience, they can use it not only for targeting, but also have additional and non-competing brands, targeting the specific audience that they own,” he added.
Walmart posted big gains in advertising and membership revenue in Q1.
Global advertising business was up 37%, strong across all segments.
Walmart US is up 36%.
Membership fee revenue grew 17.4% globally.
Dallaire sees the advertising business as a useful tool for customers.
“Ads are great for our customers. They’re great for our merchant community. They help get customers and members to new products or things they didn’t know were available for sale at Walmart, and they have a different margin profile than a traditional retail business, kind of a win-win for that,” he added.
Advertising revenue, he noted, helps reduce the cost of certain items.
“This advertising and retail media business is an important part of how we serve our customers and members as well as our P&L,” he said.
Related: National carrier closes after Chapter 11
This story was originally published by TheStreet on Jul 5, 2026, where it first appeared on Selling part. Add TheStreet as a Preferred Source by clicking here.
