Walmart sales: Walmart will earn more revenue from sales of services and advertising in the next 5 years: CFO

Much of Walmart’s future profitability will likely come from advertising sales on Walmart.com and the commission fees it charges merchants through its online marketplace and delivery services, rather than selling items in its 10,000 stores, it said. Tuesday. chief financial officer of Walmart. .

“Today, the vast majority of our total sales come from physical stores in the US,” said Walmart CFO John David Rainey at the Raymond James conference.

“Fast forward 5 years, we rely much less on this source of income than some of the other high-growth parts of our business.”

Services such as the fees Walmart charges from third-party sellers on Walmart.com, the share Walmart receives when Walmart fulfills orders for shoppers, and the dollars advertisers spend on Walmart’s expanding retail media business are more profitable and growing rapidly. . part of Walmart’s business, Rainey said. Over time, the composition of Walmart’s income statement will change over time, he said.

Retailers ranging from Amazon, Target and Walmart Inc to grocers such as Tesco Plc are actively working to attract major advertisers to their websites. Most recently, Amazon reported $11.6 billion in revenue from its advertising business in the fourth quarter.

Walmart’s retail media company, rebranded as Walmart Connect in 2021, offers branded advertising space in its US stores and allows you to use your customers’ data to improve advertising performance, even on non-Walmart websites and apps.

Since then, the company has grown rapidly, with sales increasing nearly 30% to $2.7 billion in the fiscal year ended January 31. In the fourth quarter, ad sales grew 41% year-over-year, the company said last month. Walmart, the largest retailer in the world by revenue, is also investing heavily in building its remote marketplace at Walmart.com, which currently offers more than 400 million items, according to Rainey.

“The more traffic that comes to your digital platforms, the more advertisers are willing to spend,” Rainey said, adding that advertising margins typically range from 70% to 80%. In contrast, Walmart’s margins fell nearly 1 percentage point to 24.1% in its most recent fiscal year.

“The common thread that connects them all is greater digital engagement with our consumers,” said Rainey, who took over as chief financial officer last April.

“Convenience… really resonates with consumers and it allows us to have these points of distribution as consumers move more towards e-commerce over time. They are all very connected.”