Walmart takes a page from Amazon’s play book to drive profits

Walmart will allow consumer companies like Procter & Gamble, Unilever, and Mondelez International Inc to advertise to shoppers in their stores and online on Walmart’s websites in an effort to grow its advertising business and grow profits, reports the Financial Post.

The announcement was made at its annual meeting with suppliers on Tuesday. Amazon uses ad sales to increase its profits. Walmart decided to try a different tactic after Amazon reported its most recent fourth quarter results. Amazon’s ad sales and other revenue jumped 95 percent to US$3.4 billion.

Amazon, along with Alphabet Inc’s Google and Facebook Inc let merchants pay for high placement ads in search results, and it pays off. Over the years, Walmart has done well enough, but with online shopping becoming so prevalent, advertising dollars were ignored.

During an investor conference in October, Business Insider reports that Walmart Chief Executive Doug McMillon said the company’s advertising business is “tiny” and “it could be bigger.” McMillon has the figures that show 300 million shoppers visit Walmart’s stores every month, with millions more shopping online, based on Forrester Research.

Ron Dauphin

“We have a unique opportunity to leverage our first-party shopping data from online and offline purchases to reach our customers and influence their purchase decisions,” Walmart’s chief merchandising officer, Steve Bratspies, said in an interview.

Consolidation of teams
To accomplish its goal, Walmart is consolidating a number of teams into a single entity that will support sales and operations under its advertising business. That team will be responsible for offering advertising services to vendors, said Bratspies. “It can be as simple banner ads on the website … to in-store capabilities on our TV network,” he said, according to Reuters.

To let marketers and companies know how well their investments are doing at yielding a return, Walmart will handle this by connecting data from stores and online and offering a pitch that is “much more effective than many others can,” Bratspies said.

One other important consideration is the delivery time of merchandise from vendors, and Walmart is addressing that head-on. Walmart is asking that a full truckload of merchandise be delivered on time at least 87 percent of the time and those delivering less than a truckload to be on time at least 70 percent of the time.