Walmart reported that its U.S. advertising sales increased by 95% in the second quarter, and stated that its number of active advertisers increased by more than 175%, as more and more companies and brands paid to promote their advertising to customers, online and physical stores. product.
The advertising boom is just one factor that makes Wal-Mart’s earnings call familiar to anyone who follows Amazon’s business.
Wal-Mart CEO Doug Macmillan said on the earnings call: “At Wal-Mart, the word’serving customers’ traditionally means one thing.” He refers to traditional retail sales. “But today it includes serving market sellers, our advertising partners, and those who want to use our fulfillment services or proprietary software.”
Wal-Mart’s basic advertising sales figures are not enough to require the company’s Earnings report on Tuesday morning, But Amazon’s results show the value of this approach.
Amazon said in its second-quarter earnings report that its “other” category (mainly advertising) generated $7.9 billion in sales. This is an increase of 87% over the previous year. This is part of a larger trend for Amazon to make more money by selling things other than products.
UBS (UBS) analyst Michael Lasser urged Wal-Mart executives to disclose more information about the size and potential of the advertising business during a conference call, but did not achieve much success.
Lasser estimates that advertising sales in e-commerce account for about 5% to 10% of the GMV of the total product value sold. He speculated that Wal-Mart’s advertising business may be in its infancy at this time, which may account for 1% to 2% of GMV, and asked whether advertising revenue comes at the expense of other forms of revenue from Wal-Mart’s customers.
Brett Biggs, Wal-Mart’s chief financial officer, did not confirm or deny Lasser’s speculation (or answer his questions), but instead talked about the larger direction of the advertising business.
“Last year, we renamed our business from Walmart Media Group to Walmart Connect. This is just to ensure that it is obvious that this opportunity will help us connect buyers, sellers, suppliers and customers in a value-added way. To the customer experience, “Bigs said. “As long as we do this, I will be very, very optimistic about the growth potential of this business.”
In general, Wal-Mart Total reported quarterly revenue was $141 billionAs of June 30, 2021, its profit for the second quarter of fiscal year 2022 increased by 2%, with a profit of $4.3 billion.
This quarter, as more customers returned to physical retail stores, Wal-Mart’s e-commerce sales growth in the United States fell back to single digits in the second quarter.
Its U.S. e-commerce business grew by 6% in the second quarter, reaching approximately $11 billion. In contrast, a year ago, at the height of the pandemic, it increased by more than 90% year-on-year.
But from a long-term trend, Wal-Mart can maintain most of its e-commerce progress in the past year. Compared with two years ago, its U.S. e-commerce sales have increased by 103%. E-commerce now accounts for more than 11% of the company’s US$98.2 billion in US net sales, compared to only 6% of the US$85 billion in US net sales in the same quarter two years ago.
McMillon said that Wal-Mart hopes to reach the point where, in terms of its revenue and profit, it can “completely ignore” where and how customers shop.
“I think some people now think the store is boring,” Macmillan said. “we do not have.”