Walmart's Ads and Marketplace Drive One-Third of Operating Income
Serge Bulaev
Walmart's advertising and online marketplace may now make up about a third of its operating income, according to recent reports and company comments. Advertising revenue grew 27 percent in fiscal 2024, while the third-party marketplace saw almost 50 percent growth in goods sold. Most items on Walmart.com now come from external sellers, helped by steps like easier onboarding and more support services. Analysts suggest this shift gives Walmart higher profit margins, but there are concerns about risks like fraud and competition with Amazon. It appears future profit may keep rising from these areas if growth continues and Walmart manages risks well.
Walmart's ads and marketplace are increasingly vital to its financial health, reshaping the retail giant's profitability through rapid growth in high-margin revenue streams. Internal reports and executive commentary confirm these newer business units now generate a substantial share of the company's operating income, marking a strategic pivot from its traditional retail model.
According to industry reports, Walmart's global advertising revenue has shown strong growth, with U.S. Walmart Connect sales rising 24% in Q4 according to the FY24 earnings release. More significantly, company leadership noted that income from advertising and paid memberships grew from "a little more than a quarter" to "about a third" of operating income in the most recent quarter. Analysts view this shift as highly attractive, since retail media carries far higher profit margins than first-party merchandise sales.
Marketplace acceleration
Walmart's strategy focuses on expanding its high-margin third-party marketplace and advertising services. These capital-light businesses generate substantial profit from seller fees and ad sales without the costs of inventory management, creating a powerful flywheel effect that diversifies income away from traditional first-party retail sales.
The company's third-party marketplace is expanding rapidly. According to industry reports, gross merchandise volume (GMV) has shown significant year-over-year growth in recent quarters, representing some of the fastest growth in years. In mid-2025, Walmart Marketplace passed 200,000 active third-party sellers, the catalog exceeded 420 million listings, and more than 90% of products came from marketplace sellers.
This expansion is underpinned by several strategic initiatives:
- Simplified onboarding that allows merchants to list products in days.
- International seller recruitment efforts, particularly focused on expanding the global seller base.
- Expansion of Walmart Fulfillment Services (WFS), offering Amazon FBA-style pick, pack, and ship logistics.
- Deployment of AI tools that help sellers optimize listings and automate advertising bids.
How ads and marketplace feed each other
The marketplace and advertising businesses create a virtuous cycle. Each new product listed by a third-party seller adds to the available ad inventory for Walmart Connect. As sellers compete for visibility by purchasing sponsored listings, they drive advertising revenue directly to Walmart's bottom line. Executives argue this flywheel model scales profits more quickly than first-party sales because Walmart avoids inventory risk while still monetizing its massive customer traffic.
The rapid growth in marketplace sellers likely explains why the contribution from ads and memberships to operating income jumped from roughly a quarter to a third within a single year. Analysts predict this contribution could continue rising if marketplace growth continues to outpace overall e-commerce.
Limitations and risks
However, this rapid expansion presents significant challenges. According to industry reports, the streamlined seller onboarding process has led to concerns over counterfeit products and identity theft. Walmart must now balance its growth ambitions with the need for stricter compliance and quality control to maintain customer trust.
In the advertising space, according to industry reports, Walmart Connect remains a distant second to Amazon Ads in terms of market share. Despite this gap, some advertisers report a higher return on ad spend (ROAS) on Walmart's platform, suggesting its efficiency can be a key advantage for certain campaigns.
For now, Walmart is managing two powerful, high-growth profit centers. With its marketplace showing strong growth and its ad network contributing up to a third of operating income, the company's financial structure is undergoing a fundamental shift. Future success will depend on its ability to maintain this momentum while strengthening governance to manage the associated risks.
How much of Walmart's operating income is generated by advertising and marketplace activities?
In the most recent quarter, advertising plus membership income represented about one-third of Walmart's operating income, according to CFO commentary reported by AdExchanger. While this figure bundles advertising and membership fees, it underscores that selling ads and serving third-party sellers have become critical profit drivers, shifting Walmart away from reliance on traditional retail margins alone.
What were Walmart's advertising revenue figures?
According to industry reports, Walmart's advertising revenue has shown significant growth in recent years, with the company reporting strong performance in its retail media business. Although the company does not publish a separate profit line for Walmart Connect, these totals confirm that retail-media income is now measured in the billions, far larger than just a few years ago and growing at a substantial rate in the U.S.
How fast is Walmart's third-party marketplace growing?
According to industry reports, Walmart's marketplace has shown significant growth, with some of the fastest expansion rates in years. Supporting metrics highlight the scale behind that growth:
* Active sellers have grown substantially, reaching significant numbers
* Walmart.com now lists a massive number of items, with the vast majority supplied by third-party sellers
What strategic moves is Walmart using to attract and retain marketplace sellers?
Walmart's merchant-acquisition strategy focuses on lower-friction onboarding, international recruitment, and better logistics:
1. Simplified sign-up compared with Amazon, enabling significant new seller growth
2. Walmart Fulfillment Services (WFS) - an Amazon FBA-style program now used by a growing share of sellers
3. AI-powered listing tools that auto-optimize titles, images, and pricing
4. Broader category expansion into premium and specialty goods, not just everyday essentials
5. Store-linked omnichannel reach, allowing sellers to tap in-store pickup, delivery, and Walmart+ membership data
How does Walmart's integrated marketplace and ads model compare with Amazon's?
| Dimension | Amazon | Walmart |
|---|---|---|
| Ad revenue scale | Significantly larger | Growing substantially |
| Marketplace share of total e-commerce GMV | Dominant position | Significant but smaller share |
| Key advantage | Deepest intent data and largest seller base | Extensive physical store network |
| Measurement edge | Closed-loop attribution at checkout | Omnichannel tracking across app, online, and store purchases |
| Main limitation | Limited physical retail touchpoints | Still much smaller scale in both ads and marketplace |
Despite the gap, advertisers increasingly treat the two as complementary: Amazon for reach and intent, Walmart for store proximity and household-level behavior, with a significant portion of retail media spend now flowing to these two giants.