Walmart is undoubtedly one of the companies with the highest revenue globally, with Walmart’s current total revenue standing at $141.0 billion.
So, considering these high revenue figures, you are probably wondering- how does Walmart make money? Keep reading to see what I discovered!
How Does Walmart Make Money In 2022?
Walmart makes money by selling products and services to business owners and individuals as a multinational retail company. Originally established as a brick-and-mortar store, the company has also expanded its operations to e-commerce platforms. Currently, Walmart is also earning money through in-store and online sales, as well as through membership and advertising in 2022.
If you’d like more information on how Walmart makes money, here are four reasons to consider!
1. Revenue From Product Sales
A large percentage of Walmart’s sales are generated from the sales of products. Walmart sells both private label brands and national brands in its product category.
To offer appropriate classifications of products category, Walmart subdivides the products into different sections.
Consequently, Walmart makes money through the sale of the following products:
Walmart’s grocery section includes a full line of grocery items and consumables.
The grocery items include fresh produce (fruits and vegetables), bakery, meat, deli products, bakery, frozen foods, floral and dry groceries.
In addition to this, the grocery section offers consumables such as beauty and health aids, pet supplies, paper goods, and baby products.
● Health and Wellness
Walmart’s Health and Wellness section is among Walmart’s initiatives to provide health care services.
Walmart’s Health and Wellness section includes pharmacy, over-the-counter medications, optical and clinical services in the product section.
Moreover, the section sells Walmart’s private label brand, “Equate,” to provide consumable pharmacy, health, and beauty items such as skin lotion, shaving cream, over-the-counter medications, and pregnancy tests.
Walmart’s Entertainment section helps the company generate revenue through books, electronics, and home appliance sales.
In this section, Walmart also offers toys, cellular service plan contracts and prepaid service, cellular phones, cameras and supplies, photo processing facilities, movies, music, and video games, among others.
Walmart’s Hardline section consists of automotive, stationary, hardware and paint, fabrics and crafts, sporting goods, and seasonal merchandise.
Walmart’s Apparel section includes women, ladies, men, boys, and infants clothing, as well as stocks, jewelry, and accessories.
The apparel or clothing section offers different types of wear such as swimwear, sleepwear, gym clothes, and cold wear gear.
The Home section at Walmart offers housewares and small appliances, home décor, bedding, outdoor living, and garden products.
According to Statista, the sales of groceries in the last fiscal year accounted for 56.3% of the total sales made by Walmart US in the product category.
General merchandise accounted for 32.3% of the net sales, while health and wellness took over 10.4% of the net sales.
It’s important to note that Walmart maximizes profits in the product category by items directly from the manufacturers or vendors to avoid middlemen who incur more costs.
Furthermore, Walmart ensures that the company purchases items in bulk quantities in order to keep the buying price as low as possible.
As such, Walmart is known for providing its products at low prices while still generating high net revenues.
2. Revenue From Service Sales
Walmart also earns money from sales of the following services:
● Financial Services
Walmart’s Money Center earns company revenue by offering a wide array of financial services that incur a service charge.
For instance, services such as money orders, bill payments, prepaid cards, cheque cashing, money transfers, and wire transfers generate revenue from the service charges.
● VUDU Movie Streaming Service
Vudu is a video-on-demand streaming service that offers the most sought-after movie releases.
The platform offers Walmart subscription revenue for watching, buying, and renting TV series and movies.
Although Walmart sold the Vudu to Fandango Media in 2020, the condition of the deal was that Walmart maintain its relationship with Vudu.
Walmart still promotes the service on its website and continues with the account integrations during sign-ups.
● Health Care Services
Walmart has expanded its business operations to serve people better by setting up primary care clinics that offer customers health care services.
As of March 2021, Walmart had opened 20 standalone health centers in the US, with plans to open 15 more health centers before the year ends.
The health centers offer various services, including primary care, X-ray and EKG, labs, counseling, optical, dental, ear care, and community health services.
Walmart partners with several on-the-ground health providers to offer high-quality and affordable health care services.
● Health Insurance Services
Walmart has partnered with independent third-party insurance providers to offer consumers affordable health insurance plans.
Walmart’s third-party insurance providers include Anthem Blue Cross Blue Shield, Humana, UnitedHealthcare, Freedom Health, among others.
As of October 2021, Walmart Insurance Services partnered with Medicare Advantage insurer Clover Health on its first health plan offered to 500,000 people spread across eight counties in Georgia.
3. Revenue From Walmart Plus Memberships
Walmart recently rolled out its first-ever subscription membership service, Walmart Plus, which contributes to its revenue.
With a monthly payment of $12.95 and an annual payment of $98, members can enjoy the beneficial services of Walmart Plus together with a 15-day trial.
Walmart Plus gives members access to unlimited free delivery, access to the “Scan & Go” feature on the Walmart app, and fuel discounts at selected Walmart, Murphy USA, and Murphy Express fuel stations.
The subscription also comes with the existing customer services such as Walmart’s free curbside pickup, two-day delivery, and next-day delivery.
According to Forbes, the subscription plan is doing tremendously well, with around 7.4 million to 8.2 million members.
4. Revenue From Walmart Connect Advertisement
Walmart also earns some revenue through its advertising division, Walmart Connect.
Through this platform, Walmart enables brands selling at Walmart to scale up customer connections and increase their sales.
The costs for advertising at Walmart Connect may vary per advertiser, with the self-serve campaign costing $1000 monthly with a $100 daily cap.
Managed campaigns on Walmart advertising require a commitment of $25,000. Walmart’s annual revenue generated from advertisement is estimated to be approximately $500 million, a figure that is expected to grow to $4 billion by 2025.
Walmart makes money through different revenue streams, including the sale of products and services and subscription and advertising offerings.