It is no hidden fact that the launch of online retailer, Amazon all those years ago marked a significant shift in the manner through which things are operated in the retail industry. E-commerce rapidly gained traction and just about every other retailer in the industry began developing an online shopping option for themselves in order to keep up with the growing trend.
Walmart, the big box supermarket giant recently closed eleven of its stores due to underperformance at the end of last year and as such, has been making various attempts at restructuring the business. The retailer, along with several other major retailers is also currently facing ongoing large scale boycotts after the companies had caved in to pressures to eliminate DEI policies and measures in their operations.
Now, the supermarket chain appears to be taking a page out of Amazon’s books in its latest attempt to bring in more revenue.
Walmart is going ad crazy
According to eMarketer, Amazon has an astounding 77% dominance in the category of advertising. Walmart takes the not so close second spot with a total of only 5% in U.S e-commerce ad spending.
Naturally, the retailer is trying to bridge the huge gap and as such, the company is showing its desire to get more brands to purchase ads on its website and mobile app. But how will the retailer achieve this so late in the game?
A new Application Programming Interface (API) will be launched by the company which will allow ‘adtech’ organizations to create their own tools to be used to sell display advertisements that will then be seen on Walmart’s e-commerce platform, as well as the retailer’s app. A self-serve platform will be used to sell the display ads as it allows for advertisers to manage their campaigns.
The retailer’s own ad platform was previously used to sell these display ads. Now, Walmart Connect, the advertising department of the retailer, is currently in talks to work with retail adtech firms like Pacvue, DataCaciques, and Skai as the new API begins rolling out.
This format of advertising is often referred to as ‘pay-per-click’ advertising and is the most dominantly used model of e-commerce advertising. According to Business Insider, “Amazon pioneered the sponsored product and sponsored brand ad formats where advertisers pay to promote products in search results.”
The success of Amazon is naturally an envy to many in the industry and is likely the cause of so many companies choosing to adopt this style of e-commerce advertising.
Retailers like Walmart traditionally use first-party suppliers for their store inventory, unlike Amazon who opted to be the middleman between customers and various small third-party sellers. As a result, these big box retailers like Walmart are now restructuring their business models to offer items from more third-party sellers.
In addition to extra income, the inclusion of more third-party sellers also opens up new avenues for advertising. In relation to this, Chet Butikofer, vice president of innovation at retail firm Teikametrics shared, “While it requires more relationships to manage, going from first-party to third-party sellers is the true opportunity in getting additional advertising money to your platform.”
New tracking system at Walmart
The retailer is also launching a new initiative called Digital Landscapes through which suppliers will be able to study customer behavior and process when they use the company’s e-commerce platform or app. The idea is that suppliers will use the data that is collected to better market their products and effectively enhance and tailor campaigns to the needs and wants of individual customers.
Of course, both of these new approaches are still in the initial phases, leaving much room for improvement and according to Podean’s Johnson, Walmart has not yet “figured out how to robustly present and analyze rich data from people shopping in its brick-and-mortar stores.”