Walmart has a value of $429.337 billion.
It got its start as a simple store offering the lowest prices available in 1962.
Since then, Walmart has grown exponentially and even has stores in China, Great Britain, and Germany.
Considering its low prices and growth, you may wonder how Walmart earns its money to do both.
Here are the various ways that Walmart uses to make money.
How Does Walmart Make Money? (10 Ways)
1. In-Store Retail Purchases
The primary way that Walmart earns money is through its in-store retail sales.
Although Walmart may have grown and adapted over the years, it’s still at its very heart a retailer.
It’s stayed true to its original purpose of always delivering the lowest prices.
That’s appealing to many people who have to be mindful of their weekly budgets.
It allows them to do more with their money at the end of the day.
Walmart is largely the store for those who are budget-conscious, students, and families with low incomes.
Even those with higher budgets like to shop at Walmart because they deliver on great savings.
That sort of attraction means that Walmart sees a lot of customers flock through its doors every day.
Thanks to its price-match guarantee, it also keeps the customers there.
If customers can show Walmart that they have found a lower price for a product elsewhere, then they’ll lower their price point to match or go even lower.
This keeps them from losing customers and nets them a sale.
With so many people coming through the store, they’re earning an incredible amount of money.
Walmart is also mindful of the products that they sell to attract people from all different types of income to them.
They have generic brands and high-quality brands with the price points to match.
This allows them to cater to lots of people instead of focusing on only one specific household income.
Walmart earns money by selling products in their stores and focusing on inflating their numbers of customers.
2. Walmart Plus Membership
A lot of stores have introduced a subscription model.
By becoming a member through the subscription, you’re able to unlock benefits that normal shoppers can’t access.
Walmart followed this trend and started its Walmart Plus subscription.
Customers can pay either $12.95 a month or $98 a year for the membership.
It comes with benefits like free shipping no matter how many or how few items you buy from the store.
It also gives you free delivery on their delivery services.
If you use Walmart pharmacies, then you can save money there, too.
The membership offers up to 85% in savings on pharmacy purchases.
It also gives you the ability to do mobile checkouts inside of stores.
You can use your account with Walmart to check out via your mobile phone.
This can speed up your grocery shopping and limit the amount of contact you have with other people.
Finally, it lets you save money on gas.
With a membership plan, you save five cents per gallon.
While that might not seem like a lot, the savings start to add up as you fill your car with gas more and more.
Due to the benefits, many people have signed onto the membership already.
Whether they’re paying monthly or for a year, Walmart can earn a consistent amount of money every month through membership alone.
If they decide to invest further in subscription models, then they might earn more passive income over the years to come.
Walmart earns money through its Walmart Plus membership subscriptions.
When you think of advertising, you might think of advertising powerhouses like Google, Amazon, and Facebook.
Walmart and many other stores also have a nice revenue stream from advertising.
Walmart uses its advertising division, Walmart Connect, to earn the company even more money through advertising.
You may have noticed advertising when you walked through a Walmart store or went on their website without even recognizing it as advertising.
Walmart allows those who sell through their store to advertise their products at a cost.
Sellers can join Walmart via its Walmart Ad Center and make an account.
With their account, they’re able to choose the type of advertisement that they want.
The main choices are either a search or a display.
A search means that when someone is searching for a certain product on their website, Walmart will show them yours first.
A display means that there are banners or other forms of display in their store that feature your product.
This encourages those who are walking by to choose your product over someone else’s.
Besides the type, the individual then has to choose their bid multipliers.
This means they pay a certain amount of money to influence their ad more than others.
Essentially, those who pay more get better search results and bigger displays than those who pay less.
Advertising through Walmart can help businesses see greater returns because Walmart is pushing its products.
They’re shining a spotlight on the product and making sure all their customers see it.
Since there are more eyes on the product, it means people are more likely to buy it.
It can boost a business’s revenues which means they continue to pay for ads through Walmart.
As a result, Walmart keeps earning money, too.
Walmart earns money through its advertisement division.
Walmart’s sales don’t come solely from its physical stores either.
They have invested a lot of money and effort into providing an online marketplace for their customers, too.
This became particularly important during the COVID-19 pandemic when most people could no longer visit physical stores to shop.
As such, Walmart has made it easier to navigate its website.
They’ve also invested in their warehouses and logistics systems to ensure that they can make deliveries to their customers at competitive rates.
This has allowed Walmart to invigorate its e-commerce sector and increase the revenue that it sees from it.
It’s a smart move considering that more people than ever do all their shopping online rather than visiting physical stores.
It’s a trend that will likely only increase.
By investing in their online store now, Walmart is ready for the shift to dominant e-commerce sales.
Walmart earns money through its e-commerce sites.
Walmart has at least 27 acquisitions.
These are businesses that it has either partnered with or bought.
Some acquisitions include:
- Bare Necessities
Having acquisitions also earn Walmart money because they usually take a cut of the pie.
Depending on the specific contract between the two entities, Walmart usually supports the business.
That might mean that they sell their products in their store.
It might mean that they use their technology for free or at a discount rate.
This saves them money which allows them to earn more money.
It might also mean that Walmart invests in them, and the company gives them a slice of the revenue in return.
Whatever the exact details might be, as long as the acquisition remains profitable, they’re earning Walmart money.
Walmart makes money through the careful selection of acquisitions.
Sometimes Walmart chooses to invest in a company rather than acquire it.
This usually means the other company has a technology or service that Walmart wants to use at a discounted rate.
Any cost that they save is then passed onto their customers.
It also means they’re able to keep more of the revenue for themselves.
Walmart might also choose to invest in a business for a slice of its revenue.
If they believe that the business is going to be successful, then they might invest a lot of money into it to ensure its success.
In return, the business might have to pay Walmart a certain amount of money over the years with interest.
Some might give Walmart a percentage of their earnings for a limited time or for forever.
Walmart uses these investments to better its own store and to earn further revenue passively.
7. Sam’s Club
Not everyone knows that Sam’s Club is part of Walmart, but it is.
Named for the founder of Walmart, Sam Walton, Sam’s Club is a different type of retailer.
It’s a warehouse retailer where people need memberships to shop there.
The membership costs $45 a year with the Pro Membership rising to $100 a year.
The membership grants you access to the store with the Pro Membership offering a few more benefits and savings.
Warehouse shopping is ideal for some people because it allows them to buy in bulk.
That’s the main niche of the market.
They sell bulk items.
You can also find single items at the store, but its main selling point is selling bulk products.
Bulk items are generally cheaper over the long run.
However, because customers have to pay for a membership, they may not get their money’s worth if they don’t shop often at Sam’s Club to make up the difference.
That’s one of the reasons Sam’s Club is as profitable as it is.
Since bulk items tend to last longer and you’re buying more, customers end up shopping less.
Sam’s Club keeps the bulk of its revenue itself, but since it’s part of Walmart, one can essentially call it a way that Walmart earns money, too.
8. Financial Services
Walmart has grown past being a mere retailer.
It also offers an abundance of services, too.
Walmart seems to want to become a one-stop center where a person can run most of their errands.
There’s some wisdom to this since it encourages them to make purchases while they’re there, too, for convenience’s sake.
Since Walmart also earns money through its services, its investments end up being worth it.
One of its most-used services is financial.
Many Walmart locations have a MoneyCenter where people can purchase money orders, cash checks, or just take money out of an ATM.
Each transaction usually has a small service fee associated with it.
That’s how Walmart earns money.
Each time someone uses the MoneyCenter to do something, Walmart gets a little bit of it, too.
Considering how many people use Walmart and its MoneyCenter every day, it’s easy to see how its financial services further help it earn money.
Now and then, Walmart will also partner with tax experts during tax season.
The experts can rent an area in the store where they help people file their taxes.
Walmart earns money through rent.
Whether they provide the service themselves or have someone rent from them, Walmart makes money through their financial services.
9. VUDU Services
Some Walmarts also have VUDU in their stores which is a video-on-demand service.
Customers can rent digital movies and TV shows through VUDU.
Then they return them after their rental period is over.
Walmart created VUDU before selling it.
While they might still get a cut of the revenue for any VUDU services held in their stores, most of their money came from the sale of the service.
10. Pharmacy Services
A final way that Walmart makes money is through its pharmacy services.
One of the aspects of Walmart’s pharmacy that’s different than many other in-store pharmacies is that they invest in preventative medicine.
They do this through clinical services that aim to help make people healthier through preventative medicine.
That usually means watching one’s weight and diet.
They also offer an abundance of other services like:
- Chronic illness management
- Lab testing
- Specialist referrals
- General health screening
Walmart earns money through service fees associated with these treatments.
A lot of people choose Walmart pharmacies because of their convenience.
They can pick up prescriptions or go for testing just before or after they get their grocery shopping done.
It enables them to get everything done in a single visit.
For those who rely on public transport to get around, this is a handy convenience.
For Walmart, it’s another method to earn money.
How Does Walmart Keep Its Prices Low?
Walmart is best known for one thing—low prices.
When other retailers have high prices, you may wonder how Walmart manages to keep its prices low while still running a successful business?
Here are a few ways that Walmart keeps its prices low.
Whenever there’s competition between retailers, you can expect low prices.
That’s because they’re both trying to make themselves attractive to customers.
The lowest price usually wins.
Walmart has a few competitors out there, but one of its biggest is Amazon.
That’s because the online retailer is also capable of producing extremely low prices.
Some of Amazon’s products are even cheaper than what you’d find at Walmart.
To ensure they remain competitive, Walmart has to keep its prices extremely low.
2. Lack Of Competition
While Walmart may have competition with Amazon, there are some areas of the country where it doesn’t have much competition from anyone else.
The lack of competition means that customers only have one choice for their shopping—Walmart.
They may need to travel 20 minutes or longer to reach the store, but for many customers, the low prices are worth it.
There may also simply not be other stores around offering the products that they want.
Because of this, Walmart can rely on a large number of customers consistently shopping at their stores.
Since they have this consistent number of customers, they’re able to keep their prices low.
They don’t have to worry about other competitors in the area trying to outdo them or steal their customers away.
3. Low Operation Costs
Sam Walton believed that a successful business stemmed from low operating costs.
With low operating costs, the store could increase its revenue and invest in itself.
He even famously continued to drive in an old pickup truck despite being a millionaire.
After Sam Walton passed, Walmart continued to operate with low operating costs in mind.
They’ve been able to do that in a few different ways.
One of the most helpful ways has been in automating their supply-chain management system.
As robots become more sophisticated, Walmart has started using them in their warehouses and in various other places in its supply chain to keep things moving efficiently.
The shift to automation also means that they need to pay fewer workers.
This helps them save money which means they’re able to keep their prices low.
Another way they do this is by keeping their stores basic in their designs.
They don’t spend a lot of money to put in carpeting or paint the walls with each changing season.
They keep everything efficient and basic to maximize their time and money.
They also make their executives use budget options to travel instead of spending more money than they need.
Finally, they used to pay their workers below the average of their competitors.
This has changed with Walmart taking the lead in increasing pay for all of its workers to livable wages.
Before, however, it was one of the ways that it kept its operating costs low.
Walmart can keep its prices low by keeping costs low.
4. Bargaining Power
A final way that Walmart keeps its prices low is through its sheer bargaining power.
Walmart is one of the biggest, if not the biggest, retailers in the United States.
It even extends to several stores in foreign countries.
As such, there are tons of suppliers that want to sell products in their stores.
Not everyone can since Walmart has a limited amount of space.
Walmart can utilize its bargaining power to lower wholesale prices that the sellers give.
Since most sellers want the kind of coverage that Walmart gives, they agree to the lower price.
Walmart can talk down prices with its suppliers which allows it to sell at low prices.
Walmart has various streams of revenue that it uses to make money.
While its biggest moneymaker is retail, it also gets a good amount of money through the services it offers in its stores.
It also uses different methods to keep its prices low which also attracts more people to its stores and earns it even more money.