How Does Walmart Make Money? Retail, Sam's Club, and the Business Model Explained

How Does Walmart Make Money?

Walmart generates $681B in annual revenue — more than any other company in the world — through a deceptively simple business model: buy products in enormous volume, negotiate the lowest possible supplier prices, sell at thin margins, and use scale to undercut competitors on price. But that framing misses the high-margin businesses Walmart has quietly built on top of its retail infrastructure over the past decade.

Walmart US: The Core Business

Walmart's US segment accounts for approximately 64–65% of total revenue, roughly $440–450B annually. This includes:

• Supercenters: Walmart's primary store format — combining a full grocery store with general merchandise. The average Supercenter is 178,000 square feet and carries approximately 142,000 items. Grocery represents roughly 56% of Walmart US revenue. Grocery is low-margin (2–4%) but drives weekly traffic that generates cross-selling of higher-margin general merchandise.
• Neighborhood Markets: Smaller grocery-focused stores in markets where Supercenters are impractical. Approximately 600+ locations, primarily in urban and suburban markets.
• Walmart.com and ecommerce: US ecommerce grew to approximately $85–90B in annual gross merchandise value. Walmart has invested heavily in fulfillment infrastructure (fulfillment centers and the use of Walmart stores as ship-from-store nodes) to compete with Amazon. Walmart+ membership ($12.95/month or $98/year) bundles free delivery, fuel discounts, Paramount+ streaming, and member pricing — a direct response to Amazon Prime. Walmart+ had approximately 25M+ subscribers as of 2024.

Sam's Club: The High-Margin Membership Business

Sam's Club generates approximately $84–88B in annual revenue and is Walmart's most strategically underappreciated asset. Sam's Club charges $50 (Club) or $110 (Plus) in annual membership fees — revenue that is almost entirely profit, since there are no associated cost of goods. With approximately 17M+ paid memberships, membership fee income alone generates approximately $1.5B+ in pure-margin revenue annually.

Sam's Club competes directly with Costco. Costco is larger and has higher member income demographics, but Sam's Club has been closing the gap in comparable sales growth and member renewal rates. The warehouse club model's appeal is that it sells high-quality goods in bulk at low unit prices — the membership fee funds the cost of subsidizing low prices on merchandise, which drives membership renewals.

Walmart International

Walmart operates in 19 countries outside the US, generating approximately $115B in annual revenue. Its most significant international markets are China (through JD.com stake, plus own stores), Canada, Chile, Central America, and India (through Flipkart, acquired in 2018 for $16B). International profitability varies significantly by market; India remains investment-mode while Canada and Mexico (Walmex) are profitable and growing.

The High-Margin Layers: Where Walmart Makes Profit

Walmart's consolidated operating margin is approximately 4–4.5% — thin, but meaningful at $681B scale. Within that, Walmart has been deliberately growing higher-margin businesses:

• Walmart Connect (advertising): Walmart's advertising business — sponsored products and display ads on Walmart.com and in-store — is growing at 20%+ annually and generates margins comparable to Amazon Advertising (~80%+ gross margin). Walmart reaches 255M customers per week globally; selling advertising to CPG brands and marketplace sellers targeting those customers is an extremely high-margin overlay on the retail infrastructure. Walmart Connect is estimated to generate $3–4B+ annually and is among the fastest-growing advertising platforms.
• Walmart GoLocal (fulfillment services): Walmart delivers for other retailers and brands using its logistics infrastructure. This turns Walmart's fulfillment capability into a third-party service business — competing directly with Amazon Logistics.
• Walmart Health and Financial Services: Walmart has piloted health clinics inside stores and offers Walmart MoneyCenter financial services (check cashing, money orders, wire transfers) to the large segment of its customer base that is underbanked.
• Private label (Great Value, Equate, Mainstays): Walmart's private label brands carry significantly higher margins than national brands. Customers choosing Walmart's Great Value canned goods over Heinz pay lower prices but generate more margin for Walmart per unit.

The Supplier Power Model

Walmart's foundational competitive advantage is purchasing power. When a supplier sells to Walmart, Walmart represents such a large share of that supplier's volume that the supplier has limited leverage in price negotiations. This is Walmart's EDLP (Every Day Low Price) model: negotiate the lowest possible cost from suppliers → pass most (but not all) of the savings to customers as lower prices → use price leadership to drive volume → use volume to increase supplier leverage in the next negotiation cycle. This flywheel has compounded for 60 years and is why Walmart has maintained its position as the world's largest retailer despite Amazon's growth.

Summary

Walmart makes money primarily through Walmart US retail ($440–450B revenue, ~4% operating margin), Sam's Club membership + merchandise ($84–88B, higher margin), and Walmart International ($115B). On top of these, high-margin businesses — advertising (Walmart Connect), ecommerce (Walmart+), and logistics services — are growing fast and expanding blended margins. The core moat is supplier purchasing power and 255M weekly customers, which no competitor at scale can replicate. Verify all figures against Walmart's current annual report or most recent earnings release.