In March 2025, we posted an abstract describing the growing prominence of retail media channels (see “Selling Point: Retail Media Must Evolve”). Those trends have persisted and expanding, creating the need for some new updates. In particular, recent reports indicate that as many as 200 big-name retailers have been building out their retail media networks, in an attempt to compete with Amazon’s market-leading, first-mover, profitable advertising model. Leading competitors include Walmart, Target, Home Depot, and Kroger, among others.

Amazon’s business hinges targeted advertisements, paid for by brands. When a customer searches for a specific product on its platform, sponsored posts appear in response. Due to its early entry into the space, along with its well-entrenched focus on customer satisfaction, Amazon has quickly built out this side of its business, earning a reputation for fair pricing and efficient customer service. Thus, even if Amazon is primarily categorized as a retailer, the profits it earns from its advertising division are more central to its business model. Industry leaders estimate that its retail media network increases Amazon’s overall operating margins by somewhere between 40 and 80 percent.

Yet Amazon also faces a conundrum: As it expands its line of private-label merchandise, it must choose between prioritizing its own offerings in its advertising or selling profitable ad space to competitive offerings. Its ongoing efforts to find just the right balance in turn have created a gap in the retail media market space that competitors are actively seeking to exploit.

As may come as no real surprise, Walmart seems to be leading the charge. After acquiring the content library that had been established by Vizio—a company that sought to operate as an alternative to Amazon’s Prime Video—the retailer scaled up its offerings of advertising space, as well as its promotional efforts to attract new advertisers. As of late 2024, this sector of its business represented almost 33 percent of Walmart’s operating income.

Meanwhile, Roundel, the retail media network operated by Target, has reported annual growth rates in excess of 10 percent. Home Depot has built out its Orange Apron network, with the distinction of making a more diverse set of analytics available to its advertising clients. Notably, after the Federal Trade Commission blocked a merger between the grocery rivals Kroger and Albertsons, experts suggested that these two chains could recoup the losses they expected to incur from their thwarted effort by expanding their advertising networks. Kroger already has the sixth largest retail media network, buoyed by a partnership with Yahoo media that grants advertisers who appear on both platforms access to detailed sales analytics for Kroger locations.

Even noting such diversifying and notable growth though, Amazon still overwhelmingly dominates digital advertising networks. It reported another $14.3 billion in sales for the third quarter of 2024, bring its growth relative to the prior year to 18.8 percent. Thus, new trends are emerging, but even so, competitors still have to do a lot if they hope to catch up with the retail media leader. 

Discussion Questions

1. What other options do competitors have for expanding their retail media networks to compete with Amazon’s current offerings?
2. As a customer, can you tell the difference between the quality of advertisements on some e-commerce platforms? Are there any formats that you prefer?

Sources: Abbas Haleem, “Recap: Retailers with Retail Media Networks Made Important Moves in 2024,” Digital Commerce 360, January 1, 2025; Greg Petro, “Big Retailers Find Big Profits Imitating Amazon’s Ad Business,” Forbes, January 30, 2025; Siddharth Cavale, “Kroger, Albertsons Could Turn to Ad Business as Mega Merger Falls Through, Analysts Say,” Reuters, December 11, 2024