Amazon Launches Retail Ad Service to Compete With Walmart Connect

Amazon has launched its Retail Ad Service, a new platform designed to help retailers easily incorporate targeted advertising into their digital storefronts. Powered by Amazon Web Services (AWS), the service allows retailers to display ads on product, search and browse pages, while purchases are completed on their own websites.

Currently in beta with partners like iHerb and Oriental Trading Company, the service will soon be available to a wider range of retailers. This move solidifies Amazon’s leadership in the retail media sector, offering a plug-and-play solution that leverages its advanced ad technology and infrastructure, while enabling retailers to generate additional revenue through shared ad sales.

Walmart offers a similar advertising platform, Walmart Connect, which allows retailers to advertise on Walmart’s digital properties, such as its website and mobile app. Like Amazon’s Retail Ad Service, Walmart Connect provides various ad formats, including sponsored products, display ads and video ads, along with targeting options and performance tracking. The platform leverages Walmart’s consumer data to enhance ad targeting, aiming to drive sales and compete with Amazon in the expanding retail media sector.

In an interview with PYMNTS, Bellamy Grindl, principal and founder of Retailytics, explained Amazon’s expertise in “refining personalization through its retail and advertising algorithms likely gives its Retail Ad Service an edge. In contrast, Walmart Connect’s personalization is strongest within Walmart’s ecosystem, making it a powerful solution for brands aligned with their audience.”

For retailers looking to leverage Amazon’s broader audience reach, Grindl added, “the new Retail Ad Service could offer a significant advantage, particularly with its seamless integration into the larger Amazon ecosystem. Both platforms offer robust options, but the best choice will depend on a retailer’s tech stack, audience objectives, and alignment with the respective ecosystems.”

Meanwhile Greg Zakowicz, senior eCommerce expert at Omnisend, explained to PYMNTS the biggest difference is allowing retailers to integrate the ad platform on their websites.

“Every retailer, including Amazon, knows consumers shop at various sites,” Zakowicz said. “Giving brands the ability to target shoppers as they compare stores can be a valuable asset for brands.

“Both platforms allow for ads to be displayed in a variety of ways, such as with sponsored products, sponsored brands and video. However, Walmart Connect is primarily focused on Walmart properties, such as their website. While they offer brands some things Amazon can’t, like in-store ads, the ecosystem is a bit more closed than what Amazon is attempting to build out.”

Zakowicz wondered how Amazon will use off-site data to personalize targeting on its website.

“It’s assumed Amazon will process shopping behavior data from third-party websites that are using their Retail Ad Service,” he added. “Using that data to understand what consumers may be shopping for, and combining it with their first-party data, they can theoretically deliver more targeted ads to the user on their next visit.”

Here’s a look at other notable developments from Amazon and Walmart in the past week:

Amazon Highlights

AWS Partners With General Catalyst: AWS has partnered with General Catalyst to integrate artificial intelligence (AI) into healthcare to improve patient outcomes and make care more accessible. The collaboration will focus on AI-powered solutions for predictive and personalized care, diagnostics, patient engagement, and operational efficiency. By using generative AI and health-specific models, the partnership plans to enhance disease diagnosis and treatment predictions, reducing healthcare costs and improving care delivery.

Amazon Ends “Try Before You Buy” Prime Service: Amazon will discontinue its “Prime Try Before You Buy” service on Jan. 31 as part of its cost-reduction efforts. Launched in 2017, the service allowed Prime members to try on clothing before being charged. After the shutdown, customers can still return clothing items for refunds, and Amazon will offer other shopping features like virtual try-ons and personalized size recommendations. This move comes amid a broader industry trend of using AI to manage costly return rates.

Walmart Highlights

Walmart Partners With Rebag: Walmart has teamed up with luxury resale platform Rebag to offer preowned handbags, jewelry and accessories on its U.S. website, aiming to attract affluent shoppers and fashion enthusiasts. Through the partnership, Walmart’s marketplace now features certified items from high-end brands such as Chanel, Prada and Fendi, with prices spanning from hundreds to thousands of dollars. This partnership elevates Walmart’s luxury product offerings, available starting this week.

Walmart, IBM Collaborate on Last-Mile Delivery: Walmart has partnered with IBM to enhance last-mile delivery for retailers by integrating Walmart’s GoLocal delivery service with IBM’s Sterling Order Management platform. This collaboration allows IBM retail customers to incorporate Walmart GoLocal’s delivery solutions, offering options like same-day, next-day and scheduled deliveries to improve service and meet consumer expectations for faster delivery.