WALMART: THE INFRASTRUCTURE REVOLUTION
CEO Strategic Memo
June 2030 | CEO Edition
TO: Walmart Leadership
FROM: CEO Office
RE: From Retailer to Logistics Infrastructure Provider
We are at an inflection point that most of our industry peers don't fully appreciate. Walmart is transitioning from being a "retailer with logistics" to being a "logistics provider that happens to have retail." This is a profound shift in how we should think about our business.
Our market cap is $450B. We're the largest employer in America. We have physical presence in 4,700 U.S. locations. For 20 years, we competed with Amazon on the premise that "Amazon has better logistics, so they'll win retail."
By 2030, that premise has inverted. We have better logistics because we have physical stores. Our stores are our competitive advantage.
THE STRATEGIC REALITY
Three observations:
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E-commerce plateaued at 35% of retail. We expected it to reach 60%+ by 2030. It didn't. Consumer behavior stabilized at a level where most people prefer some hybrid of physical and digital.
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Physical stores create logistics advantage, not liability. Our stores are not just sales channels. They're 4,700 distributed warehouses that enable same-day and next-day delivery cheaper than anyone else.
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The real margin pool is shifting. Traditional retail margin (merchandise) is compressing. The real margin is in:
- Marketplace fees (3rd-party sellers): Currently 10-20% commission
- Advertising: Currently 1.2% of revenue, growing
- Logistics services: Currently 0.8% of revenue, untapped potential
THE THREE-PART STRATEGY
Part 1: Maximize Marketplace Revenue
Our marketplace is currently 12% of total retail revenue. It should be 25%+ by 2035.
Current State: $2.8B in marketplace revenue (0.8% of total) 2035 Target: $7-9B in marketplace revenue (1.8% of total)
How we get there: - Recruit 50,000+ third-party sellers (currently 35,000) - Increase commission rates to 15-18% (currently 10-14% for most categories) - Integrate marketplace selection into physical stores (allow in-store pickup for marketplace items)
This adds $4-6B in revenue at 60% gross margin (no COGS on marketplace).
Part 2: Build Logistics as a Service Business
We have excess logistics capacity in our network. We should monetize it.
Service Offering: "Walmart Logistics+" - Offer fulfillment services to small/medium e-commerce businesses - Offer same-day delivery to brands that don't have delivery capability - Offer supply chain optimization consulting
2035 Target: $3-4B in Logistics+ revenue at 20-25% margin
This monetizes existing infrastructure and creates recurring B2B revenue.
Part 3: Expand Advertising to $8B Revenue by 2035
Advertising is the highest-margin business. We have an audience of 150M weekly shoppers. We know what they're interested in.
Current State: $1.8B in advertising revenue 2035 Target: $6-8B
Revenue comes from: - Sponsored product listings in marketplace - In-store advertising (digital displays, in-aisle media) - Data licensing to CPG brands about shopper behavior - Programmatic ad network with partner retailers
THE TRANSFORMATION TIMELINE
2030-2031: - Double marketplace GMV through marketing and seller recruitment - Launch Logistics+ service for 10 partner brands (pilot) - Expand in-store digital advertising footprint from 2,000 to 3,500 stores - Triple advertising revenue to $5.4B
2031-2032: - Scale Logistics+ to 200+ B2B customers - Establish Walmart Advertising Network as third-largest ad platform (after Google, Meta) - Test autonomous delivery in 20 markets
2032-2034: - Marketplace becomes 25%+ of retail revenue - Logistics+ becomes $2.5-3B annual revenue - Advertising becomes $8B+ annual revenue - Autonomous delivery is standard in urban markets
THE MARGIN EXPANSION PATH
2024 Margin: 4.2% (retail: 4.8%, marketplace: implied 35%, advertising: 85%) 2030 Margin: 4.8% 2035 Target Margin: 5.5-5.8%
The math: - Retail margin stays at 4.8% (volume growth, some pricing pressure) - Marketplace grows to 25% of revenue at 60% gross margin - Advertising grows to 15% of revenue at 85% gross margin - Logistics+ grows to 8% of revenue at 25% gross margin - Blended margin: 5.6%
This is not flashy growth. It's not a 3x revenue story. But it's a genuine 35% margin expansion and sustainable competitive advantage.
ORGANIZATIONAL IMPLICATIONS
1. Separate Business Units by 2031 - Retail (traditional stores): Led by SVP Retail - Marketplace: Led by SVP Marketplace (separate P&L, aggressive growth targets) - Advertising: Led by Chief Advertising Officer (elevated to C-suite) - Logistics+: Led by Chief Logistics Officer (new role)
2. Hire for Growth, Not Efficiency - Marketplace: 500+ new hires in seller operations, category management - Advertising: 200+ new hires in ad tech, data science - Logistics: 300+ new hires in B2B partnerships, operations
3. Reduce Capital Intensity of Store Growth - Stop aggressive store expansion in mature markets - Reallocate capex from new stores to logistics infrastructure (warehouses, automation) - Digital transformation of existing stores (self-checkout, mobile payment, personalization)
THE CAPITAL ALLOCATION
2030-2035 Annual Capital Spend: ~$12-14B - Logistics infrastructure (automation, warehouses): $6B - Store modernization (digital, automation): $3B - Technology/data (analytics, AI, platform): $2.5B - Marketplace platform investment: $1.5B
Expected ROIC: 16-18%
This is aggressive but justified by the scale of opportunity.
CLOSING
Walmart's next era is not about being the best discount retailer. It's about being the best logistics platform in America. We have the physical footprint. We have the customer base. We have the brand trust.
If we execute this transition, Walmart could be worth $750B+ by 2035 with margin profile of a software/marketplace company and resilience of a consumer staples company.
That's the opportunity in front of us.