Beyond the Cart: How Retail Media Became E-Commerce’s Global Profit Engine

Mannu Mathew

The Digital Shelf Takes Over

What was once the most valuable space in retail—the eye-level shelf in a supermarket or grocery store has now moved to a screen. Today, the “top shelf” is the first result on a marketplace search page, and brands are bidding aggressively to own it.

This shift from physical to digital visibility is not just a format change; it is a complete redefinition of retail economics. Marketplaces are no longer just platforms for buying and selling—they are rapidly becoming among the most valuable advertising ecosystems in the world.

Globally, players like Amazon have already demonstrated the scale of this opportunity, building multi-billion-dollar advertising businesses on top of their retail infrastructure. What began as sponsored product listings has now evolved into a full-fledged media engine, often described as the third wave of digital advertising after search and social.

From Transactions to High-Margin Media

At the core of this transformation is a simple reality: selling products is expensive, but selling visibility is not. Logistics, warehousing, and last-mile delivery continue to weigh heavily on margins, while advertising—especially within a high-intent environment—offers a far more scalable and profitable alternative.

The scale of this shift is already evident globally. According to data highlighted by Amazon and analysed by E-commerce enabler platform GreenHonchos, Amazon’s advertising business has grown into a $68 billion annual revenue engine in 2025, with Q4 alone contributing $21.3 billion—up 22% year-on-year. Beyond sponsored product listings, Amazon is rapidly building a full-funnel advertising ecosystem, with properties like Prime Video contributing meaningfully to growth and adding over $12 billion in incremental revenue. In effect, the world’s largest e-commerce player is now also one of the world’s fastest-growing advertising companies.

Retail Giants Are Becoming Media Companies

The shift is not limited to Amazon alone. Traditional retail giants are rapidly building their own media ecosystems. Walmart, through its advertising arm Walmart Connect, generated $6.4 billion in global advertising revenue in fiscal 2026, up 46% year-on-year, according to data from ALM Corp, a Toronto-based marketing services company.

In the U.S., Walmart Connect has already emerged as the second-largest retail media network after Amazon. Notably, advertising and membership revenues together contributed nearly one-third of Walmart’s operating income in Q4, highlighting how high-margin media businesses are becoming central to retail profitability.

India as a High-Growth Case Study

In this context, India is emerging as one of the fastest-growing markets amid this global shift. According to the India Brand Equity Foundation) IBEF, Flipkart, Amazon, and Myntra together generated ₹15,573 crore (US$1.77 billion) in advertising revenues in FY25, marking a 26% year-on-year increase.

Advertising now contributes significantly to overall revenues—28% for Amazon, 31% for Flipkart, and 15% for Myntra—highlighting how central retail media has become to platform profitability.

In simple terms, the economics are hard to ignore. Shipping a product across the country involves multiple cost layers. Serving an ad to a consumer already searching for that product costs almost nothing. The result is a high-margin revenue stream that is not only boosting profitability but also subsidising the broader e-commerce model.

Strategic Lever or “Must-Pay Tax”?

However, as retail media grows, so does the debate around its role in brand strategy. A key question for marketers today is whether marketplace advertising has become unavoidable—a “must-pay tax”—or whether it remains a strategic lever.

Chirag Gada, Vice President and CEO – Wellness Business at RP Sanjiv Goenka Group, offers a more nuanced perspective. “Retail Media is the most intent-rich advertising a brand can buy. Your consumer is already searching, already comparing,” he says, pushing back against the idea of it being a forced expense.

Yet, he also draws a clear distinction. Brands with strong fundamentals—competitive pricing, quality products, and strong reviews—use retail media as an accelerant. For others, it can quickly start to feel like a cost of survival rather than a growth driver.

This distinction is becoming sharper as advertising costs rise across platforms. Cost-per-clicks have increased, and brands that rely entirely on paid visibility are beginning to feel the pressure.

The response has been a shift towards smarter, more balanced strategies—investing not just in ads, but also in brand-building, content, and organic discoverability within marketplaces. Paid media is no longer expected to do all the work; it is increasingly seen as a layer that amplifies an already well-performing product.

Retail Media 2.0: Beyond Search Ads

At the same time, retail media itself is evolving rapidly. What was once limited to keyword-based sponsored listings is now expanding into a broader ecosystem often referred to as Retail Media 2.0.

Akash Valia, Co-founder of Secret Alchemist, points to how aggressively platforms are innovating in this space. “Amazon has drastically evolved… from keyword-based ads to display, influencer networks, and even formats similar to Google PMAX,” he notes.

This expansion reflects a larger shift, where marketplaces are no longer confined to their own platforms but are extending their advertising reach across content ecosystems, including video and streaming environments.

The Marketplace vs D2C Balance

This convergence of commerce and content is reshaping how demand is created and captured. Brands are no longer relying solely on marketplace visibility to drive sales. Instead, they are building demand externally—particularly on platforms like Meta—and allowing that demand to flow into marketplaces.

For brands, this creates a delicate balancing act. Marketplaces continue to offer unmatched discovery and scale, but they come with rising costs and limited ownership of customer relationships. Direct-to-consumer channels, on the other hand, provide better margins, deeper data insights, and stronger long-term brand equity.

As Gada explains, marketplaces and owned platforms serve different but complementary roles—one drives reach and acquisition, while the other builds loyalty and profitability.

The Full-Funnel Reality

For established players, this integrated approach is critical. Bhavin Devpuria, Head of Marketing at Triumph Group, emphasises the importance of maintaining visibility across channels. “While marketplace advertising plays a significant role in driving conversions and top-line growth, off-platform channels such as Google and Meta remain essential for building awareness and sustaining brand saliency,” he adds.

The use of closed-loop data from marketplaces further enhances this strategy, enabling brands to understand consumer behaviour better and translate those insights into product innovation.

Despite its rapid growth, retail media is not without challenges. Globally, concerns are emerging around rising ad costs, increasing competition, and the risk of smaller brands being priced out of visibility. There is also the question of user experience, as platforms balance monetisation with the need to maintain trust and usability.

Even so, the direction of travel is clear. Retail media operates at the most valuable point in the consumer journey—the moment of purchase intent. Unlike traditional advertising channels, it does not just influence consideration; it directly impacts conversion.

As global e-commerce continues to expand, advertising dollars are expected to follow consumer behaviour—and increasingly, that behaviour is concentrated within marketplaces rather than search engines or social platforms.

For years, digital advertising has been dominated by players like Google and Meta. But retail media introduces a new centre of gravity—one that is closer to the transaction, richer in first-party data, and more directly tied to measurable outcomes.

Retail did not just go digital. It became media.

And in the next phase of global commerce, the companies that control visibility at the point of purchase may ultimately control the market itself.