Dive Brief:

• Walmart and Netflix debuted an online hub that sells gear tied to new and popular programming on the streaming service, according to an announcement. It is Netflix's first digital storefront with a national retailer.
• The Netflix Hub at Walmart offers exclusive merchandise for shows like "Stranger Things," "Nailed It!" and "Squid Game," the latter of which has become an overnight global sensation. Products span Funko Pop! vinyl figures based on the protagonist from "The Witcher" — an established Netflix hit — to goods meant to promote newer content, such as a line dedicated to "Ada Twist, Scientist." A banner running at the top of the page plays clips from Netflix content, while the hub also carries Walmart ads, like one linking out to Nintendo Switch products that was viewed by Marketing Dive.
• The portal will also feature interactive experiences, including an upcoming Netflix Fan Select tool that lets visitors vote on the merchandise they'd like to see next from their favorite shows. With the tie-up, Netflix has a chance to diversify its revenue at a critical juncture for the streaming category while Walmart can link its brand closer to pop culture.

Dive Insight:

Walmart and Netflix's new merchandise hub sits at the intersection of commerce and fan culture, a potentially ripe area for business as the pandemic shores up both streaming figures and online shopping habits.

It's a major step by Netflix to expand its revenue amid fiercer competition from rival platforms like Disney+, HBO Max and Amazon Prime Video. The streamer, which now wields more than 200 million global subscribers, has been pushing to diversify in other ways, including through an ambitious plan to crack into video games. But e-commerce might be the more surefire bet. It's also an area where Netflix already has some experience through its own merchandise portal where visitors can currently buy apparel based on "Squid Game" and other series. Netflix.shop went live in the U.S. in June.

For Walmart, which is also focused on driving e-commerce sales, the tie-up presents an opportunity to better tap into consumer culture, an increasingly important mandate for brands trying to stay on top of trends in the fast-moving social media age. Planned offerings like T-shirts based on "Squid Game" are indicative of this mindset. The dystopian South Korean show, which depicts debt-laden people competing in gruesome competitions for the chance to win a cash prize, is gearing up to be the biggest surprise hit in Netflix's history, driven in part by positive word-of-mouth.

The ability to latch onto overnight hype surrounding such programming could help fortify Walmart's brand and even increase its appeal with groups that don't typically shop at the big-box store. Walmart and Netflix are clearly angling to drive continued engagement through initiatives like the crowd-sourced Fan Select tool that lets viewers vote on what they want to see sold down the line. A closer connection to the streaming space through Netflix might also provide Walmart with a stronger positioning against Amazon, which operates its own streaming platform and e-commerce marketplace.

Netflix Hub at Walmart is rolling out in time for the critical fourth-quarter holiday window, where retailers are facing intense supply-chain pressures, inflation and labor shortages. In a blog post last week, Walmart attempted to assuage customer fears, while noting it's still hoping to see inventory levels improve.

"We've worked with suppliers to source holiday merchandise earlier than usual and are finding ways to move those products inside our supply chain network as quickly as possible," wrote Joe Metzger, executive vice president of supply chain operations for Walmart U.S. "We have been laser-focused on inventory levels since the start of the pandemic and reported higher inventory in the second quarter this year than a year ago."

Walmart has made other bets to imbue its brand with a modern appeal. The retailer has started marketing more frequently on TikTok, Gen Z's preferred app, where it hosts livestreams from which viewers can directly purchase products.