Walmart, a name that needs no introduction in the retail industry, has been making major strides to compete with ecommerce juggernaut Amazon as the go-to marketplace for ecommerce sellers. Since its founding by Sam Walton in 1962, the retail giant has expanded its empire to over 11,000 stores in 27 countries. Fortune magazine lists Walmart as the largest company in the world by revenue, as well as the world’s largest employer with an estimated 2.2 million employees globally.
What is Walmart Marketplace?
Walmart’s size and influence as the world’s largest retailer has given the company several distinct advantages as it expands its footprint as an ecommerce marketplace. Ecommerce sellers are now tasked with evaluating both Amazon and Walmart’s marketplaces and how they can leverage both platforms to maximize sales of their products.
Despite Walmart’s retail dominance, Amazon is still the king of ecommerce accounting for 47% of all ecommerce sales in 2019 according to eMarketer. Walmart has been making headway in recent years showing a 43% growth in ecommerce sales in Q1 of 2019 alone. It’s clear Walmart has been applying considerable resources to expand its ecommerce footprint. In 2016, the retail giant spent $3 billion acquiring ecommerce website Jet.com. This was followed by acquisitions of Shoes.com, Moosejaw, and ModCloth. These large-scale acquisitions are direct efforts to draw digital shoppers away from Amazon and further strengthen Walmart’s online presence. Just recently, Walmart announced the launch of a new self-serve ad platform and a fulfillment service aimed to directly compete with Amazon’s ever-popular FBA (Fulfilled by Amazon) program. Walmart’s new Fulfillment Services platform (WFS) leverages their already established ecommerce fulfillment network for its own ecommerce business. The service is still in its infancy and currently has some product restrictions such as a maximum product weight of 30 lbs. and all products in the program must ship to Walmart fulfillment centers from within the United States.
How to sell on Walmart Marketplace?
Sellers interested in signing up to Walmart’s marketplace will immediately see major differences in the enrollment process compared to what they’re used to seeing when signing up to sell on Amazon. Walmart has intentionally created a more exclusive marketplace where all potential sellers must apply to be accepted into the marketplace. The approval process takes 1-2 weeks, and another 2-4 weeks for onboarding. Application requirements include an established customer service record showing positive customer reviews elsewhere on the internet, a U.S. business address, and listing your business as a specialist in any product category Walmart sells. In addition, Walmart asks sellers to provide details on their ecommerce history on other platforms including what percentage of your ratings are positive on eBay or Amazon, and the average order value processed by your other ecommerce businesses. These stricter seller requirements ensure all sellers in the marketplace provide excellent customer support and ensure the fulfillment is fast and reliable.
Pros of Selling on Walmart Marketplace
While the Walmart Marketplace application process may seem restrictive to some sellers, the more selective process ensures only the top sellers are accepted into the marketplace. This means less overall competition especially for sellers who focus on more specialized niche product categories. Sellers don’t have to worry about the thousands of low-quality competitors keen on undercutting established sellers on Amazon. Walmart also does not charge its sellers monthly or setup fees which can be a burden to smaller sellers on Amazon. Sellers on Amazon are used to paying monthly account fees, commission fees, and additional fees to access more advanced selling tools and features. Walmart has taken a different approach. All sellers within the Walmart marketplace have access to all features and tools free of charge. There are no monthly or setup fees. Instead, Walmart only charges sellers a category-wise commission fee. Other benefits of selling on Walmart’s Marketplace compared to Amazon include access to Walmart’s affiliate websites such as Jet.com, Shoes.com, Moosejaw.com, and others. If a seller matches a website affiliate’s product category, they have access to list their products on both Walmart.com as well as the affiliate website expanding the customer reach and exposing the seller’s products to a new audience.
Cons of Selling on Walmart Marketplace
Walmart’s Marketplace is still relatively new compared to older, more established marketplaces like eBay and Amazon. It is gaining traction amongst sellers as new features roll out including a newly launched self-serve ad platform and the previously mentioned Walmart Fulfillment Service (WFS). The platform’s infancy and some of its policies present a few potential drawbacks for sellers exploring new marketplace opportunities. The largest of these drawbacks has previously been Walmart’s lack of a fulfillment service. Since its inception, Walmart sellers have been forced to manage all post-sale operations independently. Post-sale logistics, shipping, returns, and refunds are a large operational burden to sellers. The newly introduced Walmart Fulfillment Service should ease this burden significantly, but it may take some time for the majority of sellers to enroll in the service and for the system workflow to be fully optimized to be at a level comparable to Amazon’s FBA.
Another key differentiator between the Walmart Marketplace and Amazon is how sellers utilize the Buy Box. For those unfamiliar, the Buy Box refers to the “Buy Now” or “Add to Cart” button on a product details page. Sellers offering the same product compete for the top position in the Buy Box, with the top ranked seller receiving the sale when a user completes a transaction. Walmart and Amazon evaluate sellers competing for the same Buy Box using different metrics. Amazon algorithmically ranks sellers using a classified system that considers the seller’s pricing, inventory availability, fulfillment history, and customer service history. Walmart on the other hand only ranks sellers competing for the same Buy Box on pricing and inventory availability, while also using a first come first serve ranking system. Because Walmart doesn’t rank sellers based on fulfillment history or customer service rating, sellers can be easily undercut by competition who only must lower their price by a few pennies in some cases to win the Buy Box. Walmart’s policy of granting a Buy Box’s top position to the seller who listed their product first prevents sellers with higher customer reviews from winning the Buy Box despite listing the product at the same price point. The only option left to the seller with higher customer reviews would be to undercut their competition by lowering their price. This policy encourages price undercutting amongst sellers and combined with Walmart’s category wise commission fees can lead to some sellers seeing lower profit margins selling on Walmart’s Marketplace compared to selling on Amazon.
Other Ecommerce Marketplaces
There are several other ecommerce marketplace platforms for sellers to consider exploring apart from Walmart Marketplace and Amazon. Sellers with a focus in the consumer tech and home appliance industries might consider selling on BestBuy.com via their Partners program. BestBuy differentiates itself from Amazon and Walmart by providing a richer product page experience that is tailored around consumer tech products. Consumers shopping for consumer tech products often do more research than say a consumer shopping for commodity products like toilet paper or dish soap. BestBuy product pages contain 8 or more photos, multiple videos, customer testimonials, product walk-throughs, and even product sizzle reels. The richer product descriptions combined with BestBuy’s strong retail presence make the platform an attractive choice for sellers who place a higher value on educating potential customers on their products.
Target is another retail giant who has entered the third-party ecommerce marketplace industry with the launch of Target+ in February 2019. While Target does not yet offer its own fulfillment service for third-party sellers, customers are able to make returns at any Target brick and mortar location, making the return/refund process much easier for both customers and merchants. The key differentiator with Target+ compared to other ecommerce marketplaces is their seller application process. Simply put, there isn’t one. Currently, sellers can only access the platform via direct invitation from Target. This is a major departure from Amazon’s marketplace which is essentially open to anyone who wants to sell on the platform. Target’s presumed goal in creating a much more curated marketplace is to eliminate counterfeit and low-quality products from appearing in its marketplace. An issue that has plagued Amazon in recent years.
What does Walmart Marketplace sell?
Ecommerce sellers should do ample research before enrolling in their choice of ecommerce marketplace. Selling on multiple marketplaces may be the best option as it maximizes your ability to reach customers, but it also requires considerable time and effort to effectively manage multiple platforms. Some sellers may not have the bandwidth to sell on every platform available to them. Walmart Marketplace provides a great opportunity for many sellers, but it may not be a perfect fit for everyone. Some sellers may benefit from less competition on Walmart’s Marketplace, while others may see lower profit margins and price undercutting as too strong of barriers to outrank selling on Amazon. Sellers should evaluate the pros and cons of each marketplace available to them as they relate to their business, and those who have a focus on more niche product categories should explore other marketplaces more tailored to their vertical. Many ecommerce marketplaces are still in their infancy. As the platforms grow and release new selling tools and fulfillment services, competition amongst marketplaces will increase leading to more viable marketplace options for sellers to choose from.
For more information about ecommerce marketplaces, contact Anvil.