To sell on Walmart Marketplace or not – that is the question for many brands that currently sell on Amazon. Describing itself as the world’s largest omnichannel retailer, Walmart’s online platform has expanded considerably in 2020. According to Marketplace Pulse data, more than 25,000 sellers have joined Walmart Marketplace this year, bringing the total to around 60,000. This is only a fraction of Amazon’s 2.5+ million active sellers, but the recent growth spike along with Walmart’s well-established base of more than 265 million customers give Walmart Marketplace the potential to become a strong competitor. Below Channel Key highlights the key similarities and differences between the two platforms to help you decide whether Walmart Marketplace is a good e-commerce channel for your brand.
Walmart Marketplace Overview
Walmart Marketplace is like Amazon in several ways. Sellers undergo an approval process, onboard their listings, choose a fulfillment option, utilize marketplace marketing and advertising programs, and get paid. Within this basic structure, however, there are several key differences. First, qualifying to become a Walmart Marketplace seller can be challenging. While Amazon allows just about anyone to open a digital storefront, Walmart is selective about the brands they choose to sell under its name. Until 2016, Walmart Marketplace was an invitation-only platform. Today, any brand can apply, but they will need to need to demonstrate a history of e-commerce experience on other platforms, reputable customer service, a compelling product assortment, and competitive pricing before being approved.
Walmart Marketplace offers several fulfillment options. Like Amazon’s Fulfilled by Merchant (FBM) program, sellers can opt to self-fulfill orders (upon qualification) through its Seller Center platform. Walmart Marketplace FBM sellers can display the “Free Two-Day Delivery” label on their approved listings, which is a core component to the retailer’s strategy against Amazon. Thanks to the latter, one-day and two-day shipping are now factored into the customer’s purchasing decision.
Walmart seems to acknowledge the new standards set by Amazon. In February of 2020, they introduced Walmart Fulfillment Services (WFS). Like Amazon’s Fulfillment by Amazon (FBA) option, WFS sellers store their inventory at Walmart fulfillment centers. When a customer places an order on Walmart.com, WFS picks, packs, and ships the item(s) on the seller’s behalf. WFS also handles all customer support and returns for these orders. The WFS end-to-end fulfillment experience comes with access to Walmart’s omnichannel capabilities such as its Free & Easy Returns program. Approved items will display the Free Two-Day Delivery and Fulfilled by Walmart tags for increased product visibility and improved conversion. Like FBA, the WFS cost structure includes a fixed monthly storage fee and a fulfillment price that is based on the item weight.
Unlike Amazon, Walmart Marketplace has partnered with a 3rd party fulfillment service to provide sellers with another option. Sellers can choose to fulfill orders through Deliverr, an e-commerce logistics service that integrates directly with Walmart Marketplace and provides pre-approved access to Free Two-Day Delivery.
Walmart+ vs. Amazon Prime
Walmart and Amazon both offer subscription-based services that provide various benefits and perks to members. Launched in 2007, Amazon Prime boasts more than 150 million subscribers and is one of the most popular and appealing features of the Amazon platform. To counter, Walmart launched its own membership service called Walmart+ in September of 2020. Still in its infancy, Walmart+ is designed to provide similar benefits to the retail giant’s loyal base of customers that it has been growing for the past half a century. Below are the basic similarities and differences between the two membership programs.
Key Distinctions Between Walmart Marketplace and Amazon
The primary selling point of joining Walmart Marketplace is gaining access to its established network of locations and customers. In addition to 11,500 brick-and-mortar stores frequented by 265 million customers each year, more than 100 million people visit Walmart.com each month (according to their data). This is about half of Amazon’s monthly search traffic. To compensate for this disadvantage, Walmart emphasizes other key distinctions that may be attractive to sellers:
- LESS COMPETITION With far less seller competition than Amazon, it can be much easier to stand out, gain brand exposure, build trust and authority, gain new leads, and convert sales on Walmart Marketplace.
- NO INVENTORY LIMITATIONS Unlike Amazon FBA, there are no SKU minimums or maximums with WFS, so you can list your entire catalog of eligible items on Walmart Marketplace or manage limited inventory with a fixed threshold setting.
- SIMPLE FEE STRUCTURE Walmart Marketplace provides a simpler fee structure than Amazon. The platform simply deducts a referral fee once a sale occurs (no setup, subscription, or monthly fees).
- EFFICIENT RETURNS AND CUSTOMER SERVICE Nine out of ten Americans live within 15 minutes of a Walmart store, which makes returns and customer service easy by leveraging the retail giant’s existing capabilities in its brick-and-mortar network.
CHANNEL KEY TAKEAWAY
There is no magic formula to determine whether your brand should sell on Walmart Marketplace. While the platform has been around for more than a decade, it is still in its early stages. From a seller’s point-of-view, this provides both advantages and disadvantages when comparing it to Amazon. With only around 60,000 current sellers, it’s much easier to generate traffic to your listings than a platform with 2.5+ million competitors. On the other hand, its marketing and advertising capabilities are quite limited. Amazon has a much larger collection of consumer shopping data that it has used with the help of advanced technology to develop an increasingly expansive arsenal of tools to help sellers target customers. Regardless, one thing is certain: Walmart is aggressively ramping up efforts to compete with Amazon. Channel Key predicts the rivalry between the two online retailers will further intensify as Walmart explores every opportunity to establish itself as a convenient and valuable e-commerce platform for both sellers and customers.
About Channel Key
Channel Key is a full-service channel management marketplace consulting agency that has helped generate $250M in Amazon sales for retail brands around the world. Complete 360-degree services include marketplace strategies, content development, marketing and advertising, catalog management, marketplace and fulfillment setup, ongoing consulting, and much more. To learn about how Channel Key can help increase sales for your business, contact us today for a free consultation.