Walmart is at war. For 30 years, they have ruled as king of all retailers. Along the way came an online bookstore called Amazon. From a humble garage in Seattle, Amazon quickly grew and expanded into other market territories. They proved to be a formidable force, launching innovation after innovation. Then it happened. In 2019, Amazon surpassed Walmart and took the crown as the world’s largest and most valuable retailer. In terms of revenue, Walmart still outranks Amazon, but the brick-and-mortar juggernaut has launched an all-out war to reclaim its title by finally charging into the digital battlefield with its own platform: Walmart Marketplace.
Describing itself as the world’s largest omnichannel retailer, Walmart’s online platform opened back in 2009 for select retailers. In 2016, they expanded by inviting more 3rd party sellers, but their version of Amazon really didn’t take off until this year. According to Marketplace Pulse data, more than 25,000 sellers have joined Walmart Marketplace in 2020, bringing the total to around 60,000. This is merely a fraction of Amazon’s army of 2.5 million active sellers, but the recent growth spike along with Walmart’s well-established base of more than 265 million customers give it the potential to become a strong competitor. Below Channel Key highlights Walmart’s e-commerce battle strategy, and more importantly, how brands can take advantage of this rivalry to reach additional customers.
Walmart Marketplace Overview
Walmart Marketplace is like Amazon in many 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 careful about the brands they choose to sell under its name. To be approved, sellers need to demonstrate a history of e-commerce experience on other platforms, reputable customer service, a compelling product assortment, and competitive pricing. In the early days, Walmart Marketplace was an invitation-only platform. Today any brand can apply, but to earn approval is much more difficult.
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). Akin to 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 omnichannel capabilities such as its Free & Easy Returns program. Participating items 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.
Unique Benefits of Selling on Walmart Marketplace
The primary selling point of joining Walmart Marketplace is gaining access to their loyal 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 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 by the retail giant’s existing capabilities in its brick-and-mortar network.
CHANNEL KEY TAKEAWAY
Walmart Marketplace has been around for more than a decade, but in reality it is still in its infancy. 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 target customers.
Still, Walmart is no entry-level soldier in the ranks of retail. They are the former king; a retail behemoth with six decades of momentum, hungry and determined to take back the throne by shifting their forces to the e-commerce battlefield. Walmart may be the current underdog, but anything can happen. Regardless of the outcome, the true victor in this epic rivalry will be neither Walmart nor Amazon. It will be the brands who profit from the ongoing challenge to create the most modern, effective, and powerful way to reach an audience; and the customers who save time and money with easier, more streamlined methods of shopping.
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.