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Commerce & Sales Channels

Selling on Walmart vs Selling on Amazon

Commerce & Sales Channels
July 8, 2021
10 min read
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Walmart Marketplace is a quickly-growing sales channel that ecommerce sellers shouldn’t ignore. Learn more about selling on Amazon vs selling on Walmart and why you should probably be doing both.

Setting up and managing new sales channels is intimidating – especially if eCommerce shops are moving from single channel retailing to multichannel selling. But, expansion to multiple channels is a proven way to expand visibility and increase sales.

 

In fact, back in 2015 Stitch Labs found that retailers selling on two marketplaces see 190% more revenue than those selling on just one. Imagine how much higher this figure is today after the pandemic accelerated eCommerce’s rapid rise.

Intimidation factor aside, jumping into a new channel is a relatively low-risk potentially high-reward venture, and Amazon’s struggles during the pandemic showed that over relying on the online juggernaut is far too risky. 

Accordingly, sellers are evaluating other sales channels and Walmart, the world’s largest retailer, is the next logical step. This has 39% of Amazon sellers considering becoming Walmart third-party sellers this year asking what it is like selling on Walmart versus selling on Amazon

Is it better to sell on Walmart or Amazon?

While there are pros and cons to selling on Walmart and Amazon, both present tremendous opportunities to reach millions of customers. Amazon is the undisputed leader of online retailing, accounting for more than 40% of all eCommerce sales after the pandemic, and Walmart is the king of physical retail, comprising 9.5% share of all 2020 retail sales, and making huge gains online.

 

Plus, each reach similar customers, particularly in categories such as clothing, beauty, personal care, and grocery, along with offering loyalty programs – Prime and Walmart+ – that feature free 2-day shipping. 

In short, established sellers should be on both platforms and understand the unique advantages of each to maximize return on investment (ROI). 

Walmart Marketplace’s Top 4 Advantages

  1. Less Competition – Compared to Amazon, Walmart Marketplace has a much better buyer-to-seller ratio. Amazon has 6 million plus sellers globally, almost 2 million of which are active, and offers more than 353 million products, whereas Walmart Marketplace has grown to almost 100,000 sellers and 80 million items. Less competition means Walmart third-party sellers can spend less on marketing to reach their nearly 100 million unique monthly visitors

  1. Smaller Product Selection – Similarly, fewer products mean shops, particularly those selling unique inventory, can stand out without breaking the bank on cost-per-click (CPC) advertising or discounting to be more attractive. 

  1. Flexible Fulfilment Services – Launched in early 2020, Walmart Fulfilment Services (WFS) is not as established as Fulfillment by Amazon (FBA), but it’s growing fast. Walmart continues dedicating more CapEx to expanding its exploding digital business and a massive 4,500 brick-and-mortar nationwide footprint already puts the retail giant only 1-hour away from 99% of the U.S. population. Acting as mini-fulfilment centers, these physical stores get purchases to consumers fast and at reduced cost when they take advantage of in-store pickup. Likewise, these stores expedite the return process, reducing costs and creating a better customer experience. Interestingly, a recent consumer survey found that almost half prefer to make returns in-store

    Amazon’s Whole Foods and Amazon Fresh stores in a few cities cannot match Walmart’s physical presence. Additionally, despite Amazon’s aggressive investments to expand logistics operations, they’re still 60 minutes away from fewer people than Walmart – just 77% of the U.S. population. 

  1. Custom Customer Support – Merchants can communicate directly with customers to answer questions and resolve any issues. Further, sellers control, specify and manage their own return policy and customer service information, though Walmart does require that customer emails are responded to within 1-business day. 

Amazon’s Top 4 Advantages

  1. Lower Barrier to Entry – Registering for an Amazon seller account is much easier than a Walmart seller account. Within days, almost anyone with a social security number can register to sell and have products listed. On the other hand, Walmart’s stricter requirements include being a registered business with a state and a US Business Tax ID. Essentially, becoming a Walmart third-party seller is out of the question for sellers that are not already operating. 

  1. Access to Prime Audience – Less competition on Walmart Marketplace does make standing out easier; however, Prime’s 200 million global members cannot be ignored. Correspondingly,  the Prime brand has become synonymous with fast, free delivery, giving sellers immediate credibility with new shoppers.


  2. Sophisticated Buy Box – Unlike Walmart Marketplace, having the lowest price is not the only key to winning the buy box, the white box on the right side of the product detail page where customers can add items to their cart. Elements that influence winning the buy box include search text matches, product availability, Order Defect Rate (ODR), on-time shipping rate, and feedback rating. As a result, Amazon sellers have more control over their pricing and profitability

  1. Multi Channel Fulfillment – Amazon’s Multi-Channel Fulfillment (MCF) takes FBA to the next level by providing fulfillment services regardless of the channel the sale comes through. Like FBA, Amazon stores product at their distribution centers, picks, packs, and delivers the order, making this an attractive option for fast growing shops dipping their toe into multichannel selling. WFS does not provide multichannel fulfillment and even prohibits the use of Amazon logistics. 

Is Walmart or Amazon a more profitable platform for sellers?

Multiple variables across both marketplaces will impact profitability such as sale price, selling fees, and fulfilment costs.

 

Sale Price

Founded on low prices, Walmart Marketplace has much stricter pricing polices than Amazon and will even unpublish listings if the best price is not offered. Best practice is adhering to these two policies to avoid having listings automatically unpublished:

  1. Price Leadership – Walmart will automatically unpublish goods if customers can find a better price (including shipping costs) on a competition website – regardless of the seller. 

  1. Price Consistency – Items will also be unpublished automatically if they can be bought for less (including shipping costs) from the same seller on a competing website. 

Selling Fees

Amazon charges a monthly $39.99 fee for a professional seller account, along with other referral and recurring fees. The eCommerce leader does offer an individual account with limited access for no flat fee, but this pay-as-you-go plan is designed for more new sellers selling a few one-off items. 

On the contrary, while Walmart third-party sellers also pay a referral fee for each item sold, Walmart Marketplace does not have any setup, subscription or recurring monthly fees. 

Walmart Seller Center vs. Amazon Seller Central

Although Amazon sellers often report slow response times and cryptic messaging from Amazon Seller Central, Amazon’s seller support infrastructure is much more advanced than Walmart Seller Center. Amazon’s advertising and reporting capabilities are unparalleled in the online marketplace space and rapidly developing. However, Walmart’s ambitions to overtake Amazon as the number one marketplace ensures that the retail giant will continue to invest in building a more robust Walmart Seller Center.

Fulfillment Costs

Fulfilment by Amazon (FBA) takes the complex work of inventory management off sellers’ hands by handling all storing, picking, packing, shipping, and returns. For shops selling products less than 20 pounds and smaller than a shoebox, FBA is an attractive option.  

Launched in early 2020, WFS has not taken long to catch up. Like FBA, merchants send products to Walmart’s fulfilment centers, where the big box retailer handles fulfilment and ships directly to customers.

For the most part, the difference in FBA and WFS’s fulfilment costs is almost negligible. However, items with higher dimensional weight (DIM), also known as volumetric weight, can be significantly more expensive via FBA than WFS due to Amazon’s weight tier structure

In addition, Walmart and Amazon do charge the same storage fees from Q1-Q3, but WFS costs less during Q4, when both companies boost prices to take advantage of the peak winter holiday selling period. 

Is it worth selling on Walmart Marketplace?

Yes, sellers should never be overly dependent on one platform for revenue, and Walmart Marketplace’s popularity is skyrocketing. 

As shared above, Walmart does have a higher barrier to entry than Amazon, so new sellers may have a more challenging time establishing themselves. This makes Walmart a more attractive option for sellers experienced with other online channels.   

How do I manage selling on multiple marketplaces?

As sellers learned during the pandemic, relying solely on FBA can be detrimental to the health of their business. For this reason, more are testing a hybrid approach, keeping some supply with FBA and some in their own warehouse or with a third-partly logistics (3PL) to sell in other channels. 

However, as HyVIDA, the world’s first hydrogen-infused carbonated beverage, and other fast growing eCommerce businesses have found, this segmented approach can lead to costly inefficiencies. Consequently, HyVIDA moved away from FBA and consolidated fulfilment through a fourth-party logistics (4PL) provider.

These outsourced order fulfilment partners negotiate the best rates and service level agreements (SLAs) across regional 3PLs to create a nationwide distributed warehouse network, while helping merchants determine where to forward stock inventory to guarantee nationwide 1-2-day delivery. 

Ultimately, HyVIDA chose to consolidate fulfilment with Ware2Go, a 4PL created by UPS to help businesses across many industries in all phases of growth guarantee 2-day shipping nationwide. 

The Bottom Line

Amazingly, if we assume that all Walmart third-party sellers are also selling on Amazon, then just 2% of Amazon sellers are also on Walmart Marketplace. While leaping into a new sales channel can be daunting, adding Walmart is a low-risk, high-reward opportunity for established Amazon sellers. 

To learn more about how Ware2Go’s on-demand fulfilment structure can help you sell in multiple sales channels cost effectively, reach out to one of our fulfilment experts.

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