Walmart vs. Amazon: The Changing Landscape For Ecommerce Sellers
Walmart is one of the most recognizable brands in the world. With a momentous footprint in the US, the giant has moved into ecommerce and is taking it by storm.
Almost anyone can sell on Amazon. Merchants are in their millions which makes competition rife, selling strategies complex and standards strict. It’s likely that you are already selling on Amazon, and may be intrigued by the new kid on the block - what does Walmart offer that Amazon doesn’t, and should you be getting a piece of the pie?
“Walmart is hot on Amazon’s heels as it continues to ramp up both its own ecommerce offerings and its marketplace for third-party sellers. In 2018, Walmart’s online sales grew 40%, and it became the third-largest ecommerce retailer in the country. Between early 2017 and early 2019, Walmart saw 207% growth in its ecommerce buyer base.”
By reading this guide you will find out:
- How the Walmart Marketplace came about.
- The benefits of selling on Walmart Marketplace.
- Selling on Amazon vs. Walmart - comparing the key aspects including fees, policies, fulfilment services, buy box strategies and sponsored ad processes.
- Amazon vs. Walmart - which platform to pick.
- Optimization strategies for both sales channels.
- How A2X can simplify your ecommerce accounting.
How the Walmart Marketplace came to life
Unlike Amazon and eBay, Walmart is not an ecommerce native. So the fact that it has become second only to Amazon in traffic (in the US), and third for sales overall, is remarkable.
Recognizing the potential of ecommerce, Walmart transformed its ecommerce strategy mid-2016. Acquiring other major online brands like Jet, Bonobos and Modcloth enabled the high street giant to diversify and expand its product offering online, while developing a solid fulfillment infrastructure along the way.
By the end of 2018, Walmart had seen a 40% increase in its online revenue, and taken Apple’s spot of third place in sales behind eBay and Amazon. The latter retaining almost half of all US ecommerce sales that year, Walmart, a relative rookie, took home a 4% market share - an impressive feat for the traditional bricks-and-mortar store.
The benefits of selling on Walmart Marketplace at a glance
Should you sell on Walmart Marketplace?
Whilst Amazon remains the biggest ecommerce player, Walmart’s success in this space is nothing to be sniffed at. The giant has significant benefits of its own for sellers, including:
- Lower seller fees: it costs a seller nothing to get set up on Walmart Marketplace, unlike on Amazon which charges a $39.99 monthly subscription for pro sellers. Charges come once sales are made. Even as a Prime member, selling on Walmart over Amazon may save you money over time.
- Less competition: Walmart Marketplace, unlike Amazon, is far from saturated. Some categories could even be called sparse, giving you the chance to snap up a gap in the market.
- Better competition: Walmart is more selective about sellers, which may seem like a downside. But in fact, it ensures that you are not competing as much with lower quality merchants looking to undercut your product niche. Only the most established sellers are permitted to use the platform, increasing customer trust and repeat sales.
- Physical presence: 90% of Americans live within 10 miles of a Walmart store. With 85% of transactions still happening in stores, Walmart’s 11,000 over Amazon’s 500+ gives it a significant edge in this respect.
- Larger revenue: Walmart exceeds Amazon in revenue. In 2018, Walmart raked in around $500 billion versus Amazon’s $141.4 billion.
- Reach the non-Prime members: going for Walmart Marketplace opens you up to a new customer base. That is, non-Amazon Prime members and other audiences of consumers.
- Diversify your revenue streams: the fear of Amazon’s little red flag is something all sellers will have in common. By spreading some of your inventory across more streams, you are less vulnerable to those frightening restrictions posed by Amazon.
Selling on Amazon vs. Walmart
Let’s delve a little deeper into the key aspects of selling on Walmart Marketplace and how it compares to the Amazon experience.
“Half of 800 sellers surveyed in a recent Feedvisor survey complained of high Amazon fees.”
One of Walmart’s biggest selling points is its lack of marketplace fees.
Unlike Amazon, Walmart does not charge sellers any fees to set up or list. Only after a sale is made are you charged a referral fee. These are in part determined by the category of your listing, but the fees give you unlimited access to all of the Walmart Marketplace features.
Walmart’s referral fees are competitive. These are partly dictated by category, so while most fees are around 15%, these can be between 8-20%. The key distinction between Walmart and Amazon is that this is the end of the story. No monthly pro account charges, high-volume or other miscellaneous fees. Every little bit helps!
Aside from fees, a major differentiator between the platforms is membership.
Walmart is strict about who they let sell on the Marketplace. It is in fact an invite-only system of sorts, where applications take between 2 and 4 weeks to be approved. You will need to be a credible, established seller to be accepted. If you are selected after the approval process, onboarding takes another 2-4 weeks.
Everything is taken into account from your sales history, fulfilment, order defect rate, returns policy, customer support, buy box success rate and your customer reviews on other sites.
If you are selected, you will have access to all Marketplace features, there is no ‘pro’ version or upgrade like Amazon.
Tip: more is more in this game. Show as much evidence as you can that you are an established seller from positive reviews elsewhere to a business address, and proof that you are a specialist in your category.
Like Amazon, Walmart is very strict on their bottom line pricing. Committed to offering customers the best deals, you are not allowed to offer the same item cheaper elsewhere, so bear this in mind when formulating a multi-channel strategy.
Tip: Walmart favors brands over retailers, so if you are selling your own products, you may get preference. If not, you can gain brownie points by ensuring that you offer the lowest price for your products.
Fulfilment by Amazon (FBA) vs Walmart Fulfilment Services (WFS)
Amazon’s FBA (Fulfilment by Amazon) service is costly, but many sellers consider it worth the price tag. Fulfilment is no small task, so having another supplier pick, pack, ship out and track items for you with no negative impact on your ratings if they make a mistake, is a huge advantage.
So how does Walmart support their Marketplace sellers with fulfilment?
Walmart’s version of FBA is WFS (Walmart Fulfilment Service).
“[A] competitive, cost-effective solution with a straight-forward pricing structure, which includes a monthly storage fee and a fulfilment price based on the item weight only (excluding add-on fees for apparel and HAZMAT)”
In order to qualify for WFS, sellers need to meet the following requirements:
- You need to be able to ship products to Walmart fulfilment centres from within the US.
- Your products are not perishable or regulated.
- Max weight is 30lbs.
- Max dimensions are 25” x 20” x 14”.
Some benefits available when using WFS include:
- Guaranteed 2-day delivery.
- Using WFS gives sellers greater control over content on product pages.
- Support available from WFS call centres for recommendations on business strategy.
- Like FBA, WFS handles customer queries throughout the shipment process, including returns and refunds.
The most exciting prospect for Walmart Marketplace sellers is the potential for the high street giant to leverage its expansive store network. Amazon offers buyers the chance to pick up products from shops like RiteAid. But if Walmart offers something similar, their footprint would immediately shadow that of Amazon making fulfilment cheaper, more efficient and convenient.
“There are also discussions of better implementing their physical location network to double as shipping and forwarding locations, and with FedEx’s end to their ground shipping partnership with Amazon, Walmart stands to gain even more ground (pun intended) in the logistics field.”
Seller Central vs Seller Center Performance Metrics
Wherever you choose to sell, you will be held to certain standards. Amazon and Walmart each keep tight metrics on sellers to ensure customers are getting the best experience. Below we compare how each platform measures their sellers:
Walmart’s Seller Scorecard makes it easy to track your metrics. Both Amazon and Walmart have an appeals process in the case of suspension, expecting sellers to address the cause of any faults and their proposals for solutions.
Tip: if you are suspended and submit an appeal, make sure that you provide as much information upfront as you can, as you may not have the opportunity to resubmit.
Unlike Amazon, Walmart allows you to set your own return policies. Sellers are given back the reins to manage their customers and fulfilment the way that works best for them.
Sponsored Product Ads (SPAs)
“If there’s one thing we’ve learned, it’s that Amazon Sponsored Product Ads (SPAs) are one of the most effective ways to increase conversion rates and discoverability for your products.”
Paid ads can be an effective tool for business growth, particularly when you have competitors in the thousands.
Amazon has opened up more and more ad spots, heading towards a “pay to play” space. Sellers need to spend just to stay relevant. For Walmart Marketplace, the traditional purpose of paid ads - building brand awareness and longer term organic success - is still very much alive.
You can see this illustrated in the example below of organic vs. paid search results for “protein bar”:
Aside from allowing brands to build their organic success over time, Walmart shields its buyers from ad fatigue.
So, how do Amazon and Walmart run their SPAs?
Amazon ads are sold on a CPC (cost-per-click basis), sellers bidding on keywords and setting a maximum bid. The second highest (plus one cent) wins. Walmart is the same except the winning bid is successful.
The benefit of Walmart’s strategy is that it prohibits larger brands playing games, setting unrealistically high bids that can’t win in order to rule out the chances of the smaller players. In this way, Walmart levels the field.
Interestingly, whilst Amazon still has most online traffic and paid ads would likely give you most impressions there, Walmart still gives you greater control and options. Amazon is known for supplying incomplete data, so Walmart’s greater insight in ad performance is a major plus.
“Because Walmart is omni-channel, digital ad spend can influence consumers through the full funnel and allow you to measure the impact of your ads directly, online and in-store.”
Winning the Buy Box
“In the same sense that Google organizes the organic search results to give users the best search experiences possible, Amazon allocates buy box privileges to give customers the best purchasing experiences possible.”
The buy box - gold dust. Especially on Amazon, where you compete with thousands, if not millions of sellers.
Winning the buy box on Amazon involves a considerable process. First, you need to become eligible, which comes with a host of requirements including strong metrics, new products and inventory. Your sales performance, order defect rate, fulfilment and other factors are taken into account. Winning the Walmart buy box, as it currently stands, is far easier.
For sellers on Walmart offering a product already listed, they can share the listing. Sellers have already been rigorously vetted by Walmart in order to onboard, so the buy box is all about providing competitive price.
Walmart is less ruthless when it comes to buy box eligibility. As long as sellers have plenty of inventory and low pricing, they are in the running. Amazon sellers will need to remain well-informed and agile in order to remain top dog of the buy box - a great example of how different the experience of selling on Walmart Marketplace is.
Amazon vs. Walmart: which platform should I use?
The best way to decide whether you should sell on Amazon vs. Walmart Marketplace (or both) is to compare what they can offer you, and your unique brand. Each platform requires different tactics, some of which may not suit your services, and have their own challenges alongside their benefits.
“For example, Walmart sellers may deal with less competition, but they also face more pressure to offer the lowest prices online. Amazon sellers may be hurt by its high levels of competition, but it’s easier to join as a seller and slightly less price-driven.”
This helpful diagram is a good starting point for sellers deciding between the platforms:
Optimizing Your Amazon & Walmart Selling Strategies
“52% of the 800 [participants] from [a] Feedvisor seller survey [said that they] are constantly worried about Amazon removing their seller privileges.”
It makes sense not to keep all your eggs in the Amazon basket, especially at the beginning of Walmart’s ecommerce rise. By diversifying your sales channels, you are less vulnerable to suspensions or unprecedented changes in the market.
In order to do this well, it is essential to understand the key differences between the channels and ensure that you optimize your strategy to each:
Planning your sales strategy is a great way to ensure you are prepared for selling on either platform. Check out this helpful guide for more on how to do this.
A2X for Amazon & Walmart Marketplaces
Whether you sell on Amazon or Walmart Marketplace, comprehensive accounting is imperative.
Your ecommerce accounts need not take you hours every month to manage. With A2X, you can reconcile your transactions with settlement payments with ease - giving you accurate data, neat and tidy books as well as the ability to set and forget.
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