Walmart has come a long way since its humble beginnings in 1962. From being a chain of budget-friendly grocery stores to becoming the second largest online retailer, next only to none other than Amazon, the company has seen appreciable growth.
The expansion and evolution that the Walmart brand has undergone over the last few years is unmatched.
Today, Walmart is enjoying unprecedented attention from marketers and businesses due to the popularity of the Walmart marketplace.
Walmart marketplace is the new kid in the online marketplace block. And despite being significantly smaller than Amazon, it is all set to become the global retail giant’s up-and-coming competitor.
So, what’s the deal with the Walmart marketplace?
In this blog, we will answer this question and more. Read till the end to find out about the pros and cons of Walmart marketplace and see if it is worth your time.
What is Walmart Marketplace?
Walmart launched its marketplace back in 2009. But it has only started gaining popularity recently, partly due to the increased interest the company has started taking in this area of their business.
Walmart marketplace is similar to Amazon. It lets third-party sellers sell their products through the Walmart platform and share a customer base with Walmart.
You can sell a wide variety of products across dozens of categories that the marketplace features. These products are sold on the Walmart platform but under your brand name. This allows you to interact with Walmart’s extensive customer base and enjoy its brand reputation.
The Walmart marketplace was initially reserved for US businesses only. But the company has recently opened its doors to foreign sellers as well.
Foreign third-party sellers can now sell on the Walmart marketplace and benefit from all its features, including advertising and performance tracking. The platform is, however, strict on allowing foreign sellers since it has a reputation to maintain.
Walmart marketplace currently has over 124,000 sellers. But this number is expected to rise as more and more people discover the potential bundled up within the marketplace and flock to it.
Like all other marketplaces, you must pay Walmart a referral fee to sell through their platform. This fee varies from category to category but usually falls between 8-15% of the product price.
How Do Shipping and Refunds Work in Walmart Marketplace?
You are responsible for shipping and refunds when you sell through your own website. But what happens when you share the platform with Walmart?
Walmart gives its marketplace sellers two options for shipping. You can either use Walmart Fulfilment Services (WFS) or ship the products yourself.
WFS is the FBA of Walmart, where the company stores, picks, packs, and ships the products on your behalf. When you go the WFS route, Walmart also takes care of inventory management, returns, and customer service for you.
You have to pay the fulfillment fee, which depends on different variables like the weight and size of your products.
You are pretty much on your own when shipping the products yourself. You will have to take care of the inventory, refunds, and customer service yourself.
Walmart also lets you have a hybrid approach when it comes to fulfillment. You can opt for WFS for certain products and ship yourself for others.
Pros and Cons of Selling on Walmart Marketplace
Is Walmart marketplace worth going into?
Walmart US had eCommerce sales worth $47.8 billion in 2022, an 11% increase from 2021.
https://www.statista.com/statistics/1109330/walmart-ecommerce-sales-by-division-worldwide/
95% of Walmart marketplace sellers have a profitable eCommerce business.
These numbers paint a bright picture of the Walmart marketplace. But the platform has its drawbacks.
Here are some of the Walmart marketplace’s pros and cons to help you decide whether it is worth your time:
Walmart Marketplace Pros
Some of the benefits that you will get to enjoy as you join the Walmart marketplace include:
Walmart’s Excellent Brand Reputation
Walmart has fostered a solid brand reputation by ensuring excellent product quality and customer service. Fostering such a reputation and building the kind of trust Walmart has managed to build with its customers isn’t easy.
When you sell on Walmart marketplace, you get to share the platform’s hard-earned trust and well-built reputation without investing time and effort into building your brand’s reputation from scratch.
You still have to work on reinforcing your reputation as a Walmart seller. But that’s significantly easier than fostering brand reputation when operating independently.
Walmart’s Features
When you join the Walmart marketplace, your business benefits from a number of features you may not enjoy otherwise. One of these features is Walmart’s website.
Walmart has a powerful, well-structured, and optimized website. Building such a website for your own business would require a lot of investment. When you sell on the Walmart marketplace, you benefit from an excellent website without investing anything in web design and development.
Apart from the website, Walmart marketplace also offers its proprietary advertising system to help you drive brand awareness and sales.
The platform also has other tools to help you create and optimize your listings and stores.
Essentially, joining the Walmart marketplace does not only allow you to enjoy Walmart’s hard-earned customer trust. You also get to leverage the powerful tools Walmart has in store for its sellers.
A home and kitchen goods manufacturer and seller used the Listing Quality Dashboard, one of Walmart’s nifty seller-support tools that helps sellers with listing optimization, to optimize the listing for one of their products. This optimized product listing received 765% more page views, and the product saw a 1300% boost in sales.
So, Walmart’s tools don’t just help make selling easier. They generate results as well. You just have to be a part of the marketplace to benefit from them.
A Massive Audience
Walmart has many loyal customers, people who keep coming back to the platform despite there being many other similar options out there. One of the reasons for this is Walmart’s competitive pricing.
So, when you sell on Walmart marketplace, you don’t have to worry about finding and reaching the right audience. All you have to do is optimize your listing so it can rank for the right searchers. Walmart will bring the customers for you.
Moreover, Walmart.com gets over 120 million visitors each month. There are very few businesses in the world that can get this many online visitors when operating on their own.
So, selling on Walmart marketplace also allows you to tap into an engaged and loyal audience and helps you drive your product reach by enabling your business to interact with a vast customer base.
Free Onboarding and Competitive Referral Fee
Joining and existing in the Walmart marketplace is free. Walmart operates on a “pay when you make a sale” model. You pay a nominal referral fee only when a customer buys your product. The exposure, impressions, and brand awareness you get from existing on a platform with millions of visitors are free.
Cons of Selling on Walmart
Walmart isn’t all rainbows and sunshine. It has its downsides like:
Difficult Registration Process
Walmart is conscious of its brand reputation. Therefore, it is very particular about the sellers it allows on the marketplace. Unlike Amazon, where just about anyone can become a seller, joining the Walmart marketplace is a bit more complicated. You must have the right qualifications and meet Walmart’s strict criteria to enter the platform as a seller.
Lower Profit Margin
Walmart operates on an EDLP or everyday low-pricing model. And while this does make shopping on Walmart great for customers, it may not always be pleasing for the sellers since they are forced to slash their prices and make do with smaller profit margins.
Fulfillment Services May Not Be As Efficient As FBA
It may not exactly be fair to compare WFS with FBA since FBA has been operational for much longer with better resources. But looking at it from a seller’s perspective, WFS may not be as efficient as FBA.
Walmart fulfillment service is fairly restricted when compared to FBA. There are smaller limits on product size, dimensions, and weight. Moreover, WFS only excepts shipments from within the US and has a relatively smaller logistical infrastructure.
WFS can also be more expensive than FBA.
Final Words
Like everything in the world, Walmart marketplace has its pros and cons. On one hand, it allows you to reach millions of people for free and deducts a fee only when you make a sale. But on the other hand, it has a difficult registration process and an EDLP pricing model that may make you compromise on your profit margin.
But despite its evident cons, small and big brands continue to sell on Walmart. And this could be an indicator that the pros weigh heavier than the cons in this case.
Can’t decide whether Walmart marketplace is right for you? At Accrue, we help sellers like you choose the right eCommerce channels and develop a strong marketplace presence. Talk to one of our consultants for tailored advice!