Skip to content
Walmart’s online store is not profitable.  Now he’s borrowing from Amazon’s playbook


Under the category on the site, you will see a number of options shipped and sold by Walmart itself. Then there are others. You can get a Ford Mustang t-shirt from a third-party seller named Wild Bobby, or a t-shirt with the Disney’s Stitch character from seller Open and Clothing. Basically, there is no shortage of t-shirts. And this also goes for other categories like toys and kitchen utensils.
It’s because Walmart (WMT) quickly increased the number of third-party sellers on its site.

Over the past year, he has enriched his network of merchants. It recently opened its platform to sellers outside of the United States for the first time and is trying to attract even more with incentives like zero commission for 30 days.

The Walmart market has been around since 2009, but it is only in recent years that it has become a key priority for the company as it battles Amazon (AMZN) online. E-commerce accounts for less than 10% of sales at Walmart, but it is growing rapidly as Walmart abandons its physical roots to reach customers online.

Walmart says it wants to expand its market to offer customers a wider choice of products online than the company itself can offer directly.

“Our customers expect us to provide them with as much breadth and depth as they can,” Jeff Clementz, vice president of Walmart Marketplace, said in an interview. Market vendors “round off” Walmart’s online offering, he said.

Additionally, Walmart’s online business is unprofitable and may earn more money from third-party sales than from selling its own products online. Not only does the company earn commissions from sellers, but it can then sell merchants even more products – advertisements, delivery services, or even lines of credit through a partnership with Goldman Sachs.
Walmart has a long way to go to catch up with Amazon, which has more than 1.9 million active third-party sellers. Walmart won’t release numbers, but according to e-commerce data firm Marketplace Pulse, it had fewer than 7,000 sellers at the start of 2017. Walmart has since added about 80,000 merchants.
Tackling more sellers could be risky. In particular, the decision to open its platform to sellers outside the United States could expose Walmart to more counterfeit and low-quality items, said Juozas Kaziukenas, founder of Marketplace Pulse. The United States Government Accountability Office said in a 2018 report that 88% of counterfeit products in 2016 arriving in the United States originated from China and Hong Kong.

Clementz defended the move, saying Walmart tested a pilot for overseas sellers that had been well received by customers and gave Walmart the confidence to open it more widely.

“You’re going to go through the same verification process that has a very high bar,” he said.

‘Lots of eyeballs’

Sellers say they joined Walmart.com for one simple reason: to help them reach more customers.

Katie Melissa has been selling household items and cookware like Crock-Pots, toasters and microwaves in the Walmart Marketplace for a year. She had previously sold her products on Amazon and Etsy, but wanted to join Walmart to reach a new audience that did not shop on these sites. Walmart boasts that 120 million customers visit its site every week.

“I knew this was going to generate a lot of eyeballs on my products,” she said. “It is a market with great potential.”

The two companies have different verification processes for sellers. On Amazon, they have to go through a registration process where Amazon examines the information and identity of the sellers to weed out sellers selling counterfeit products. With Walmart, sellers go through a process that includes a review of the products they sell, their sales history, and previous product and seller reviews.

Melissa said it was difficult to get approval to start selling in the market. She had to provide a compelling reason why she would be the right person to sell on the Walmart Marketplace – something she never experienced at Amazon – and had a longer application process than on Amazon.

Walmart’s online store is not profitable.  Now he’s borrowing from Amazon’s playbook

She said the sale on the platform “has gone smoothly so far.” She quickly hit six figures in terms of monthly revenue and says there is less competition on Walmart.com than Amazon because there are fewer sellers.

One seller, however, says Walmart.com presents challenges. Jonathan Hedden is the owner of Flyclothing.com, which sells Rock & Roll and retro clothing like ACDC and Led Zeppelin t-shirts, leather jackets and belt buckles and motorcycle bags. Hedden started selling on Walmart over two years ago.

He grew increasingly frustrated with selling on Amazon. It faced increased competition on Amazon from overseas sellers who were offering clothing similar to its licensed products at lower prices.

Hedden stopped selling on Amazon in January and says he makes 40% of the Walmart market sales he made on Amazon. He’s worried that adding foreign sellers to Walmart will lead to some of the same issues he’s faced with Amazon.

He also has difficulty uploading inventory, shipping information, and listing products on the site.

“There are tools that don’t work well,” he said. “I don’t think they fully understand the world of e-commerce.”

Responding to Hedden’s concerns, a Walmart spokesperson said in an email that its market “contains mostly US sellers” and “that’s not changing.”

Walmart “is evolving rapidly to create a seamless selling experience,” the spokesperson said.
“While we have work to do, we are grateful for their collaboration and feedback as we improve and expand our support capabilities.”

.



Source link