Walmart teams up with Shopify to give Amazon a run for its money

Discussion
Photo: Walmart
Jun 16, 2020
George Anderson

Walmart is serious about growing its online marketplace business. The retailer has teamed up with Shopify to enable sellers from the platform to sell their goods on walmart.com.

The agreement between the two companies is potentially bad news for Amazon.com. Walmart is the second biggest e-commerce site in the U.S. and growing its business at a rapid pace (74 percent in the last quarter). Shopify is the second largest online platform in the country with more than one million companies.

Jeff Clementz, vice president, Walmart Marketplace, wrote in a company blog yesterday that the retailer is committed to growing its third-party seller base and is focused on recruiting small and medium businesses with product assortments that complement its own and with stellar records of customer service. Initially, 1,200 Shopify sellers will list products for sale on walmart.com.

Research published earlier this year by Tinuiti puts the number of third-party sellers on Walmart at 33,000. Fifty-seven percent of Amazon shoppers also shop on walmart.com.

Shopify sellers will be able to “seamlessly list” products for sale on Walmart’s site, according to Mr. Clementz’s post.

A spokesperson for Walmart told RetailWire that Shopify sellers “can apply to utilize Walmart Fulfillment Services (WFS).” The service is positioned as a low-cost way for third-parties to use Walmart to pick, pack and ship items ordered from walmart.com.

In an email received by RetailWire, Moody’s vice president Charlie O’Shea said the Shopify deal continues Walmart’s successful expansion with third-party sellers like Advance Auto Parts on its site.

Walmart and Advance announced a deal in 2018 that included value-added content and product information from the auto parts dealer. Shoppers ordering from Walmart’s site can get same-day delivery or pick up the parts at either retailers’ stores.

Mr. O’Shea sees store space as a “key competitive advantage” for Walmart that it can use to expand its third-party partnerships.

“One of the critical factors involved in these relationships is the logistics capability of the large partners, and in the case of Walmart and Amazon, it will be interesting going forward to view the differences between a store-driven model and a largely pure-play delivery model and their impact on these third-party relationships,” said Mr. O’Shea.

DISCUSSION QUESTIONS: What is your take on the significance of the Walmart/Shopify deal? What will it mean for Amazon and others such as Target that also have online marketplaces?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Sounds like Walmart has taken off the gloves in the battle against Amazon. "
"This represents a fantastic opportunity for Walmart to ramp up their assortment in a decidedly non-Amazon way which is to closely vet all incoming merchants."
"Of course, Walmart will get more traffic, revenue, and sales (product and ads) of its own products which are perhaps the Trojan Horse."

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20 Comments on "Walmart teams up with Shopify to give Amazon a run for its money"


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Mark Ryski
BrainTrust

I think this is yet another good move by Walmart – they seem to be out-Amazoning Amazon. Logistics is a huge challenge for small online retailers, and so utilizing Walmart’s significant logistics capabilities will be extremely helpful. This coupled with Shopify’s leading online platform makes for a strong offering. Given the bad press Amazon has received about how they harvest information from their third-party “partners” to inform their own products, this definitely puts Walmart in the preferred partner category.

Jeff Sward
BrainTrust

Sounds like Walmart has taken off the gloves in the battle against Amazon. They are clearly determined to take e-commerce market share away from Amazon, and to say that they have a head start in brick-and-mortar is an understatement. This also sounds like a huge incentive for Amazon to get into the brick-and-mortar business in a big way and in a big hurry.

Brandon Rael
BrainTrust

So to summarize, its “game on”!

Zel Bianco
BrainTrust

Never underestimate Walmart! They have a specific goal in mind for the percentage of revenue they want to have by 2024 and they have the logistics bones to make it happen. The combination of store fulfillment may make the difference in their approach and will be very interesting to watch. Fasten your seatbelts!

Paula Rosenblum
BrainTrust

Great move for both. Shopify is easy. I saw it take one of my clients from 0 to $350,000 in its first year of operation, with lots of SKUs.

Competition is healthy and Walmart is certainly viable.

Ben Ball
BrainTrust

You hit the key point Paula — what Shopify brings to Walmart goes far beyond more resellers. Not many understand the power of the Shopify model unless they follow it as an investment opportunity or are among the thousands of small businesses that, as you point out, Shopify has literally put into business.

Brandon Rael
BrainTrust

Competition is always a good thing. Once again Walmart has raised the stakes in their ongoing battle with Amazon for the share of the consumer’s wallet. By partnering with Walmart, Shopify’s brands will now join a much larger online marketplace, where they will have increased the ability to reach new customers, scale their operations, and maximize their digital reach.

Reach and scale is one aspect of the deal. More important are the supply chain and distribution considerations that go along with online fulfillment. Walmart has invested significantly in both their digital offerings and supply chain capabilities. Shopify’s marketplace members will now have the opportunity to take advantage of Walmart’s supply chain fulfillment solutions, and reach customers they may not have been able to satisfy.

Stephen Rector
BrainTrust

Besides this deal with Walmart, Shopify is adding several new services for their users to make it easy for people to start and grow their digital businesses. I was on a Shopify webinar when the COO spoke and was impressed with his empathy and compassion for the users of the Shopify platform. They are trying to be the “anti-Amazon” and doing a great job of it.

Ben Ball
BrainTrust

This relationship will benefit both partners, but Walmart is definitely getting the best end of the deal. Toby Lutke has built a unique and powerful platform in Shopify that makes large scale e-commerce as accessible as eBay and Marketplace make private selling for the average Joe selling his car. Walmart online shoppers and resellers will certainly benefit from that.

Michael La Kier
BrainTrust

While bringing Shopify under its wing, Walmart won’t bring Amazon to its knees, but it’s a smart move. Expanding its marketplace is better news for the thousands of companies using Shopify and for consumers, too. Of course, Walmart will get more traffic, revenue, and sales (product and ads) of its own products which are perhaps the Trojan Horse.

Suresh Chaganti
BrainTrust

This will help both Shopify and Walmart, but not to the extent that it will disrupt the status quo- At least not yet. This move will reduce friction for Shopify store owners to sell on Amazon. From a seller point of view, they would not want to forgo one over the other. Until Amazon makes life consistently hard for the sellers like eBay was notorious for, I do not see a seller exodus from Amazon to Shopify. It should give Amazon pause, and a reason to up their game.

Lisa Goller
BrainTrust

This year’s e-commerce wars are my favorite reality show.

Since splitting with Jet.com, Walmart faced an urgent need for a new partner to catapult its e-commerce strategy into the 2020s. Partnering with Shopify helps Walmart access tech expertise, scale fast and boost assortment variety.

Notably, Walmart could finally win with young, urban shoppers – some of whom may also be Shopify vendors. This play could boost their loyalty by deepening Walmart’s commitment to small businesses and local communities.

Shopify wins by helping its small vendors access a massive market, especially since the pandemic ignited a shift to value shopping.

This partnership is a smart move ahead of the holiday season yet it seems reactive.

Now that retail and tech are unmistakably entwined, Walmart competes against Amazon, Facebook, Google, and the comparatively more tech-savvy Target. Unless Walmart leverages its existing partnership with Google (they collaborated on Google Home voice commerce), Walmart could lag its tech titan rivals.

Ricardo Belmar
BrainTrust
There is a definite, unique, strategy emerging from Walmart exemplified by this partnership! While I agree this is a fantastic move by both Walmart and Shopify, I’m going to temper my enthusiasm a bit and make the following points for everyone to consider: Shopify merchants had an existing ability to connect to the Walmart marketplace from a technology perspective prior to this announcement, but it was through a third-party connector within the platform that carried a price. Now it’s free, and provided natively by Shopify alongside the numerous other marketplace platforms (including Amazon) Shopify makes available to their merchants. Walmart stated they are only allowing 1,200 Shopify sellers this year to join their existing 33,000 marketplace sellers. That means they are not opening the floodgates and are looking for something specific out of every seller to complement their existing merchants. Equally exciting is that Walmart’s new fulfillment service will be made available to these sellers. Also, remember that Shopify has been offering something similar as an alternative to Fulfilled by Amazon to its sellers. This… Read more »
Chuck Palmer
BrainTrust

If Walmart’s deal with Shopify yields something akin to their arrangement with Advance Auto Parts, I can see it benefiting consumers. As we balance out our in-home and in-store shopping behavior, having more interesting choices within the context of convenience that Amazon and Walmart offer can only be a good thing. Although the first 1,200 Shopify retailers may get lost in Walmart’s 33,000 third-party vendors. According to the website Ecomerce Platforms, there are over 500,000 active stores running on Shopify, and they’ve collectively driven more than $40 billion worth of sales.

So, yeah. Scale.

Peter Charness
BrainTrust

The next question becomes — what happens to the next tier of retailers “stuck” in the middle of the market? With Walmart and Amazon (Target and a few others) having massive assortments and logistics capabilities, and now bringing along smaller retailers from the “smaller tiers” what happens to the mass middle? Nothing good I predict. If you are in the middle and don’t have a unique brand – watch out..

Kiri Masters
BrainTrust

This represents a fantastic opportunity for Walmart to ramp up their assortment in a decidedly non-Amazon way which is to closely vet all incoming merchants. All merchants through this system (like their regular onboarding channels) will be monitored. Thus avoiding the problems that Amazon has faced with having an open-door policy: counterfeiting, gray market resellers, and fake reviews being the most concerning.

However, Walmart only plans to add 1,200 new merchants to their platform via this initiative this year. Either that is a comment designed to downplay their hand, or it will be a drop in the ocean versus the ocean of sellers Amazon recruits each month.

Ananda Chakravarty
BrainTrust

The focus here is on expanding the Walmart marketplace specifically taking advantage of Shopify’s penetration into the SMB market. For Walmart, this is a pilot to test expanding assortment and bringing in new suppliers. For Shopify it is brand association and helps them move up from their well known small scale platform clients towards potentially enterprise scale clients. This would slightly expand Walmart’s ~30k sellers, but doesn’t make much of a dent from a marketplace standpoint given Amazon has over 2.5M sellers, with about 25k of them selling over $1M each year. This is more of a test from Walmart’s side to see how they can continue to expand assortment and still control the quality of sellers. I suspect they’re really looking to see if they can build a counter to FBA. It’s good to see competition, but this isn’t a major game changer.

Kai Clarke
BrainTrust

This is a great move for Shopify, and just a good one for Walmart. The real question here is why is Walmart going to a third party for a solution that it should be doing itself and controlling in-house? Unless it is going to buy Shopify … hmmmmmmm….

Brent Biddulph
BrainTrust

Walmart proves once again, the path to dominating retail will require continued investment in digital partnerships, supply chain collaboration, and data monetization strategies that too many other retailers still lack the courage (vision or cash) to “lean in” on. Kudos to Walmart for continued smart investments, even in the era of COVID.

The gloves were off long ago versus Amazon. Walmart has been all in on digital transformation for years now, with a superior supply chain and brick and mortar foundation, now leap-frogging other traditional retailers still sitting on the sidelines.

Francisco Lyons
Guest
3 months 7 days ago

This is certainly an interesting move by both Walmart and Shopify as a step to growing share in e-commerce. Walmart has already been successful at gaining share in food and beverage mostly due to pickup, which is a great competitive advantage for them vs Amazon. It’s going to he interesting to see how far this partnership takes both Walmart and Shopify.

wpDiscuz
Braintrust
"Sounds like Walmart has taken off the gloves in the battle against Amazon. "
"This represents a fantastic opportunity for Walmart to ramp up their assortment in a decidedly non-Amazon way which is to closely vet all incoming merchants."
"Of course, Walmart will get more traffic, revenue, and sales (product and ads) of its own products which are perhaps the Trojan Horse."

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