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Will Walmart Marketplace Become the Retail Giant’s Focus for E-Commerce Expansion?
Walmart added fuel to the expansion of its digital marketplace with an in-person event for third-party sellers. The Walmart Marketplace summit, which started on August 30, invited merchants of all sizes to participate to help Walmart further develop its digital offerings.
Walmart also announced plans to expand its marketplace — which currently operates in the U.S., Canada, and Mexico — to Chile next year. This will enable cross-border sellers to expand their international reach and could give Walmart’s e-commerce business in the country an extra boost.
Additionally, the retail giant is continuing to roll out dedicated digital brand storefronts called Brand Shops, which give third-party sellers additional control over their pages with options like curated assortments and seasonal selections. It has also created “new opportunities to reach more customers,” including Walmart Business, which is dedicated to B2B sellers, and Walmart Restored, which enables resale.
Walmart is also working with third-party sellers by offering local pickup and delivery for retailers with physical stores, with options for shoppers to choose in-store pickup or same-day delivery. Walmart Fulfillment Services, the retail giant’s end-to-end fulfillment solution, is available for bulky items like trampolines.
Walmart Marketplace has been around since 2009, but the retailer has been making greater efforts to grow the service in recent years. For instance, Walmart entered a partnership with Shopify in 2020 to open the marketplace to more small sellers, and it offered limited-time discounts for new sellers at the start of 2023.
It’s not hard to see why — marketplaces are an attractive proposition for retailers on both sides of the equation.
Small and medium-sized retailers can expand their reach by having their products appear before Walmart customers, and 77% of respondents said their goal for entering a marketplace was to reach more customers, according to a survey by Digital Commerce 360. The study also found that the average respondent earned 38% of their overall sales through marketplaces.
For large retailers like Walmart that can handle the logistics of a marketplace, the benefit is carrying a selection of items above and beyond the usual assortment of SKUs. Manish Joneja, SVP of Walmart Marketplace and Walmart Fulfillment Services, noted in a press release that Walmart Marketplace provides “customers access to what they want regardless of whether Walmart or a third-party seller owns the inventory.”
A growing marketplace also provides Walmart with another avenue to compete with Amazon, which is an area where Walmart still has a lot of catching up to do. As of January, it had around 50,000 active sellers on its platform compared to Amazon’s 493,000, according to data from Zentail. So while Walmart has saturated brick-and-mortar with thousands of stores, it still has plenty of room to grow online. Amazon holds 37% of e-commerce sales, compared to Walmart’s 6.4% share, according to Insider Intelligence.
Still, Walmart is trying. It has launched a Prime Day competitor, offers a subscription program to rival Amazon Prime, and even sought to build a better website than Amazon.com earlier this year. While Amazon has a massive head start, Walmart is dedicated to taking its brick-and-mortar dominance online as well.
Discussion Questions
Will hosting in-person events be a significant opportunity for Walmart to expand its group of third-party sellers? Do you expect Walmart Marketplace to be Walmart’s primary e-commerce focus in the future?
Poll
Loading …BrainTrust
Carol Spieckerman
President, Spieckerman Retail
Christine Russo
Principal, Retail Creative and Consulting Agency
Marketplace is a critical element of Walmart’s bid to grow e-commerce. In theory a third-party marketplace should allow Walmart to broaden its reach, widen its assortment, and drive increased sales – and to do all of these things while minimizing capital outlay and maximizing return on investment.
However, there are challenges. The first is differentiating from Amazon for both customers and sellers. Stores have a big role to play here as they can be leveraged as points of collection and return and will help Walmart take on Amazon’s powerful fulfilment network. A credible grocery offer will also help as consumers can do all of their shopping at Walmart across multiple categories. For sellers, Walmart is emphasizing that it is agnostic and will not prioritize its own products – something Amazon has been accused of. Walmart can afford to do this as it will still have its stores to drive sales of its own lines.
The second challenge is ensuring that Marketplace works seamlessly with Walmart’s first party offering.
Let’s not be naive that When Walmart sees a winner online, they will not contemplate making a similar offering online and in-store.
Of course they’ll do that – every retailer does. They might also bring the brand in store. Walmart has been adding more and more DTC brands of late to try and elevate their proposition and attract the younger consumer.
Walmart has approached the online business from a very strategic POV. While their start was quite bumpy, they have integrated all the Walmart processes and philosophies online.
I don’t know when it happened, but somewhere along the way, they realized to approach Amazon’s success, they must be a mall online. While Walmart will remain behind Amazon until they can match the draw of Prime, the mall approach online is infinite. At the same time, the brick-and-mortar expansion for Walmart is limited by maturity, investment, and ROI.
Walmart is determined to give Amazon a run for its money. They’re going all-in with their Marketplace, and that will be their focus for eCommerce going forward. Notice that they’re not offering shelf space to Marketplace retailers, they’re offering the massive Walmart digital platform and even more massiver [sic] Walmart supply chain engine. Meanwhile, not so behind the scenes, this also means that Walmart is competing with Google for digital ads. Walmart gets paid when shoppers click on ads for a Marketplace vendor’s ads. I also think its a good strategy to offer the Marketplace in Chile. It signals an intent to offer more international products and expand globally at some point.
Today, Amazon dwarfs Walmart in online sales, but coordinated efforts like this — ones that get buy-in from the retailers Walmart is already competing with, will certainly gain it market share. And lets not forget the drone deliver competition between the two (and Target is in the running, too). While I’d rather not have a stream of drones delivering stuff over my head every day, I think resistance is futile.
Walmart’s marketplace and its ad business are the one-two profit-building punch that will keep it ahead of competitors and hedge against the product-based headwinds that are smacking retail around. And in true Walmart form, the two businesses are mutually supportive. Comparisons to Amazon can provide context or be nearly irrelevant. Walmart’s store fleet sets it apart from Amazon as Amazon’s online scale dwarfs Walmart (for now). With its commitment to diving into emerging technologies, and AI in particular, Walmart’s just getting started.
Walmart has continued to broaden its assortment and improve the technology and infrastructure behind its marketplace. This will undoubtedly be a key element to the future of Walmart’s expanding e-commerce initiatives.
Don’t look now, but Walmart is narrowing the gap with Amazon – purposefully, intentionally, and quite successfully.
Walmart has a long way to go It has “around 50,000 active sellers on its platform compared to Amazon’s 493,000.” per today’s discussion. The big asset Walmart doesn’t have is PRIME.
The Marketplace serves the customer by broadening the assortment but also provides huge visibility into products Walmart should private label and bring into store.
In-person events help third-party sellers build visibility, trust and sales with Walmart. Business is all about relationships.
Walmart Marketplace will be a priority to expand Walmart’s global ecosystem for ongoing growth.
Amazon is growing in Europe, the Middle East and APAC. Focusing on Latin America brings Walmart’s low-cost leadership to new Western markets as value shopping soars. Hispanic-owned brands will help Walmart adapt to demand for supplier diversity.
Walmart is the only likely head-to-head competitor to Amazon, and able to cope with an “endless assortment” by hosting and supporting more 3rd parties. In many ways this is solid execution of a logical me-too strategy. When and if Walmart figures out how to feature key marketplace products in a highly targeted and localized basis inside stores they will surpass what Amazon is capable of doing.
Can a brand be too strong ?? Perhaps when the message is something like price – Always low prices..always! – and it tries to court vendors who stress other elements.
The ill-fated pairing with Lord and Taylor – remember that (try tho you might to forget it)? – serves as a(n all too) clear example.
I wish them well, but I think they will spend quite a bit of time stumbling over their own success as a discounter before this really catches on…if it ever does.
Maybe not THE focus, but Walmart Marketplace is certainly one key focus. While the company has every interest in providing shoppers and sellers with an alternative to the Big A, it wields far more brick-and-mortar power and far less data services clout.
The prospect of aligning in-store events with the activities of Marketplace sellers in intriguing in principle, but I’ll reserve an opinion until I can see it in action.
Walmart is a big marketplace with plenty of opportunities for merchants. It’s just that we’re used to seeing only Amazon in that space. However, based on Walmart’s massive efforts to expand its marketplace, it seems more desperate than Amazon. This definitely puts the ball in the court of merchants, as Walmart would be more open to negotiations and willing to offer better deals in order to establish long-term relationships with merchants. I believe they can benefit greatly from Walmart’s marketplace at the moment, given their large presence in both online and physical retail.