Selling on Walmart vs Selling on Amazon

Walmart has aggressively built up its catalogue of third-party sellers — more than doubling ranks in 12 months. This has many merchants considering whether they should list their products on Walmart Marketplace in addition to their existing marketplace channels.

Setting up and managing new sales channels is intimidating – especially if eCommerce shops are moving from single channel retailing to multichannel selling. But, expansion to multiple channels is a proven way to expand visibility and increase sales.

In fact, back in 2015 Stitch Labs found that retailers selling on two marketplaces see 190% more revenue than those selling on just one. Imagine how much higher this figure is today after the pandemic accelerated eCommerce’s rapid rise.

Intimidation factor aside, jumping into a new channel is a relatively low-risk, potentially high-reward venture, and Amazon’s struggles during the pandemic showed that over-relying on the online juggernaut is far too risky. 

Accordingly, sellers are evaluating other sales channels and Walmart, the world’s largest retailer, is the next logical step. This has 39% of Amazon sellers considering becoming Walmart third-party sellers this year asking what it is like selling on Walmart versus selling on Amazon. 

Is it better to sell on Walmart or Amazon?

While there are pros and cons to selling on Walmart vs Amazon, both present tremendous opportunities to reach millions of customers. Amazon is the undisputed leader of online retailing, accounting for more than 40% of all eCommerce sales after the pandemic, and Walmart is the king of physical retail, comprising 9.5% share of all 2020 retail sales, and making huge gains online.

 

Plus, each reach similar customers, particularly in categories such as clothing, beauty, personal care, and grocery, along with offering loyalty programs – Prime and Walmart+ – that feature free 2-day shipping. 

In short, established sellers should be on both platforms and understand the unique advantages of each to maximize return on investment (ROI). 

Walmart Marketplace’s Top 4 Advantages

1. Less Competition – When looking at Walmart vs Amazon, the biggest standout for Walmart is that it has a much better buyer-to-seller ratio. Amazon has 6 million plus sellers globally, almost 2 million of which are active, and offers more than 353 million products, whereas Walmart Marketplace has grown to almost 100,000 sellers and 80 million items. Less competition means Walmart third-party sellers can spend less on marketing to reach their nearly 100 million unique monthly visitors.
2. Smaller Product Selection – Similarly, fewer products mean shops, particularly those selling unique inventory, can stand out without breaking the bank on cost-per-click (CPC) advertising or discounting to be more attractive.
3. Fast-Growing Tech – As one of the country’s most recognizable legacy retailers, Walmart has a wealth of resources at their disposal. Their platform is quickly becoming more advanced as they add robust capabilities around listing optimization, native advertising, and more. As competition heats up between Walmart and Amazon, this will likely drive even further innovation as Walmart looks to attract more third-party sellers to its ecommerce marketplace.
4. Custom Customer Support – Merchants can communicate directly with customers to answer questions and resolve any issues. Further, sellers control, specify and manage their own return policy and customer service information, though Walmart does require that customer emails are responded to within 1-business day.

Amazon’s Top 4 Advantages

1. Lower Barrier to Entry – Registering for an Amazon seller account is much easier than a Walmart seller account. Within days, almost anyone with a social security number can register to sell and have products listed. On the other hand, Walmart’s stricter requirements include being a registered business with a state and a US Business Tax ID. Essentially, becoming a Walmart third-party seller is out of the question for sellers that are not already operating.
2. Access to Prime Audience – Less competition on Walmart Marketplace does make standing out easier; however, Prime’s 200 million global members cannot be ignored. Correspondingly,  the Prime brand has become synonymous with fast, free delivery, giving sellers immediate credibility with new shoppers.
3. Sophisticated Buy Box – Unlike Walmart Marketplace, having the lowest price is not the only key to winning the buy box, the white box on the right side of the product detail page where customers can add items to their cart. Elements that influence winning the buy box include search text matches, product availability, Order Defect Rate (ODR), on-time shipping rate, and feedback rating. As a result, Amazon sellers have more control over their pricing and profitability.
4. Vast Ecosystem of Support – Although Amazon’s seller support may not have the best reputation, there a wealth of Amazon consultants and eCommerce agencies have cropped up to provide outside support for Amazon sellers. These agencies specialize in services like content creation, advertising/SEO, brand registry, and more. As the world’s largest marketplace, Amazon has created an ecosystem of experts dedicated to studying what works on Amazon and helping brands optimize their listings for better performance.

Walmart vs Amazon: Which Is More Profitable?

Multiple variables across both marketplaces will impact profitability such as sale price, selling fees, and fulfillment costs.

 

Sale Price

Founded on low prices, Walmart Marketplace has much stricter pricing polices than Amazon and will even unpublish listings if the best price is not offered. Best practice is adhering to these two policies to avoid having listings automatically unpublished:

1. Price Leadership – Walmart will automatically unpublish goods if customers can find a better price (including shipping costs) on a competition website – regardless of the seller.
2. Price Consistency – Items will also be unpublished automatically if they can be bought for less (including shipping costs) from the same seller on a competing website.

Selling Fees

Amazon charges a monthly $39.99 fee for a professional seller account, along with other referral and recurring fees. The eCommerce leader does offer an individual account with limited access for no flat fee, but this pay-as-you-go plan is designed for more new sellers selling a few one-off items. 

On the contrary, while Walmart third-party sellers also pay a referral fee for each item sold, Walmart Marketplace does not have any setup, subscription or recurring monthly fees. 

Walmart vs Amazon: Seller Support

Although Amazon sellers often report slow response times and cryptic messaging from Amazon Seller Central, Amazon’s seller support infrastructure is much more advanced than Walmart Seller Center. Amazon’s advertising and reporting capabilities are unparalleled in the online marketplace space and rapidly developing. However, Walmart’s ambitions to overtake Amazon as the number one marketplace ensures that the retail giant will continue to invest in building a more robust Walmart Seller Center.

Fulfillment Costs

For the most part, the difference in FBA and WFS’s fulfillment costs is almost negligible. However, items with higher dimensional weight (DIM), also known as volumetric weight, can be significantly more expensive via FBA than WFS due to Amazon’s weight tier structure. 

In addition, Walmart and Amazon do charge the same storage fees from Q1-Q3, but WFS costs less during Q4, when both companies boost prices to take advantage of the peak winter holiday selling period. 

However, the best way to simplify fulfillment across multiple marketplaces is to streamline fulfillment through a single provider. Amazon does offer multichannel fulfillment (MCF), which will fulfill orders that come in through other platforms, but Walmart will not allow their orders to be fulfilled through MCF.

In order to streamline fulfillment workflows, provide the same delivery experience across all sales channels, multichannel merchants should consider outsourcing their fulfillment to a flexible fulfillment partner who can manage all of their sales channels through a single platform and network.

Looking for a multichannel fulfillment solution? Reach out to one of our fulfillment experts.

Is it worth selling on Walmart Marketplace?

Yes, sellers should never be overly dependent on one platform for revenue, and Walmart Marketplace’s popularity is skyrocketing. 

As shared above, Walmart does have a higher barrier to entry than Amazon, so new sellers may have a more challenging time establishing themselves. This makes Walmart a more attractive option for sellers experienced with other online channels.   

How do I manage selling on multiple marketplaces?

As sellers learned during the pandemic, relying solely on FBA can be detrimental to the health of their business. For this reason, more are testing a hybrid approach, keeping some supply with FBA and some in their own warehouse or with a third-partly logistics (3PL) to sell in other channels. 

However, as HyVIDA, the world’s first hydrogen-infused carbonated beverage, and other fast growing eCommerce businesses have found, this segmented approach can lead to costly inefficiencies. Consequently, HyVIDA moved away from FBA and consolidated fulfillment through a fourth-party logistics (4PL) provider.

These outsourced order fulfillment partners negotiate the best rates and service level agreements (SLAs) across regional 3PLs to create a nationwide distributed warehouse network, while helping merchants determine where to forward stock inventory to guarantee nationwide 1-2-day delivery. 

Ultimately, HyVIDA chose to consolidate fulfillment with Ware2Go, a 4PL created by UPS to help businesses across many industries in all phases of growth guarantee 2-day shipping nationwide. 

Walmart vs. Amazon: The Bottom Line

Amazingly, if we assume that all Walmart third-party sellers are also selling on Amazon, then just 2% of Amazon sellers are also on Walmart Marketplace. While leaping into a new sales channel can be daunting, adding Walmart is a low-risk, high-reward opportunity for established Amazon sellers. 

To learn more about how Ware2Go’s on-demand fulfillment structure can help you sell in multiple sales channels cost effectively, reach out to one of our fulfillment experts.