Two-thirds of the top sellers on Walmart Marketplace use WFS, a fulfillment service that Walmart launched less than five years ago, and nearly all items on Walmart.com are shipped from Walmart warehouses, whether they're items sold directly by the retailer or by one of its 140,000 active third-party sellers.
Jaré Buckley-Cox, vice president of Walmart Fulfillment Services, confirmed this two-thirds metric at the Walmart Marketplace Seller Summit in San Francisco: Three years ago, 25% of marketplace volume was already going through WFS; today, that figure should be over 50%.
Amazingly, the company achieved this just five years after introducing WFS in February 2020. Prior to that, all sellers used their own warehouses or 3PL warehouses. For comparison, more than 90% of Amazon sellers use Fulfillment by Amazon (FBA), according to a Marketplace Pulse survey, but the service has been in operation since 2006.
Walmart has 4,606 brick-and-mortar stores in the U.S., and 50% of online orders are fulfilled through one of them. In an interview with CNBC a year ago, Jare Buckley Cox said that in-store pickup for marketplace items was a “top priority” and would happen within the next five years. This would be WFS' biggest selling point.
Services like FBA and WFS allow Amazon and Walmart to look like regular retailers while hiding the complex marketplaces that supply most of their inventory. Most shoppers don't realize they're buying from a third-party seller because they rarely interact with them directly and every order arrives in the same Amazon-branded box. This marketplace invisibility was important when Amazon competed with eBay, which couldn't offer the same consistency.
Walmart has positioned WFS as a required service, much like Amazon has done with FBA, although both companies describe it as optional. Amazon's search results mostly show products stored in FBA because it offers Prime shipping and most shoppers are Prime members. Similarly, at Walmart, for example, 38 of 40 search results for “headphones” are stored in WFS. Walmart sells a Walmart+ membership that offers free shipping on WFS items.
Walmart previously touted that WFS “increases sales by 50% on average through increased search rankings and Buy Box access.” This statement was removed because WFS no longer provides search ranking boost. WFS now means a choice between appearing on the first page of search results or not appearing at all.
Both WFS and FBA create a flywheel that benefits sellers who use it, which is how Walmart got most of its sellers to use it in less than five years. The problem is that once the flywheel starts spinning, it becomes mandatory, not optional, forcing sellers to accept every change. For Amazon, this has been a recurring issue, leading Italian regulators to fine the company nearly $1.3 billion in 2021.