- Walmart is relying on third-party online marketplaces to boost sales during the holiday season.
- Although Walmart is the largest retailer, its e-commerce business remains much smaller than that of rival Amazon.
- Walmart US’s online sales have recently increased sharply, while other major retailers such as Macy’s and Target have reported declines.
Walmart held its first Seller Summit for third-party marketplaces this summer. At an invite-only event, CEO Doug McMillon pitched why small businesses and brands should collaborate with retail giants.
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It was summer in Las Vegas. On that day in late August, temperatures neared her 110 degrees, but everyone was thinking about Christmas.
While Santa Claus walked around during the invite-only conference, businesses that sell products on Walmart’s website participated in how-to sessions and exchanged advice. Walmart leaders also gave early gifts to third-party marketplace sellers. The idea was to waive additional fees for storing products during busy periods.
Doug McMillon, head of the world’s largest retailer, took to the stage to pitch small businesses and brands.
“We hope you will choose to grow with us,” the CEO told the more than 1,500 attendees, recalling the memory of founder Sam Walton, who was once a small-town entrepreneur. “I will,” he said. “We want you to bring great items to our marketplace. Our team is here for you.”
Walmart is hiring and retaining hundreds of thousands of independent sellers who fill its virtual shelves with products ranging from lip gloss to Rolex watches during one of the most important times for the retail industry. The company is also trying to persuade these sellers to let Walmart pay for packaging, shipping and even advertising their products. The company is leaning toward a time when inflation brings more high-income shoppers to its stores and website.
This holiday season will put Walmart’s e-commerce strategy to the test. The company is already looking to use third-party marketplaces to boost its nascent business.
More than half of the items sold at Walmart’s sales event last week, which kicked off the season, were from the company’s third-party marketplace.The event was held concurrently with Amazon’s Prime Big Deals Days event., But there was nothing to compare it to.
About 70% of the products included in Walmart Plus Week, which coincided with Amazon Prime Day in July, were marketplace products. Walmart did not provide a comparison with last year’s sales event, but said more merchants were participating in the event overall.
There are signs that growth in Walmart’s third-party market could help the company resist slowing spending patterns and take advantage of shoppers wary of inflation.
Walmart US’s online sales have increased significantly over the past two fiscal quarters, even as other major retailers such as Macy’s and Target have reported declines. Walmart’s third-party marketplace saw double-digit sales growth in some discretionary categories, such as home goods and clothing, in the latest fiscal quarter as shoppers at many stores, including Walmart’s own stores, skipped discretionary purchases. did.
Tom Ward, chief e-commerce officer at Walmart US, said the company’s app and website have a new look, automation is in place at fulfillment centers and stores, and late-night and last-minute deliveries have been enhanced. He said that the growth of the market is contributing to the growth of the market. Give customers a reason to come back with an “endless aisle” of electronics, toys, and groceries.
“Customers want choice,” he said. “They want that assortment. They want that variety. And the more often they visit us, the more they expect to see that.”
When it comes to e-commerce, Walmart is in a rare position: the underdog. The company’s online sales make up only a small portion of Amazon’s sales, which are carried over to the company’s third-party marketplaces.
Customers who shop on the Amazon and Walmart websites are presented with a variety of products. Some products are sold directly by retailers, while others are sold by sellers who own the inventory, list the products on other retailers’ websites, and share a portion of the profits with those retailers. Sold by
Amazon has more than 1 million active sellers and Walmart has about 100,000, according to Marketplace Pulse, a third-party company that collects data on e-commerce marketplaces such as Amazon, eBay and Etsy. Amazon and Walmart do not disclose the number of active sellers.
For Walmart, bridging this huge gap is both an uphill climb and an opportunity, said Rick Watson, CEO of RMW Commerce Consulting, an e-commerce consultancy with clients across furniture, fashion, and food and beverage categories. CEO (CEO) speaks.
“Amazon has never been known as the most seller-friendly place to do business,” he says. “What I’ve seen recently is that a lot of merchants are actually rooting for Walmart because they want alternatives.”
Tensions between Amazon and some sellers are at the center of an antitrust lawsuit the Federal Trade Commission filed against Amazon in late September. The lawsuit alleges that the e-commerce giant engages in anticompetitive practices, including penalizing sellers who offer lower prices on other websites and forcing them to use fulfillment services. He blames it.
Amazon denied the allegations in a blog post, saying the company helped, not harmed, customers, helping lower prices and speed up service.
Watson said Amazon sometimes has a hard time getting sellers to answer the phone. At Walmart, on the other hand, sellers tend to get more “red carpet treatment,” he said.
But before that happens, Walmart will often have to persuade successful sellers on Amazon to take a chance on a relatively upstart company like Lucky 21.
About a year and a half ago, the apparel retailer, which represents national brands such as Disney, New Balance and Reebok, tested selling some products on Walmart’s marketplace.
Melissa LaCognata, Lucky 21’s vice president and divisional product manager, said the company knew that Walmart was years behind Amazon. Still, she said, she had heard about Walmart’s Marketplace investment and knew that Walmart already had a large brick-and-mortar customer base and significant online traffic.
“It’s like being in the second-best mall in the world,” she said. “Why not?”
Last year, Lucky 21 became the largest third-party seller of children’s clothing on Walmart’s website.
However, Walmart is making a big comeback with efforts such as simplifying the onboarding process to make it easier for new marketplace sellers to join and launching a membership program, Walmart+, to boost online sales. had to do. Three years ago, the company launched Walmart Fulfillment Services, allowing sellers to pay retailers to store inventory, package and ship orders. Amazon he started offering similar picking and packing services in 2006.
This summer, Walmart announced a wave of new features to better compete with Amazon. The company began offering fulfillment for sellers’ large, bulky items or items that come in multiple boxes, such as canoes and patio sets. We also support our sellers’ businesses, such as by allowing us to request local delivery of cakes and other online orders from Walmart, or by paying Walmart for software that enables curbside pickup in our stores. The tool was also debuted.
Walmart has more than 4,600 stores across the U.S. as another way to compete with Amazon.
Stores act like mini-warehouses, with more than 50% of online orders being fulfilled at the end of the most recent quarter ended in late July. About 90% of Americans live within 10 miles of a Walmart store, and that proximity can sometimes allow Walmart to get packages to customers’ homes faster than Amazon.
So far, Walmart does not carry third-party marketplace products in its stores. That means customers can’t order online and receive it with curbside pickup or super-fast home delivery.
But Jahre Buckley Cox, vice president of Walmart Fulfillment Services and an Amazon veteran, said it will happen within the next five years and called it a “top priority.”
Some customers have seen a glimpse of it. One of Walmart’s popular market products is tires, which shoppers can ship to select stores and have them installed at Walmart Auto Centers.
Walmart’s marketplace could help the retailer solve one of its age-old challenges as inflation squeezes Americans’ household budgets. The idea is to persuade shoppers to buy more high-margin items like sweaters and wallets along with boxes of cereal and bread.
Walmart has tried and retreated from other strategies to achieve that. The company previously acquired direct-to-consumer brands with fans such as Bonobos, Moosejaw and Eloquii after acquiring Jet.com in a $3.3 billion deal. The company then changed course and focused on making its online business profitable and sold those companies.
Walmart, the nation’s largest grocer, has reported an increase in market share of groceries from households with annual incomes of $100,000 or more over the past year.
That may be leading to increased usage of Walmart’s app. Walmart’s shopping app now surpasses Amazon’s in daily usage, according to estimates from Uptopia, a third-party company that analyzes trends in mobile apps and connected devices.
Third-party marketplaces are another approach. It’s a way to buy pallets of inventory and add items to it without the risk of worrying whether it will sell or whether it will be marked down.
Michael Mosser, Walmart’s category vice president for the U.S. market, said Walmart can monitor popular and related products and add them quickly. For example, he said sellers helped Walmart add more hot pink and Barbie-themed merchandise. It could also be useful in unforeseen scenarios, such as when smoke from Canadian wildfires caused East Coast residents to look for air filtration systems, he said.
“We don’t buy products once a year or three-quarters of the year,” Mosser said. “If we see something trending on social media, or we see something trending as a cultural moment, we reach out to our community of sellers and say, You can say, ‘Hey, I’m seeing this spiking. What’s the inventory available?’
Some of the products that Walmart has tested and rolled out on its website through Marketplace include premium brands that Americans wouldn’t expect to find on Walmart’s website, such as Michael Kors, Dyson, and Solo stoves. be.
Solo Stove fire pits start at around $100 at Walmart.com, but sets that include a fire pit, lid, shield, and a collection of portable camping accessories can cost as much as $1,155.
John Merris, CEO of Solo Brands, said the Solo stove already has traction on Amazon, attracting customers like Walmart who want more expensive discretionary items. I doubted whether it would be possible.
“Don’t you wonder if that’s not only not your customer, but more importantly, doesn’t it cheapen your brand?” he said. “Is there a perception among consumers that if they can find your product at Walmart, it somehow means they have a lower quality product?”
He said it changed the way he looked at Solo Stove. The company began selling smokeless fire pits on Walmart’s website early last year. The company’s performance increased when Walmart held a competing sales event during Amazon’s Prime Day in July. As of this fall, sales of solo stoves in Walmart’s marketplace are up 300% compared to the same period last year.
Fire pits will soon be hitting Walmart store shelves. Mr. Melis was surprised to see the order book at the company’s Seller Summit in late August. He joked that he has high hopes for sales at the store, especially since the store is located in an aisle a little further away from the s’mores ingredients.
If Walmart uses its stores to speed up shipping and adds more brands at price points that customers like, the discounter says it could become “very dangerous for markets like Amazon in the future.” “There’s a gender,” Melis said.
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— CNBC Gabriel Cortez contributed to this report.
