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The Pros and Cons of Selling on Walmart Marketplace
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The growth of Walmart’s e-commerce business is encouraging more brands and sellers to sign up and expand to its platform. Some brands and sellers, however, prefer to only sell on Amazon.com, as the company is considered the world’s largest online retailer with a vast customer base of millions of Prime subscribers. However, there are several pros and cons to selling on Walmart Marketplace that businesses should consider.
Choosing the appropriate online marketplace to sell on will vary for each brand and seller, as you will need to evaluate operational expenses, the resources each marketplace provides, your business goals, and more.
If you are uncertain whether you would like to sell on Walmart Marketplace, consider the pros and cons outlined below.
Pros of Selling on Walmart Marketplace
Limited Seller Fees
One of the greatest draws to selling on Walmart is its limited fees for brands and sellers on its marketplace. Merchants are only required to pay a referral fee whenever their product is purchased. The referral fee differs depending on the product category; 8% for video game consoles, 15% for grocery, 20% for jewelry, and the list goes on. Contrastingly, Amazon charges its sellers monthly fees and variable closing fees, in addition to its referral fees.
Limitless Product Assortment
Walmart does not limit sellers on its marketplace to SKU minimums or maximums. Brands and sellers are able to leverage their entire catalog on Walmart Marketplace as long as their products are not on Walmart’s prohibited product list. This feature is especially beneficial for businesses that have a large product assortment and inventory for all of their SKUs.
Create Your Own Return Policy
Brands and sellers are allowed to create their own return policy on Walmart Marketplace. Sellers have more control over return conditions and can establish terms that work best for their business while being fair to their customers. Amazon, on the other hand, requires its sellers to have a return policy that matches or exceeds its own.
When brands and sellers sign up to sell on Walmart.com, they are required to write a return policy that is less than 4,000 characters. A return policy is required since Walmart’s third-party sellers are responsible for fulfillment and customer service.
Even though Walmart Marketplace has over 70,000 sellers and the number continues to increase, it is nowhere near the 2.4 million active sellers on Amazon’s marketplace. Walmart having fewer sellers on its platform than Amazon is favorable to brands and sellers as it reduces the competition.
Brands and sellers have a better chance at winning the Buy Box on Walmart’s marketplace than on Amazon’s since there are fewer sellers competing for the placement proven to boost sales.
Reach a New Customer Base
As mentioned, Walmart’s marketplace receives over 120 million unique visitors per month. Walmart’s Every Day Low Prices (EDLP) guarantee attracts audiences that are looking to purchase items at affordable rates. Brands and sellers can expose their products to a new customer base that they otherwise may not be able to reach on Amazon.com or on their own website.
Cons of Selling on Walmart Marketplace
Strict Price Requirements
Walmart is committed to offering consumers the lowest price possible for products on its marketplace. While brands and sellers choose the price for their products, it must not interfere with Walmart’s Price Parity Rule and Price Leadership Rule.
Price Parity prevents brands and sellers from listing their products at a lower cost on other marketplaces. Price Leadership will remove listings if the same products are priced lower on another marketplace, even if it is being sold by a different seller. Walmart takes into account the price for the products, shipping, and additional fees.
Lower Profit Margins
Brands and sellers may need to reduce their product prices on Walmart’s marketplace compared to Amazon.com or their own website due to Walmart’s EDLP guarantee. Although offering products at a lower rate may increase sales volume, sellers will likely see lower profit margins. You should also note that Walmart will remove listings if the same product is sold at a significantly higher rate on a different marketplace.
Smaller Audience of Shoppers
While selling on Walmart Marketplace can help brands and sellers reach a new customer base, selling on Walmart.com alone is not ideal, as there are fewer shoppers visiting the marketplace than Amazon.com. Amazon’s marketplace receives 200 million unique visitors per month. Even though Walmart is superior in its brick-and-mortar footprint, Amazon reigns supreme in its online shopper traffic.
Limited Fulfillment Services
Walmart previously required its third-party sellers to store, fulfill, and ship their own products. Walmart Marketplace sellers were also responsible for handling customer service and returns.
In 2020, Walmart launched Walmart Fulfillment Services, which takes care of fulfillment, shipping, customer service, and returns on behalf of eligible sellers. Brands and sellers who do not qualify for Walmart’s fulfillment service will need to handle these aspects of their business on their own
Potential Listing Issues
Brands and sellers may experience listing issues on Walmart’s marketplace since the retailer operates on a first-come, first-serve system. The seller to first list a specific product is prioritized over sellers selling the same product when it comes to the Buy Box. The only way to beat the original seller of a product is to offer a lower price for the product, which will enable the seller to win the Buy Box.
While Walmart’s e-commerce business is growing, it is important to consider a variety of factors before signing up to become a selling partner.
The pros and cons of selling on Walmart Marketplace outlined in this blog will help inform your decision. If it is possible, we recommend selling on both Walmart.com and Amazon.com to expand your online presence, reach more of your customers, and increase sales.
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