The Pros and Cons of Selling on Walmart Marketplace

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.

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.