In the online space, it’s hard to imagine trying to compete with Amazon, but that’s exactly what Walmart is trying to do with its recent move to offer fulfillment services for third-party sellers.
While Walmart has owned a hefty share of the brick-and-mortar retail space, it’s making an overall bigger play in the digital arena after 2019 saw its online sales grow 37%.
Walmart had a third-party seller system in place but did not offer fulfillment. This meant they couldn’t control the quality of the seller and shipping times the way Amazon can.
Walmart Fulfillment Services (WFS) offers storage, picking, packing, two-day shipping, returns and customer service. The goal is to offer next-day shipping in the near future. The program was created using feedback from existing Walmart third-party sellers.
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Sellers should be able to improve customer experience and profitability, and for customers it will mean more selection, better service and quicker shipping times. For Walmart it should lead to improved customer satisfaction and increased trust to choose Walmart.com over Amazon.
Amazon fees for its turnkey seller services usually amount to about 20% of the retail price of an item. Walmart hasn’t disclosed its fees yet, but hinted it would be one of the lowest-priced fulfillment services on the market. There are no monthly membership fees.
Walmart could leverage store pickup as a way to differentiate and offer additional options that Amazon does not have.
One reason that Amazon has done so well with third-party sellers is because of its robust review program. I believe for Walmart’s program to succeed it will need to promote a review program and have a system in place to ensure the reviews are authentic and trustworthy.
Walmart may also struggle because it doesn’t have a loyalty program like Amazon has with its Prime Members. However, if they can offer Prime-level benefits and services, either complimentary or for a lesser fee than Amazon, they may be able to lure some loyal Prime members their way.
I do suspect that Walmart will work better for some businesses than others. The Amazon brand has a higher quality perception in the marketplace than the Walmart brand, so for sellers with higher-ticket luxury goods, Walmart might not produce as well as Amazon.
For sellers the new WFS program opens up another revenue stream with very little cost or risk associated with it. For businesses already selling on Amazon it will be easy to replicate systems and processes to also work with Walmart. There aren’t any perceived downsides with adding this new channel to your business model.
Kale Abrahamson is the Co-Founder of Nine University, a six-week online course that helps students successfully launch an Amazon FBA store. Abrahamson is very skilled in the business world and specifically the e-Commerce world, having started his own Amazon FBA store business on the side several years ago. Now Abrahamson, alongside his co-founder Taylor Hiott, helps thousands of students worldwide set up their Amazon FBA stores.
