Seeking to compete with marketplace leader Amazon, Walmart has introduced Walmart Fulfillment Services (WFS). Using WFS, select Marketplace sellers will be able to access a range of supply chain capabilities including storing, picking, packing, shipping, returns and customer service.
The WFS debut follows a soft launch that took place a few months ago, with participating sellers offering items such as footwear, apparel, home décor, sporting goods, automotive and electronics.
“Walmart’s next-generation fulfillment network gives participating sellers a new, competitive advantage to grow their business,” said Jaré Buckley-Cox, VP Walmart Fulfillment Services, Walmart eCommerce in a statement. “We intentionally designed WFS together with sellers, and offer benefits including two-day shipping, easy returns, dedicated customer service and a low-cost, simple fee structure — all without a membership fee.”
The new service represents a smart strategic move for the giant retailer, according to Hilding Anderson, Head of Retail Strategy, Publicis Sapient. “This is a key investment Walmart is making to help sellers deliver more quickly, improve the experience for Walmart’s customers and boost utilization (and associated revenue) at their warehouses,” said Anderson in an interview with Retail TouchPoints. “The vast majority — roughly three in four — marketplace sellers on Amazon use their fulfillment service.”
Still, Amazon has established a big lead in the marketplace arena. “WFS allows Walmart to begin to match Amazon’s fulfilled by Amazon offering,” said Anderson. “But with Amazon’s $3 billion-plus investment in next-day delivery for materially all their 300 million SKUs, Walmart still has a ways to go to fully compete. Still, this is the right path.”
Walmart believes access to WFS capabilities will provide consumers with access to a wider assortment of brands and products. Soft launch participants include NetRush and Pattern, and brands such as PopSockets, Leatherman Tools and Peet Shoe Dryer also will be available. Additionally, the retailer plans to add NextDay delivery as an option in the future.
The retailer can take additional steps to make its Marketplace more attractive to sellers and consumers. “Walmart needs to continue to expand its SKU selection, improve the customer experience during the search, browse and inspiration path, and compete around speed of delivery,” said Anderson. “Look for their use of click-and-collect as a key leverage point as they try to enable same-day pickup for many of their items as a competitive strategy.
“I also wouldn’t be surprised if they don’t revisit their pricing strategy,” Anderson added. “They could prioritize matching Amazon on the most frequently sold items, but increase the prices somewhat on the long-tail to help improve their margin. Further complicating this task, Walmart, unlike Amazon, also has to balance their commitment to ELP (everyday low prices) with this drive for profitability.”
Click here for Walmart’s video introducing WFS.