In the sweltering heat of a Las Vegas summer, while Christmas celebrations were in full swing, Walmart was plotting its strategy to tackle e-commerce giant Amazon. During an invitation-only conference, businesses collaborating with Walmart were offered an incentive to waive storage fees during peak season.
Doug McMillon, Walmart’s CEO, appealed to the gathering, “We hope you’ll choose to grow with us,” he said, referencing the humble beginnings of company founder Sam Walton. “We want you to bring great items to our marketplace. Our team is here to serve you.”
Walmart strategically positions itself for the holiday season by engaging with thousands of independent sellers. Their primary aim is to entice these sellers into availing Walmart’s services for packing, shipping, and even advertising their products. This strategy comes when inflation has led higher-income shoppers to gravitate more toward online and in-store Walmart.
The company’s third-party marketplace strategy was on full display during its recent sales event, which coincided with Amazon’s Prime Big Deals Days event. A staggering 70% of the items showcased during Walmart Plus Week, another event that ran concurrently with Amazon Prime Day, were from its third-party marketplace.
Walmart U.S.’s Chief E-commerce Officer Tom Ward emphasized the evolving consumer expectation, stating, “Customers want choice. They want that selection. They want that variety. And as they visit us more and more often, they expect to see it.”
However, the e-commerce playing field is not level. Amazon boasts over a million active sellers compared to Walmart’s roughly 100,000, according to Marketplace Pulse. Rick Watson, CEO of RMW Commerce Consulting, identified this disparity as an opportunity for Walmart, given that Amazon has been criticized for its treatment of sellers.
A Federal Trade Commission lawsuit against Amazon, alleging anticompetitive practices, further underscores this sentiment. Amidst such legal battles, sellers have often found a more receptive and supportive partner in Walmart.
For businesses like Lucky 21, Walmart’s robust brick-and-mortar presence and significant online traffic are tempting, even if they acknowledge Amazon’s lead in e-commerce. Melissa LaCognata of Lucky 21 likened it to being in “the second-best mall in the world.”
Walmart’s tactics to attract sellers include simplifying onboarding processes, offering new fulfillment features, and leveraging its 4,600 stores nationwide to gain an edge over Amazon. The company has made considerable strides, with 50% of its online orders being fulfilled from its stores.
Inflation’s impact on consumer behaviour might play into Walmart’s hands. As Americans feel the pinch, they might look for more value-driven choices without compromising on quality, a gap that Walmart is eager to fill. The third-party marketplace strategy offers a dynamic approach, allowing Walmart to adjust inventory based on trending products or consumer demands without significant financial risks.
Products like Solo Stove’s fire pits, which start at about $100 but can go as high as $1,155 for premium sets, represent the high-end, discretionary items Walmart hopes to sell more. John Merris, CEO of Solo Brands, expressed optimism about Walmart’s potential, suggesting that its strategies “could be hazardous for a marketplace like Amazon in the future.”
Walmart’s aggressive push into e-commerce, its strategic partnerships with third-party sellers, and its focus on leveraging its expansive physical store network signal a renewed challenge to Amazon’s online dominance. As the retail industry heads into its busiest season, all eyes will be on Walmart to see if its strategies will bear fruit.
