For years, retailers and marketplaces alike have tried to chip away at Amazon’s online dominance. One well-known example is the battle between Walmart and Amazon.
While some commentators now predict that Amazon will surpass Walmart as the leading retailer by 2022, others champion Walmart’s latest gains in ecommerce. Sellers, too, are paying more attention to Walmart Marketplace as coronavirus impacts highlight the risks of over-relying on Amazon. But the differences between the two platforms are vast.
In this blog, we’ll cover those key differences. We’ll explore how Walmart’s efforts have added up over the years, and what sellers should expect from each platform. How easily does your approach to Amazon translate to Walmart? What does it take to succeed on either platform? Read on to learn more.
Table of Contents (Click to Jump to a Section):
- Ecommerce and Retail Market Share
- Selling Fees
- Onboarding and Listing
- Price and Buy Box Competition
- Shipping and Fulfillment
- Performance Standards
- Branding and Advertising Opportunities
- Overall Seller Satisfaction
Ecommerce and Retail Market Share
Amazon still remains the undisputed number one in ecommerce, accounting for nearly 40% of ecommerce sales today. When the coronavirus pandemic disrupted its supply chain and severely delayed Prime deliveries in early 2020, Amazon still saw a 25% surge in online sales—its fastest recorded growth in at least six quarters.
That being said, operating profit fell dramatically from $2.3 billion to $1.3 billion during the same time period in the North America segment. COVID-related costs totaled to more than $600 million. (The company itself raised eyebrows when it committed to spending $4 billion on higher wages, PPE and other COVID-related expenses in the second quarter.) And the vast majority of pandemic sales came from low-margin products, like food and cleaning supplies.
Amazon is likely to remain unfazed in the long run. As conventional retailers face heavy, if not permanent, blows to their brick-and-mortar businesses, Amazon stands to operate at an advantage for years to come. Birkenstock’s US CEO David Kahan echoes the sentiment of many with his claim that “This could be the biggest boon ever to Amazon.”
Walmart passed a critical inflection point in 2020. For the first time ever, it was reported that Walmart would surpass eBay as the second largest ecommerce retailer in the U.S. behind Amazon.
Its ecommerce sales leapt 74% in the first quarter of 2020. The biggest driver was online grocery sales, which "permanently catapulted three or four years into the future in just three or four months,” according to eMarketer analyst Andrew Lipsman.
When Amazon Prime orders faced month-long delays, overall Walmart Marketplace orders skyrocketed and peaked at 300% growth in early April. This speaks, in part, to Walmart’s dominance as a brick-and-mortar retailer. Self-proclaimed as the world’s largest retailer, the company has more than 5,000 stores in the U.S. that can double as fulfillment centers or pickup locations (compared to Amazon’s 200 North American warehouses).
“During the pandemic, Walmart used technology and stores to out-satisfy Amazon,” said Harvard Business School professor James Heskett, lauding Walmart’s omnicommerce strategy. Walmart is well-positioned to dodge inventory issues that still choke Amazon today.
In the midst of this success, Walmart also announced it was phasing out Jet.com. The retail giant acquired Jet in 2016 for more than $3 billion as a foray into ecommerce. After several failed experiments and big learnings, Jet.com is being cast aside to make room for its own marketplace. This move reflects the company’s confidence in Walmart.com—good news for sellers looking to launch to its marketplace—as its ecommerce sales are finally starting to grow at a faster clip. Since its Jet.com acquisition, Walmart’s ecommerce sales have nearly tripled.
Amazon’s Professional selling plan costs $39.99 a month. There are generally no listing fees, though there is a “referral fee” for each sale. Referral fees usually range between 8% and 15%, with several categories charging as much as 20%. Amazon also enforces a minimum referral fee per category.
Certain categories, like media, come with additional service fees or variable closing fees. The vast majority of Amazon sellers (73%) also pay Amazon FBA fulfillment fees, which are either determined by unit or weight. Storage fees are charged separately, as are many other related services (FBA label service, returns processing and removal orders, to name a few). These fees can quickly rack up if you’re not keenly aware of how they work or how your inventory is performing.
Walmart Marketplace doesn’t charge any setup or monthly seller fees. Sellers are only charged referral fees that generally range between 8% and 15%, similar to Amazon’s rates.
Walmart’s new Walmart Fulfillment Services (WFS) charges monthly storage fees and per-item fulfillment fees. WFS fees are simple compared to FBA. However, far less sellers are eligible for the program. Only existing Walmart Marketplace sellers can gain access, and new sellers are not likely to be approved right now.
Aside from these fees, Walmart requires UPCs for every product you want to list (though exemptions are available in certain cases). UPCs can cost several thousands of dollars for a batch of a hundred or more codes. GS1, the official provider, also charges annual renewal fees starting at $50.
Onboarding and Listing
Amazon offers a touchless launch process. Once you’ve purchased a selling plan and set up your Seller Central account, you can create your first listings through a number of options:
- Create individual listings manually through Seller Central
- Upload product listings in bulk using Amazon’s inventory file templates
- Tap an integration partner, like Zentail, to automatically format and categorize your product listings
Most categories on Amazon require products to have a standard ID, such as a Universal Product Code (UPC), European Article Number (EAN) or an International Standard Book Number (ISBN), but if your product already exists on Amazon, you should be able to add your offer without a GTIN. In some categories you can also request GTIN exemptions to get your products up on the marketplace.
One of the most difficult aspects of listing management is keeping up with Amazon’s constantly changing criteria. For example, in 2019, Amazon overhauled its shoe sizing requirements with little notice. Sellers were forced to submit a slew of new attributes for every shoe listing—or risk having their ASINs removed.
Even among seasoned sellers, listing errors are commonplace. It’s therefore advised that you enable a system for quickly detecting, interpreting and resolving cryptic error messages. Too many errors will not only render your listing unsellable, but can also lead to stranded FBA inventory that will incur hefty fees.
Walmart Marketplace is notoriously harder to onboard. New sellers must send in an application and undergo a “trust and safety” review. During this process, sellers need to demonstrate previous marketplace experience, a high level of professionalism and other qualifications. This review can take several weeks, although working with an official channel partner such as Zentail can cut down the process to just a few days.
Once accepted, you will receive a launch checklist with step-by-step instructions for registering your company. You can create a new listing via manual setup, Excel upload, API or through a software partner. Keep in mind that Walmart’s APIs are relatively underdeveloped; they can be hard to work with if you don’t know the right way to format your product data or can keep up with continual changes. Therefore, it's highly recommended that you tap a software partner or see if Shopify's Walmart integration makes sense for you.
Another core difference, as mentioned before: Walmart requires a UPC for every product you list, so if your product doesn’t have one yet, you’ll have to obtain one or submit a case specifically asking for an exemption. According to sellers who've been approved for UPC exemption, Walmart will send a list of questions to better understand your reason for exemption, the category for exemption, your company background, forecasted sales and links to products requiring exemption.
In general, this UPC requirement has been a source of headache for some sellers. Sellers report encountering issues with duplicate listings and/or not being able to choose which listing to sell on. UPCs may also be associated with the wrong product if, say, another seller purchased a false code from a provider outside of GS1. The only remedy to this situation right now is to locate the “right” UPS and submit a case with Walmart Seller Support.
Read More: How to Sell on Walmart Marketplace
Pricing and Buy Box Competition
In line with its goal of being the “everything store,” Amazon operates a marketplace open to all sellers. Its U.S. marketplace has 493,000 active sellers, with more than 86,000 new sellers joining in 2020 alone.
A significant percentage are based abroad. In fact, Marketplace Pulse reports that among the top 10,000 sellers, more are based in China (49%) than in the U.S. (47%). As a result, price competition can be intense and fluctuate suddenly. To stay competitive, sellers need an automatic repricer that can keep up with constantly changing prices. The best options are arguably algorithmic—they can keep you winning the buy box at the highest possible price, so you neither lose a sale nor kill your margins.
That being said, having the lowest price isn’t the only key to winning the buy box. FBA or Seller-Fulfilled Prime (SFP) sellers historically beat out any other seller, even if their prices are slightly higher. This is because Amazon can guarantee on-time, non-defective deliveries more consistently than the average FBM seller.
On the organic front, price comes second to your sales history, according to our partners at Buy Box Experts. The higher your sales velocity, the more likely you are to rank on Amazon’s search pages. Text matches, product availability, reviews and selection are other important ranking factors. Some analysts note that the A9 algorithm still looks for listings that deliver better margins for Amazon, whether via FBA or advertising participation.
Walmart is, unsurprisingly, strict when it comes to pricing. Uncompetitive pricing is the number-one reason for getting delisted on its marketplace. One recent study of prices for 50 different products showed that overall, Walmart was cheaper than Amazon by 10.4%. Walmart showed lower prices for groceries, technology and home goods, but higher prices for kitchen and appliances.
While price erosion is largely driven by competition on Amazon, Walmart’s pricing culture is mainly defined by two pricing rules:
- Price parity. If one of your products can be purchased from your store on a competing website at a lower price (including shipping), the product will be delisted on Walmart.
- Price leadership. If one of your products can be purchased from any seller on Walmart.com or any competing site at a drastically lower price (including shipping), the product will be delisted.
Competition overall is lower on Walmart. With just over 50,000 sellers who are all domestically based, Walmart Marketplace offers prime real estate for new seller—sellers get 13x more visitors a month compared to sellers on Amazon, reports Walmart, due to a less saturated space. Worth noting though: the number of Walmart marketplace sellers has doubled since July 2019, indicating its rapid growth.
Buy box competition is also less intense. It’s important to note that Walmart restricts repricing to approximately once per day, so you can’t use a repricer in the same way you would on Amazon. Pricing updates need to be extremely deliberate, while at the same time reactive to various market variables.
Shipping and Fulfillment
Amazon rewrote the rules—and effectively recalibrated consumer expectations—when it comes to shipping. Prime members now enjoy free shipping on both two-day and next-day deliveries.
“The number of items delivered to U.S. customers with Prime’s free one-day and same-day delivery more than quadrupled [in Q4 2019],” said CEO Jeff Bezos in a statement.
Consequently, 73% of Amazon sellers use FBA to gain access to the Prime badge. It has become a necessity to compete on Amazon—yet, recent months have gone to show that it’s dangerous to rely on FBA alone. Thousands of sellers were shut down overnight when Amazon temporarily banned nonessentials from FBA in March 2020.
(Above: "[Sellers] have lots of reasons to complain. But I do want to remind sellers that you made the choice...to have only one company do fulfillment," says James Thomson, Amazon's first-ever FBA account manager. See the full interview transcript.)
Today, many sellers opt for a hybrid approach, in which at least part of their inventory is kept with a 3PL or their own warehouse. ShipBob, for example, is a popular alternative among sellers. The tech-enabled 3PL offers two-day shipping and greater visibility over the location and status of your inventory.
Amazon’s SFP beta program, which lets FBM sellers participate in Prime after meeting strict requirements, is no longer accepting new applicants. However, you can join a waitlist for when/if it reopens.
Behind the scenes, Amazon continues to invest aggressively in its logistics operations. It recently announced that it was adding 12 more widebody cargo jets for a fleet of 81 aircrafts, slashing an estimated $100 billion from the top line of companies like UPS. Amazon also put in an order for 100,000 electric delivery vans. These moves build upon the company’s long track record of reaching into its deep pockets to make large, strategic investments. Safe to say that its dominance in this arena will only grow and will continue to drive customer expectations around shipping.
Walmart recently launched its own loyalty program, Walmart+, to rival Prime, similarly making fast shipping a core benefit. Through the program, the company offers free, unlimited same-day shipping on all grocery items and other perks, like a scan-and-go service for in-store shoppers.
Walmart also offers free two-day shipping for orders over $35 (no membership required) and heavily promotes its TwoDay Delivery Program among its sellers. By participating in the TwoDay program, you can gain two-day shipping tags on your listings that elevate your search rankings and increase your buy box win rate.
There are three ways to qualify for two-day shipping tags:
- Self-fulfill. You must have been a marketplace seller for at least 90 days and meet strict performance standards before being able to apply.
- Deliverr, Walmart’s official fulfillment partner. When you outsource fulfillment to Deliverr, you are pre-approved for Walmart’s fast shipping tags.
- Walmart Fulfillment Services (WFS). As mentioned, this service is only available to established marketplace sellers, but new sellers can complete a form to express their interest, suggesting that Walmart plans to roll it out more broadly.
If you choose to handle fulfillment on your own, your packaging cannot be branded or include any independent marketing materials. For this reason, Walmart expressly prohibits sellers from using Amazon’s Multi-Channel Fulfillment (MCF). It will not acknowledge Amazon Logistics codes as valid tracking codes and will dole out a suspension if you are caught using them.
Aside from two-day, Walmart is making strides with its NextDay Delivery and two-hour delivery options. Its two-hour delivery service, dubbed Express Delivery, launched suddenly in April 2020.
"Walmart has accelerated the development of the service in the wake of the coronavirus pandemic, piloting Express Delivery in 100 stores since mid-April," read the official press release. "The service will expand to nearly 1,000 stores in early May and will be available in nearly 2,000 total stores in the following weeks."
Neither NextDay nor Express Delivery are currently available for marketplace sellers to leverage. It’s likely just a matter of time, though, before they are. After all, Walmart touts that next-delivery does not cost the company any more money. As it seeks to expand its marketplace reach, it will likely pursue profitable ways to help sellers offer and promote fast-as-possible shipping.
Amazon tracks three performance metrics around sellers, which require you to:
- Maintain an Order Defect Rate (ODR) under 1%, tracked over 60 days. ODR is defined by negative feedback, claims under the company’s A-to-z Guarantee, and credit card chargebacks.
- Keep your Cancellation Rate (seller-canceled orders) at or below 2.5% over a 7-day period.
- Keep your Late Shipment Rate at or below 4% over both 10-day and 30-day periods, for seller-fulfilled orders only.
If you fulfill through FBA, these metrics are moot; Amazon will take responsibility for them. If you self-fulfill, you’ll generally receive a warning for your first offense and a chance to submit a Plan of Action before your account is at risk of suspension.
That said, disputing an Amazon warning or suspension notification is part art, part science. Consultants like eGrowth Partners exist to help sellers through these bouts, because once suspended, it could take months to get reinstated. This includes instances in which a buyer falsely claims that you sold them a counterfeit item. Even when innocent, your business must present a strong case and provide the right documentation to avoid further conflict.
Walmart also tracks three core metrics, although they are slightly different from Amazon’s. As a Walmart marketplace seller, you’re required to:
- Keep 90-day ODR at less than 2%. ODR accounts for orders cancelled by sellers, product returns*, late deliveries and customer complaints.
- Keep your On-Time Shipment rate above 99%, which you can meet by confirming shipment and entering tracking information before the Expected Ship Data that is created when a product is sold.
- Maintain a Valid Tracking Rate above 99%, which you can meet by providing valid tracking data when you confirm shipment.
Walmart will typically work with sellers who fail performance standards as long as they are actively addressing the violation, but if your ODR gets too high, your account is at risk of suspension.
* A note about returns: While Amazon allows fees to be withheld from returns for various reasons, Walmart will issue a full refund even if a customer returns wrong or damaged items. You can try to dispute the refund by contacting Walmart Seller Support.
Branding and Advertising Opportunities
A whopping 78% of Amazon searches are unbranded, meaning consumers are looking for a type of product rather than a specific brand. This underscores the importance of advertising to create brand awareness and convert the sale. Partly as a result, advertising on Amazon is growing rapidly. In 2019, Amazon’s ad revenue grew 40% and surpassed $4 billion for the first time. Both search result pages and product detail pages are becoming increasingly cluttered with paid placements, which dominate result above the fold.
Amazon also offers branding opportunities and services for those enrolled in its Brand Registry. Perhaps the most important of these is its protections against IP infringement or inaccurate content in listings posted by unauthorized resellers. Another important benefit is the ability to create more distinctive listings using Enhanced Brand Content.
While registered brands can access Brand Analytics data for deeper insight into their customers, Amazon still owns all the customer data. Wall Street Journal recently reported that Amazon may use data from marketplace sales to develop its own competing products. You’ll therefore want to explore creative options to drive returning buyers to your own webstore (like instructional YouTube videos) and build cross-channel awareness.
As a more traditional retailer, Walmart is better known for the brands it carries. There's a higher chance that buyers may search or filter for products based on brand, though a majority of searches are likely still generic.
As you might expect, Walmart is far less saturated with advertising than Amazon. Only 1.6% of its sellers currently advertise, according to Teikametrics, indicating lower CPCs across the board. Walmart ads, in a way, can be trickier to manage. They work on a first-price auction—you pay whatever amount you bid when you won the auction, even if it's 10 times higher than the next highest bidder. Amazon, on the other hand, uses a second-bid model whereby the auction winner pays just one cent above the second highest bid.
As of 2021, Walmart offers a Brand Portal that serves as a much leaner version of Amazon's Brand Registry. It is more or less a ticketing system for brand owners who notice IP infringement but is a step in the right direction. Walmart's application process further helps to reduce infringement concerns by requiring proof of ownership, experience and other qualifications.
Overall Seller Satisfaction
Amazon is a mature ecommerce marketplace with nearly eight times more sales than Walmart and ubiquitous consumer recognition. It has invested heavily in developing and refining a wide array of user-friendly seller tools all available within Seller Central.
It can also be a cutthroat world where, as one seller put it, you “have to constantly watch your back.” Amazon can be opaque and capricious in its business dealings with sellers.
Many therefore approach Amazon with caution. While traditionally, Amazon has been treated as a business strategy all its own, today’s sellers are looking to diversify and eliminate concentration risk across any part of their operations.
Walmart has a long way to go in its technology. Walmart Seller Center pales in comparison to Seller Central, according to sellers. Aside from features, Walmart Seller Center is purportedly difficult to navigate. Performing basic tasks can be tedious, and it’s often easier to work through a third-party integration partner than to work with Seller Center directly.
As a marketplace, many would agree that it’s an alluring channel with great potential. But some sellers have reported relatively long intervals between sales on Walmart and disappointment in sales volume (or lack thereof). This could have something to do with the product category; as some categories are gaining notable traction, others are still quiet and require further promotion among buyers.
On the plus side, Walmart is growing faster than ever. As demonstrated by the introduction of WFS, the retailer's committed to developing a more complete suite of services for marketplace sellers. And as one seller noted, “I feel my business is more welcome on Walmart.” Another said that Walmart Marketplace is the best marketplace for the cost, given its low fees and low competition.
The Bottom Line
Much has yet to be seen in this ongoing power struggle. Amazon’s massive advantage online is being balanced, somewhat, by Walmart’s foothold in retail.
For sellers, both channels have their appeal. Walmart has demonstrated that it’s in the game for the long haul and many eagerly await for it to gain even more momentum.
The path to success for sellers is unique on each platform. Amazon merchants shouldn’t expect the same type of results or user experience on Walmart Marketplace. One thing that they can bank on is continual developments throughout the next few years. Walmart still remains a great growth opportunity, and early adopters may see their businesses grow in lockstep with Walmart’s ecommerce maturity.
Editor's Note (March 2021): A previous version of the chart under "Ecommerce and Retail Market Share" mistakenly reported that the number of U.S. marketplace sellers on Amazon was 1.1 million. This, at the time, represented the number of active sellers worldwide. This has since been corrected to represent U.S.-only sellers.
Book a demo with Zentail today to see how we can transform your ecommerce business.