Walmart Inc.'s new fulfillment service, introduced this week, aims to attract more third-party sellers to its online marketplace in another bid to stay competitive with e-commerce rival Amazon.com.
The service, which began Tuesday, is similar in some ways to the one Amazon offers its third-party vendors. Walmart will pick, pack, ship and deliver customer orders, and guarantee two-day delivery. The Bentonville-based retailer also will manage all customer inquiries and refunds on "Fulfilled by Walmart" orders.
However, Walmart promises a simple and transparent cost structure with a low monthly merchandise storage fee and a fulfillment price based on shipping weight for most products. Sellers will not be charged a monthly membership fee, as they are with some online marketplaces including Amazon.
Jare Buckley-Cox, vice president of Walmart Fulfillment Services for Walmart e-Commerce, said in a news release Tuesday that many sellers on its marketplace had asked if they could use the retailer's fulfillment network and supply-chain capabilities to fulfill their orders.
"We built this service with sellers, for sellers, and are proud to offer our partners transparent and simple pricing that's one of the lowest on the market," Buckley-Cox said. "[Walmart Fulfillment Services] is designed to help sellers generate more profitable sales of their inventory at scale, while growing their business with Walmart Marketplace."
Buckley-Cox said customers will have access to a larger assortment of brands and products, along with fast shipping, easy returns and dedicated customer service. Sellers will also get increased site visibility through higher search rankings.
The firms Netrush and Pattern help sellers navigate Walmart's third-party marketplace, Buckley-Cox said, and both were instrumental in building the new fulfillment service.
Walmart started its online marketplace in 2009 with a small, curated group of sellers. The company wouldn't say how many third-party sellers it currently hosts on its marketplace. According to e-commerce research firm Marketplace Pulse, however, Walmart has more than 35,000 sellers.
In contrast, Amazon says it has more than 5 million third-party sellers worldwide. They generate more than half of Amazon's marketplace revenue, according to database company Statista. Third-party sales generated $42.75 billion in revenue in 2018, up from $31.88 billion in 2017.
Amazon is by far the nation's largest online retailer, accounting for 38.7% of U.S. retail e-commerce sales, according to market research firm eMarketer. Walmart comes in second with a 5.3% share. Other online marketplaces include Google Shopping, eBay, Target and Wish.
Sucharita Kodali, vice president and principal analyst at Forrester Research, said Friday that she's skeptical that Walmart's fulfillment service will result in a broader assortment of merchandise for shoppers.
"Perhaps that is true, but I find it difficult to imagine there are firms out there these days that don't know how to ship a product to a customer," Kodali said. "I do think the bigger value is the ability for Walmart to deliver a better customer experience and to have a better handle on the inventory the marketplace offers, and to get to economies of scale with shipping.
"If it can break even on these fulfillment services, that would be good enough," Kodali said. "But if it can make a profit, that would be icing on the cake."
Walmart's new program is "unequivocally" not likely to entice sellers away from Amazon, said Keith Anderson, senior vice president of strategy and insight for e-commerce analytics firm Profitero. However, it may make it easier for some who already sell on Amazon to join Walmart as well, he said.
Anderson said the fulfillment service represents another investment in Walmart's marketplace, "which is effectively key to compete against Amazon." Expanding the marketplace means adding sellers, he said, "but they want to keep the customer service consistent." By handling the logistics themselves, Walmart keeps control of the customer experience, he said.
Overall, Anderson said, "It's an interesting move. It's a good move. But it's not game-changing."
Business on 02/29/2020