Walmart Marketplace Increases Third-Party Seller Activity

Walmart’s
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market-place will play a bigger role in this holiday season. Third-party sellers are committing more advertising to Walmart’s marketplace this year. While the number is still much smaller than Amazon’s
AMZN

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third-party partner base, it is notable since the commitment is growing. It is important since Walmart’s third-party platform is not as crowded as Amazon’s.

There are other reasons to take note of the increased Walmart marketplace activity. For instance, vendors are sending more merchandise to Walmart to back up their advertising with appropriate inventory commitments. The inventory commitment is larger and more powerful for those brands that have upped their advertising spend. That advertising will enable vendors to bring more traffic to their merchandise. At this point, the numbers are still much smaller than rival Amazon but Walmart has developed two programs – Brand Shops and Brand Shelves – which both are big draws for clients.

About two weeks ago, Walmart held its first seller summit and presented a number of new tools to enable third-party sellers to sell more easily on the Walmart platform. The company also announced some perks which include a waiver on peak season storage fees if sellers get holiday products into storage facilities by October 1. That should help somewhat, but deliveries from the Far East may miss the deadline because of shipping or transportation delays. Management indicated that sellers are very happy for Walmart to waive holiday peak fees.

“It will be a much bigger holiday season for them,” said George Hatch, director of marketplace at e-commerce accelerator Pattern. He continued: “This year, it feels like many brands are dedicating their own advertising budgets specifically to Walmart’s marketplace. A lot of that is because there is opportunity for early adopters to be able to come in, as there are not as many sellers on Walmart and there are not as many sellers using advertising efficiently on Walmart”.

Two years ago, in 2021, Walmart rebranded its advertising business. Rather than refer to it as a retail media division, it is now called Walmart Connect. Then, last year, Walmart transitioned to a second price auction which helped sellers drive better ad efficiency and higher return on their investment. In addition, Sponsored Search remains a core offering for Walmart Connect.

Many third-party sellers are willing to push more inventory into Walmart Fulfillment Services (WFS), since they believe they will see more demand. The company said that one should see an increase in demand year-over-year of 20% to 30%.

Hatch said that he is also seeing more brands “really looking at matching Walmart’s promotional calendar and their merchandising events to see how they are able to get additional exposure of some of their items.” Examples include Black Friday and Cyber Monday. He also feels that brands now find it more compelling to have a presence at Walmart.

Bottom line: Walmart is willing to compete with Amazon even as Amazon’s marketplace is much bigger.

POSTSCRIPT: Last week, on September 22, 2023, I published a blog detailing Amazon’s effort to boost its relationship with third-party vendors. I was impressed by Amazon’s effort. Amazon’s marketplace is much bigger than Walmart’s.

I believe Walmart third party sellers should sell products in the marketplace that are not otherwise available to Walmart customers because it should boost the Walmart assortment. Walmart has already adopted some of Amazon’s strong selling points. For instance, Walmart+ competes with Amazon Prime and faster delivery. Our price check tells us that prices are similar, and the attitude to customers by Amazon associates and Walmart associates compared favorably today. The two giant companies will continue to compete with each other and that should result in wins for third party sellers and customers alike.