When you talk about ecommerce retail superpowers, Amazon is always top-of-mind. Ecommerce represented 14.3% of total retail sales in 2018, and Amazon accounts for 40% of US online retail.

But superstore Walmart is hot on Amazon’s heels as it continues to ramp up both its own ecommerce offerings and its marketplace for third-party sellers. In 2018, Walmart’s online sales grew 40%, and it became the third-largest ecommerce retailer in the country. Between early 2017 and early 2019, Walmart saw 207% growth in its ecommerce buyer base.

In this article, we’ll cover how the two retail giants compare in the following areas:
 

  • Walmart vs. Amazon: Challenges
  • Walmart vs. Amazon: Advantages
  • Walmart vs. Amazon: Strategy
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    Walmart vs. Amazon: Challenges

     
    Here are some challenges faced by the two retail superpowers.
     

    Walmart Challenges

     
    Walmart’s biggest weakness is a lack of ecommerce experience and expertise. Walmart is newer to the ecommerce space, while Amazon was built as an ecommerce-first retailer. Before Walmart acquired Jet.com in 2016, the company didn’t focus on ecommerce beyond the bare minimum.

    walmart marketplace

    Walmart also follows a different, less seller-friendly strategy for marketplace product placement. The big-box giant demands that sellers list at the lowest price available online — not just on Walmart.com — to win exclusive Buy Box placement. Walmart also has far fewer resources for sellers on its platform.
     

    Amazon Challenges

     
    Walmart’s 11,000+ brick-and-mortar stores dwarf Amazon’s physical presence. 90% of Americans live within 10 miles of a Walmart store. Amazon launched Amazon Go stores and Amazon brick-and-mortar bookstores, but still has a ways to go to catch up with Walmart’s physical footprint. 

    Amazon is also notorious for copying third-party sellers’ most successful products, private labeling them, and listing them at lower prices (sometimes at cost or even a loss). On the other hand, Walmart is less likely to launch a line of its own private label products in competition with its third-party sellers. Amazon is willing to sell unprofitable products to keep customer satisfaction as high as possible — at the expense of third-party sellers on its platform. It’s an unpleasant risk that sellers have to take when they choose to sell on Amazon. 
     

    Walmart vs. Amazon: Advantages

     
    Walmart and Amazon face unique challenges, the two ecommerce giants have different advantages. 

    Walmart Advantages

    85 percent of US transactions still take place in brick-and-mortar stores. With over 11,000 retail units around the world, this is a win for Walmart. (Meanwhile, Amazon operates just 481 Whole Foods Market stores and 41 other US locations.)

    Walmart is also much larger than Amazon by revenue:

    • Walmart’s 2018 sales exceeded $500 billion
    • Amazon’s 2018 North American sales hit $141.4 billion

     
    And the differences in revenue grows larger when you look at grocery sales:

    • Amazon generated up to $20 billion in revenue from groceries last year
    • Walmart generated approximately $270 billion

     
    Amazon owns Whole Foods and offers grocery delivery through both Prime Now, AmazonFresh, and Prime Pantry — but Walmart is the world’s largest grocer. Walmart offers same-day grocery pickup at thousands of stores, grocery delivery in several cities, and free 2-day shipping on online food and household purchases over $35. (Amazon’s grocery services require paid subscriptions.) In 2018, Walmart’s digital food sales increased 53% — compared to 8% on Amazon. 

    Finally, Walmart offers more accessible (and affordable) delivery options than Amazon. Walmart offers several different free shipping options — no paid subscription required. Depending on location, Walmart offers (on non-marketplace items):

    • Free next-day shipping on qualifying orders over $35
    • Free 2-day shipping on orders over $35
    • Free 3-5 day shipping on products not marked “free 2-day shipping”

     

    Compared to Amazon’s pricier Prime subscriptions — which no longer guarantee 2-day shipping — Walmart’s shipping is much cheaper. 

    “Walmart.com has come a long way in a short time in terms of marketplace capabilities; in the types of targeting, ad types, reporting, and the sophistication of the platform overall. Brands looking for ecommerce growth beyond Amazon should consider the opportunity of selling on Walmart’s online marketplace.”

    — Elizabeth Marsten, Senior Director of Strategic Marketplace Services at Tinuiti
     

    Amazon Advantages

     
    Amazon’s biggest advantage is its focus on technology, innovation, and all things digital. Amazon’s digital ad spend share is expected to jump from 3% in 2018 to 8% in 2023. Amazon Web Services (AWS) is Amazon’s fastest-growing — and most lucrative— business arm. Amazon has expanded its AWS cloud offerings to connect with more clients. 

    Walmart recently launched a self-serve mode (similar to Amazon’s) for on-site ad placements, but has a long ways to go before catching up with the advertising options Amazon offers sellers. 

    Amazon’s third-party marketplace is also much better established than Walmart’s. Amazon reports that 50% of its sales come from its third-party selection.

    Amazon also dominates in the apparel space, with try-before-you-buy through Prime Wardrobe and the 2009 acquisition of Zappos. They also have several in-house apparel brands — over half of Amazon’s 75+ private label brands are clothing lines. 

    One of Amazon’s most popular features is its Prime membership service. For $13/month or $119/year, more than 100 million people in the US subscribe to Amazon Prime, which includes free shipping, video content, music streaming, ebooks, and more. Prime members also receive free 2-day, one-day, or even same-day shipping on eligible items. Amazon’s FBA shipping lets third-party sellers leverage the Prime shipping that is a fan favorite, especially among millennials.  
     

    Walmart vs. Amazon: Strategy for sellers

     
    Amazon’s marketplace is more established, making it more saturated and competitive. To succeed as a third-party seller on Amazon, sellers should invest in a digital marketing and Amazon advertising strategy.

    Amazon allows anyone to create a seller profile, charging merchants pay $39.99/month (plus per-item selling fees) for the Professional selling plan. Walmart charges no monthly fees or account fees; they only charge sellers a 6-20% referral fee depending on the product category. But Walmart must approve all sellers who apply to sell on their marketplace.

    Walmart selects sellers based on:

    • Sales projections
    • Reputation
    • Sales records
    • Order defect rate
    • Return policy
    • Customer support
    • Seller ratings on other online marketplaces
    • And more!

     
    Walmart also gives preference to brand owners over retailers. For retailers, Walmart prefers merchants who ask the lowest price for their products. Offering a product at the lowest price is the only way to win the Walmart Buy Box, but repricing tools can help sellers change their prices automatically. Amazon’s Buy Box algorithm focuses on Order Defect Rate, performance metrics, customer service quality, and length of time on Amazon. The Buy Box is a great example of how Amazon sellers will have to adjust and learn new rules if they add the Walmart marketplace as a sales channel. 

    Pro-tip: Looking for more of a deep dive? Check out our recent article, “How To Sell On The Walmart Marketplace in 2020
     

    Walmart vs. Amazon: Who wins?

     
    There’s no clear winner when it comes to these ecommerce giants — except, maybe, the customer, as options to buy nearly anything online continue to grow. Amazon and Walmart are both part of an evolving retail landscape, both online and off. Overall, Amazon has a big head start on Walmart, especially when it comes to third-party sales and marketplaces. But Walmart could catch up, especially if they continue to develop the resources and digital marketing opportunities they offer marketplace sellers.

    The bottom line? Sellers can benefit from selling on both marketplaces.

    Amazon is still the undisputed ecommerce leader, but Walmart.com has several things going for it that make it a good investment for retailers including “Shopper overlap”.

    According to consumer research, there is a large overlap between Amazon.com and Walmart.com shoppers. Over 57% of Amazon buyers also shop on Walmart.com, and 91% of Walmart.com buyers shop on Amazon.com.

    Thus, a presence on both sites will give you a greater chance of capturing the same buyer.

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