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Walmart’s Marketplace Strategy Aims to Compete with Amazon

Walmart Boosts Marketplace Business as High-Income Shoppers Turn to Online

Las Vegas, a city known for big bets and bright lights, set the stage for Walmart’s summer seller summit. Amid Santa Claus appearances and how-to sessions for businesses selling on Walmart’s website, CEO Doug McMillon made a compelling pitch to over 1,500 attendees. His message was clear: Walmart wants to partner with small businesses and brands, inviting them to grow together on the retail giant’s third-party marketplace.

As Walmart approaches the crucial holiday season, it is intensifying efforts to attract and retain a vast array of independent sellers who stock its virtual shelves with everything from cosmetics to luxury watches. To sweeten the deal, Walmart is offering sellers the opportunity to pay for storage, packing, shipping, and advertising services. All of this coincides with a period where inflation has driven higher-income shoppers toward Walmart’s stores and website.

This holiday season presents a significant test for Walmart’s e-commerce strategy. Already, the company has utilized its third-party marketplace to boost early sales. More than half of the items featured in Walmart’s recent sales event were from third-party sellers. While direct comparisons with Amazon’s Prime Day are unavailable, Walmart continues to encourage more sellers to participate in these events.

Walmart’s expanding third-party marketplace is already showing promise in defying recent spending patterns, capitalizing on cautious shoppers amidst rising inflation. Online sales for Walmart U.S. have increased significantly in the past two fiscal quarters, even as other major retailers like Macy’s and Target reported declines. In contrast, Walmart’s third-party marketplace recorded double-digit growth in sales for discretionary categories like home and apparel.

Walmart’s Chief E-Commerce Officer, Tom Ward, explained that the company’s app and website have undergone significant improvements. Furthermore, the integration of automation in fulfillment centers and stores enables more late-night and last-minute deliveries, which, along with a growing marketplace, creates an “endless aisle” of products encompassing electronics, toys, and groceries, giving customers ample reasons to return.

Despite Amazon’s dominance in the e-commerce sector, Walmart is working to close the gap by presenting itself as an attractive alternative for sellers. With over one million active sellers on Amazon compared to Walmart’s approximate 100,000, there is an opportunity for Walmart to tap into a seller-friendly market. Many sellers appreciate the more personalized treatment they receive from Walmart, highlighting the challenges of getting a prompt response from Amazon.

Walmart’s mission is to persuade successful Amazon sellers to take a chance on the relative newcomer, such as Lucky 21, an apparel retailer that represents national brands. While Walmart acknowledges that it is behind Amazon, it has strategically invested in its marketplace and leveraged its large brick-and-mortar customer base to attract sellers.

Over the past year, Walmart’s marketplace has seen success, particularly in discretionary categories, benefiting from the changing spending patterns amidst inflation. This growth has the potential to address one of Walmart’s long-standing challenges: convincing shoppers to purchase higher-margin items, including clothing and accessories, alongside everyday products.

Walmart’s “endless aisle” strategy, with more than 4,600 stores across the United States acting as mini warehouses, allows customers to enjoy the convenience of rapid delivery due to their proximity to Walmart outlets. In the coming years, Walmart plans to introduce third-party marketplace items in its stores, enabling customers to choose curbside pickup or ultra-speedy home delivery for these products.

As inflation impacts consumers’ budgets, Walmart’s marketplace could be instrumental in addressing its ongoing challenge of convincing shoppers to invest in higher-margin discretionary items alongside everyday necessities. By offering an array of third-party products, Walmart can attract customers to its platform without the risk of buying large amounts of inventory and risking unsold items.

Furthermore, Walmart can closely monitor consumer trends and promptly introduce popular or relevant products, responding to customers’ ever-changing preferences and providing a vast selection of items. Walmart’s growing marketplace encompasses premium brands such as Michael Kors, Dyson, and Solo Stove, offering a broader range of products that customers may not expect to find on the platform. By embracing a marketplace model, Walmart has the potential to transform the shopping experience for consumers and challenge its larger rival, Amazon, in the future.

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Ruben Jay
Ruben Jay
Ruben Jay is an American broadcaster, media blogger, and podcast host. Currently, Ruben is the President of MultiMediaMouth.com and the executive producer and host of the popular podcasts You’re My Best Friend and ON AIR with Ruben Jay, exclusively on MultiMediaMouth.com. Follow Ruben on Instagram, Twitter, and Tiktok @TheRubenJay.

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