Walmart.com Is Expanding Its Third Party Marketplace

For years, Walmart has acknowledged the importance of developing its ecommerce presence, yet progress has been slow. Despite being the world’s fourth largest online retailer, Walmart ecommerce quarterly growth has slowed considerably over the past 11 quarters, albeit remaining positive.

Walmart introduced the 3P online marketplace in 2009, which allows select sellers to list products on Walmart.com as a seller, rather than being a vendor to Walmart.

Following a 2015 year that saw Walmart invest heavily in technologies supporting its ecommerce platform and with Q2 news of Walmart.com adding “100 new sellers to its marketplace in May, and 150 merchants in June,” as reported by InternetRetailer.com, it seems that the retail giant is making a legitimate push toward further developing its ecommerce marketplace and increasing its market share by widening its product offerings.

Additionally, Walmart made headline news recently with it’s lofty (pending) acquisition of Jet.com. A spokesperson for Walmart ecommerce noted that Walmart’s hope is that Jet.com will help it expand its audience and increase its brand and product assortment while also providing infrastructure for delivery and seasoned management familiar with the ecommerce industry. Though it remains to be seen how the two ecommerce platforms will integrate, it is evident Walmart is making efforts to increase its competitiveness in the ecommerce space.

Walmart.com’s expansion of its 3P marketplace is geared at directly competing with Amazon, an update to the decade-long competition between the two online retail giants.

What Does the Walmart.com Marketplace Offer 3P Sellers?

 

Marketplace Offerings

The Walmart ecommerce homepage entices potential clients with four main offerings:

  1. Expand your Audience: The webpage boasts over 80 million unique monthly visitors (statista.com estimates 87 million), which can greatly expand a seller’s potential customer audience.
  2. Ensure effortless transactions: The navigability of the Walmart.com marketplace is fairly simple, and will be discussed later in this article.
  3. Rely on our operational safety: Walmart.com is assuring safe and easy transactions for both sellers and buyers. Purchases are managed via Walmart’s “secure checkout processes”
  4. Be a strategic partner: Listing on Walmart.com will allow sellers to access both seller support (see “Reports” later in this article) as well as analytics that will help sellers evaluate their products’ performance.

Insight from an Amazon + Walmart.com seller: Dazadi

Walmart.com walmart ecommerce contributorWhile Walmart will tout its own platform, we thought it would be more insightful to speak with an actual 3P seller who is listing products on the Walmart.com marketplace.

Jason Boyce, Co-Founder and CEO of Dazadi commented on his company’s relationship with Walmart.com. Dazadi is a family-run retailer of home recreation products with products listed on its own ecommerce site as well as on the Amazon and Walmart.com 3P marketplaces.

Can you comment on how the Walmart.com marketplace has helped expand Dazadi’s customer base?

The sales we get from the marketplaces do not include the customers.  In other words, we cannot direct market to customers who buy our goods on the Walmart.com ecommerce marketplaces.  However, we know that it drives traffic to our site.  The conversion rates are lower for customers that we think see our name on the marketplaces than visit our site to make sure that “we are legit.”  However, we know that some customers come to our site after seeing our name on the marketplaces and stay for the sale.  Those customers are ours.

How has Walmart.com opened up new opportunities for you, compared to those offered by your own ecommerce site and/or Amazon?

Walmart has quickly become our second largest online marketplace, second only to Amazon.com.  We are grateful for the sales generated from Walmart and we feel that it exposes our brand to a different kind of customer base than what we see from Amazon and or our own site.  The average ticket is a little less, but we like sales.

What are your thoughts on the product management process for sellers, particularly the Seller Center portal?

Walmart’s seller portal has a long way to go in order to catch up to Amazon’s Seller Central; however, they are making constant improvements and upgrades which is all that we can ask for.  Amazon has been in the marketplace game for a lot longer than Walmart and we feel confident that they will catch up.

Walmart.com offers ecommerce retailers a value proposition very similar to that it offers traditional sellers, high sales volume, though margins will likely be lower.

Getting Started as a Walmart.com Third Party Seller

The Walmart ecommerce site has worked to simplify the onboarding process for new clients.

How it Works

  1. Apply & Qualify: Now is a good time to note that Walmart’s 3P marketplace is not currently open to all sellers. Although they are currently expanding their list of partners, potential sellers must be invited by Walmart and granted an offer to sell on the marketplace site–similar to Amazon Vendor Central.Interested parties may request an invitation, which entails submitting contact and general information about one’s company, but this is by no means a guarantee of acceptance. The company will likely continue to expand its marketplace in the future to include more SMBs, as eBay and Amazon have done, but Walmart.com offers limited 3P capabilities at this time. Walmart.com lists the qualifications for becoming a marketplace partner as follows:
      • Reputation: Most likely revolved around brand awareness, brand equity, and other factors related to your brand’s positioning in your industry. “First-class customer service” and “fast and reliable fulfillment” appear to be important considerations.
      • Sales Projections: Is listing on Walmart.com a good fit for both you and Walmart, based on sales history and forecasting? Unique product assortment and competitive pricing are weighing factors.
      • Alignment with Walmart’s values: A spokesperson for Walmart ecommerce supplemented the qualifications on their website with “Walmart.com is an invitation only marketplace. We select sellers based on experience, scale and reputation related quality of assortment, strength of pricing, and customer service track record.”
  2. Add Your Goods: Walmart.com’s Seller Center is the portal sellers use to manage their marketplace accounts. Items can be uploaded via the Walmart API, as a bulk upload using Excel spreadsheets, or by collaboration with a Walmart channel partner, ie companies specializing in listing products on the Walmart.com marketplace.
  3. Fulfill Orders: Unlike Amazon.com which offers FBA choices, sellers on Walmart.com are responsible entirely for fulfillment, including managing and supporting customer service inquiries, shipping, exchanges, and returns. While this will entail additional work on the seller’s behalf, it does give them more control over the fulfillment process.

 

“Get Paid”: Walmart.com will process transactions and will disperse funds to sellers based on the schedule both parties agree to in Marketplace Retailer Agreement. In exchange for listing on their marketplace, Walmart will deduct a “reasonable referral fee’” per sale. Referral fees are determined on a product level and are shared in the Marketplace Retailer Agreement.

Advertising on Walmart.com

While there are options for brand owners to work directly with Walmart for advertising, Walmart.com opens its site to third party ad placements. The majority of ads shown on Walmart.com are managed by third party agencies.

Google “Sponsored Products” 

Walmart.com Sponsored Products ClippedA “Sponsored Products” section is featured on the left-hand side of search results pages located under the additional search filters. Not to be confused with “Featured Products,” this section of “Sponsored products” is powered by Google AdWords via Google Shopping partner network.

When a user enters keywords in the Walmart.com search bar to performa a search for a desired product, ads triggered by those same keywords are eligible to appear in the designated “Sponsored products” section of the search results page.

So for example, on a query for “Xbox One,” the sponsored products section shows Xbox Ones for sale. Note: these results are for consoles listed on other third party sites. Clicking on these ads will direct users away from Walmart.com to a third party site. If you’re using AdWords, this is an opportunity to have your products shown on Walmart.com without ever listing them on the marketplace. Sellers on the site should be aware of the unwanted competition this presents.

Google “Sponsored Links”

Walmart.com Sponsored Links

Sponsored Links are also an available advertising option on Walmart.com. Appearing at the bottom of search results pages beneath the organic results, Sponsored links are also provided by Google AdWords. Similar to the Google “Sponsored products” section, Sponsored links will redirect users away from Walmart.com to a third party page.sponsored links

Third Party Display Ads

Standard display ads appear on the product search results page, on the left most side and at the bottom beneath organic results. They are standard network buys and link to an outside landing page, redirecting users away from Walmart.com

Ads, Featured/Sponsored Products Linking to Walmart.com Product Pages

As opposed to the Google AdWords sponsored products, which redirect users to a third party site, all of the ads explained below link users to product pages still on the Walmart.com site. This is expected to have higher conversion rates, as users are already familiar with and using Walmart.com

Display ADThese untargeted banner ads are linked to product pages on Walmart.com. They appear beneath Walmart’s scrolling carousel at the top of the home page. The spot can be purchased for an amount of time and will appear on the site regardless of who visits Walmart.com. This means that two separate computers viewing the site at the same time will both see the ad.

 

3P Sponsored AdsFeatured/Sponsored products can appear in two places on the Walmart.com site. There is a carousel on the homepage which objectively shows sponsored products. These are objective because they are not triggered by keywords in a search, instead a variety of products across multiple departments are shown.

 

More Sponsored ProductsThere is another section for featured/sponsored products on search results pages following queries for specific products. Below the organic listings is another carousel that advertises sponsored products.

Note: although one section is called featured products and the other sponsored products, both ads link to that product’s Walmart.com listing page. The easiest way to identify between Google AdWords’ managed Sponsored Products and those linking to Walmart.com is by format.

The products that show in this section are triggered by keywords from the search query. A query for “Xbox One” pulled the following sponsored products:

All featured/sponsored products sections operate on a cost-per-click (CPC) pricing model. Advertisers are charged only when a user clicks on the ad and is forwarded to the ad’s landing page.

Searching for Products

After a query is entered, for example “xbox one,” the search results page will display the marketplace’s listings for products displayed on the standard result page.

At the very top of the search results page is a section showcasing products related to your search. For a search performed for “Xbox One,” categories for consoles, games, and accessories is presented. This an opportunity for complementary products to be introduced.

A natural option to refine searches appears just above the organic results. It allows users to quickly choose from a drop-down menu and sort by price (set a min and max price), top brands, and store availability (Walmart.com will scan availability against B&M locations within a certain radius of a user’s search location).

Results can be toggled to appear as a grid or a list, and can be sorted by best match, best sellers, price (high to low), price (low to high), highest rated, and newest. Product listings will appear differently in list versus grid view. Grid view is a more condensed listing, meaning part of the product title which would regularly appear in full in list view may be cut off when presented in grid view. Generally though the two have the same information presented.

Product listings appear in line with a static thumbnail image, price and a title. The amount of text shown in the title appears to be more dependent on space than actual character count. If available, customer reviews of the product will appear under the price. These are reviews submitted to and stored by Walmart.com, not by third party reviews. Selling party and shipping options will appear in both formats, as will any special offers. In list view, a brief product description will appear on the right hand side.

Product Page and the Buy Box

Clicking on a product in the search results page will take you to the product page. Since Walmart.com opened its marketplace to 3P sellers, they introduced buy-box competition to their products.

The Walmart.com buy box appears to be primarily influenced by price (selling price+shipping), which Walmart, if a seller of the product, will usually have the lowest. Walmart has built its reputation around EDLP’s and it appears Walmart’s buy box algorithm has price as a very heavily-weighted variable; Amazon’s algorithm calculates in more factors.

Walmart.com’s listings feature 3P options more prominently than those on Amazon, making it easier for buyers to choose a third party option over the buy box winner:

Walmart Product Page (3P sellers highlighted)Walmart BuyBoxAmazon Product Page (3P sellers highlighted)Amazon BuyBox
If a single product has multiple SKUs, think colors or sizes, all of the variants can be listed on one product page. For a product with a single variant (color) there is a 50-100 variant limit to what can be featured on one page. Multi-variant products have a 500 variant limit. This applies to an item with 5 sizes and 100 color options, for example.

Walmart.com’s content and imagery guidelines are interesting. If a seller has an item that competes with the same item also being sold by Walmart, or competes directly with another seller, an algorithm will select a Primary Content Provider (PCP). Walmart.com will use the PCP’s content and imagery for the product listing, even if your product wins the buy box. Your item content will only be displayed if you are the sole seller of that item. It is unclear how the algorithm chooses a PCP, but it is safe to assume Walmart’s content will win most of the time.

The same content rules apply to variant groups. If two sellers (one of which can be Walmart) are each selling variants of a product, overlapping variants will be grouped together as one listing. Your item will only receive its own unique listing if no other sellers are selling that particular variant.

Payment and Taxes

Remitting taxation is the seller’s’ responsibility. However, Walmart.com offers to collect sales tax on the seller’s behalf. The seller uses partner tools in the Seller Center to identify which tax codes and jurisdiction apply, and Walmart.com handles the rest.

When a customer places an order for a product on Walmart.com, the order is added to the seller’s queue located in the Seller Center platform. It will contain the necessary information for correctly shipping the order to the customer. The seller is responsible for frequently checking their queue for new orders and making sure they are properly and promptly fulfilled. For sellers using the Walmart.com API, Walmart expects acknowledgement of an order within one hour.

After an order is placed, Walmart enacts an authorization hold on the order until the seller confirms the product has been shipped. Once this is completed, Walmart.com will debit the customer account. This means sales are reported on the shipping date, not on the order creation date.

Sellers are paid the total amount from sale of products minus Walmart’s referral fees. Referral fees are agreed upon in the Marketplace Retailer Agreement, and vary by product category/subcategory. It can be expected that Walmart.com dictates referral fees with very little, if any, wiggle room.

Sellers and Walmart agree to payment terms and schedule in the Marketplace Retailer Agreement, though sellers are typically paid on a weekly basis for orders occurring during the period. Periods end on Mondays at midnight (PST), and sellers can typically expect funds to be dispersed by noon (PST) the following Wednesday.

Fulfillment, Cancellations, Refunds, and Customer Service

Third party sellers on the Walmart.com marketplace are responsible for handling shipping, exchanges, returns, and customer service.

Shipping

Since sellers are responsible for fulfillment, they are able to enter their shipping costs along with their product listings, with free shipping being an option. Sellers are able to set shipping costs by one of two methods:

    • boxTiered Pricing: Shipping is charged based on the price of the item. A different rate can be applied for different price ranges.
    • Item/Weight Pricing: Shipping is calculated based on the weight (in pounds) of the item purchased or based on the amount of units ordered.

 

Based on the shipping model chosen, sellers then enter expected transit times and shipping costs. Updates can be made at the item level. Offering multiple shipping methods will grant customers the option of upgrading their shipping. This will enable them to receive their product faster if desired, which can greatly assist in the buying process.

Cancellations

If Walmart.com believes an order is fraudulent, it will not be released to the seller and the customer will receive a cancellation email. Cancellations are final. Once an order is canceled–by either party–it cannot be reversed or shipped.

Returns and Refunds

When a seller signs up for the Walmart.com marketplace, they are required to write a <4000 character return policy. Since sellers are responsible for fulfillment and customer service, they are able to dictate their return policies, as long as it is transparent to customers.

If a customer requests a refund prior to the item being shipped, the order can be canceled because Walmart has not debited their account. If the product has shipped, they can expect a refund in 3-7 business days.

Metrics for Sellers

Sellers on Walmart.com have access to a number of reports as marketplace partners. A summary of the available reports can be viewed at:

Walmart.com reports

Ultimately, Walmart is making strides in the right direction by working to expand its ecommerce platform, though it will continue to chase Amazon for the foreseeable future. The platform does offer sellers access to a considerable audience but smaller sellers will have to wait for the announcement that the platform will open universally.

How Shoppers Browse and Buy CPG Products Online And Offline

The Consumer Packaged Goods Shopper Survey 2017
 

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