Selling on Amazon vs Walmart and Shopify: What Sellers Should Know
- Selling on Amazon vs Walmart and Shopify | Costs and Fees
- Advertising on Amazon vs Walmart & Shopify
This partnership was carried out amidst the COVID-19 pandemic, which took the world by surprise, leaving shoppers with no choice but to turn to eCommerce to acquire their daily essentials.
Despite all this, eCommerce experts have predicted that Amazon will surpass Walmart as the leading retailer by 2022, based on the following facts:
- Shopify powers one million businesses while Amazon has 2.3 million active sellers.
- Walmart Marketplace gets 110 million US visitors per month, whereas Amazon has over 150 million visitors per month.
In this post, we’ll cover the pros and cons of selling on Amazon vs Walmart and Shopify, and what you can expect from each platform in terms of costs and advertising.
Scroll down to learn more!
Selling on Amazon vs Walmart and Shopify | Costs and Fees
What works on Amazon may not be the best course for your eCommerce business. Multi-channel retailing requires a custom strategy for each platform. Here’s what selling on all three platforms looks like:
The Amazon Professional account charges $39.99 per month. There are no listing fees, but Amazon does charge sales fees for each sale.
Walmart does not charge a monthly fee. It also grants unlimited listings in all categories. Sellers are also only charged sales fees for each sale, as in Amazon. Shopify also does not collect a monthly fee if sellers use Shopify Payments. Using an external payment provider will require additional fees.
Fulfillment and storage are two crucial options and costs to consider.
Shopify sellers can have full shipping control using Shopify Shipping. The service lets merchants select specific carriers for their products. It also features overnight delivery, package pick-ups, shipping insurance, tracking information, international shipping, and more perks.
Amazon sellers can choose between Fulfillment By Merchant (FBM) and Fulfillment by Amazon (FBA). FBM means that you’ll manage product deliveries on your own. With FBA, you only have to create your product listings, prepare your products, and store them in an Amazon warehouse. Amazon takes care of the rest.
Amazon’s storage fee per cubic square feet is $0.69 per month for 8 months, and $2.40 per month in October, November, and December. Walmart Fulfillment Services (WFS) is similar to Amazon’s FBA. It charges monthly storage fees and per-item fulfillment fees. This service is only available to established sellers.
Amazon and Walmart offer premium loyalty programs to attract online sellers and shoppers. Amazon Prime users pay $119 per year to receive two-day delivery on Prime products for a year.
Subscribers can also enjoy streaming content, Prime Day, Whole Foods discounts, and Prime Now delivery. It also gives great advantages to sellers. Products featuring the Prime badge receive a higher search rank because Prime members shop more frequently.
Walmart+ users pay $98 per year to get free, unlimited same-day shipping on all grocery products. It also features a scan-and-go service for customers who shop in the store. Subscribers also get free two-day shipping and Discounted fuel prices at Walmart and Murphy gas station. Walmart+ sellers can participate in the Two Day Delivery Program. Their listings can be granted two-day shipping tags that raise their rankings in searches and boost their buy box win rate.
Advertising on Amazon vs Walmart & Shopify
The cool thing about advertising on Amazon is that there’s no upfront fee for any of their ad options. You choose your own budget, and you can change it or adjust it at any time.
Keep in mind that you won’t be charged every time a shopper sees your ad. As its name suggests, you will only pay for every time they click on your ad. Amazon features four types of advertising campaigns for sellers:
1. Sponsored Products are cost-per-click (CPC) ads that appear in shopping results and on product pages. They are easy to create and they promote individual product listings, so customers can discover and buy your items.
These ads are available for professional sellers, vendors, book vendors, Kindle Direct Publishing (KDP) authors, and agencies in North America (Canada, Mexico, and the US), South America (Brasil), Europe (Germany, Spain, France, Italy, The Netherlands, and The UK), Middle East (Saudi Arabia, The United Arab Emirates), and Asia Pacific (Australia, India, and Japan).
Here’s how you can create a Sponsored Products campaign:
- Set your campaign duration.
- Choose which keywords you will target. (Try DataHawk’s Amazon Keyword Research)
- Pick the products you will advertise and set your bid.
- Launch your campaign!
2. Sponsored Brands highlights the uniqueness of your company and three product offerings by allowing you to feature your brand logo, a custom headline, and multiple products.
They are available in the same countries as Sponsored Products to professional sellers enrolled in Amazon Brand Registry, vendors, book vendors, and agencies. To create your campaign you must follow the same steps as you would for Sponsored Products, the only difference is that you’d have to submit your ad for review, and wait 72 hours before approval.
- Retail awareness: These ads will only appear when your products are in stock.
- Ad Creatives: They are automatically generated and include a product image, pricing, deals, savings badging, star rating, and the “Shop now” button.
Quickly launch: Since this is a self-service, ads are generated automatically.
Creating your campaign is pretty easy as well. Just follow these steps:
- Select your audience and targeting strategy.
- Set your bid and daily budget.
- Choose the products you’d like to promote.
- Your ad will be created automatically.
Which is of great help for businesses that are starting their selling journey. The Stores dashboard includes great tools such as:
- Smart metrics (daily visitors, page views, and sales on and off Amazon)
- Templates and widgets designed for app, desktop, and mobile
- Amazon’s Self-service Store builder
This amazing tool is available to agencies, vendors and professional sellers enrolled in Amazon Brand Registry in the same countries as Sponsored Products. Here’s how you can get started with Stores:
- Use the predesigned templates to create your page.
- Add videos, text, and images to highlight your products
- Submit your page for review; you’ll receive a message within 24 from the Stores Team if your page was approved.
Advertising on Walmart
Walmart Advertising Partners is the retailer’s new self-serve ad platform. It was launched on January 3rd to better position Walmart to compete with Amazon Advertising.
Walmart Performance Ads operates similarly to the early stages of Amazon Ads. But at its current stage, there are several distinctions to consider between the two.
Walmart’s sponsored products are called Walmart Performance Ads. They are granted to sellers if their products rank organically within the top three search pages. And they must be winning the Walmart buy box.
The company allows for two sponsored products per search results page. It has a $1,000-minimum lifetime campaign spend, and a $100-minimum daily spend. However, the limited number of sponsored product spots available in Walmart means sellers can capture long-term customer visibility. You may also want to read up on how to use Walmart product listing variation to maximize exposure to multiple products.
Check out this Sponsored Products Made Simpler Webinar from Walmart Connect to learn more:
Advertising on Shopify
Let’s not forget that Shopify is an eCommerce platform that allows you to build your own store, whereas Amazon is a marketplace itself. Therefore, Shopify uses different channels to help sellers advertise their products:
- Email Marketing
Through Shopify Email, sellers can send up to 2,500 emails to customers for free. After that, you pay as you go for as low as $1 USD per 1,000 additional emails sent (or $0.001 USD per additional email).
Shopify Email features a complete dashboard to manage all email marketing campaigns.
It also saves time. You can choose from hundreds of email templates to share product collections, sales, or newsletters. Also, your branding is automatically pulled into the templates.
If you Import your customer list to Shopify, you can then segment emails to ensure the right message gets to the right person. Plus, Shopify emails can be sent using your domain name to avoid spam filters.
- Google Smart Shopping
This feature lets you run effective ads campaigns in a few clicks. Just set a daily budget in Shopify and Google will pull your product information to create the ads.
Smart Shopping optimizes your campaign by choosing which products to advertise, how much to bid and who to target. Then, Google will analyze the results and use them to optimize your campaign.
- Facebook Ads
When you connect Facebook and Instagram to Shopify, products automatically sync so you can create and manage ads for social through Facebook Ads.
(In order to sync your Instagram to ecommerce, you need to set up a Facebook business page and have products on your FB catalog.)
You can share products with social posts and use Facebook’s Carousel Ads to group items and encourage followers to discover your products.
Sellers can also take advantage of the apps’ marketplaces. You can let customers browse and buy your products directly on Instagram and Facebook.
Advertising Costs: Walmart and Amazon
Both Walmart and Amazon’s Sponsored Products programs offer sellers control over campaign budget and spend. They also use a similar CPC format.
Advertising costs, however, are a bit variable. For example, Brands could pay a lot more bidding on Walmart. Amazon uses a second-bid auction, where the winning bidder only pays the cost of the second-highest bid plus one cent.
For instance, if you bid $10 for the “lemon scent lotion” keyword, and another marketer bids $8, you would only pay $8.01. Sellers can bid high, knowing they won’t necessarily pay a full bid.
Walmart has a first-price bid auction model. This means sellers pay the exact price of what they bid. So, if you bid $10 and another seller bid $8, you’d have to pay $10. Bidding high is not necessarily the right strategy in Walmart. It is better to scale bids to increase CPC and visibility.
When you sell on Amazon, you have Amazon’s reputation backing your business. With Shopify, you are fully responsible for promoting your business and building your brand awareness. You have to put time and effort into optimizing your Shopify site so people can find you online. It requires using SEO for relevant key terms and decreasing site load time so your site can rank in search
Account metrics are part of how online marketplaces rank sellers. Amazon tracks four performance metrics:
- Order Defect Rate (ODR) evaluates your ability to provide a good customer experience. You must keep an ODR below 1%.
- Pre-fulfillment Cancellation Rate tracks all seller-canceled orders prior to shipment confirmation. This Rate should always be less than 2.5%.
- Late Shipment Rate represents orders confirmed after the expected ship date. Less than 4% of your orders must be confirmed over a 10-day or a 30-day period.
- Valid Tracking Rate (VTR) measures a Seller’s use of Valid Tracking Numbers. You must keep a 95% Valid Tracking Rate.
Walmart metrics require sellers to:
- Keep 90-day ODR at less than 2%
- Keep your Shipment rate above 99%
- Maintain a Valid Tracking Rate above 99%
Both retailers will work with sellers who fail performance standards, as long as they are actively addressing their violations. The worst-case scenario for negative metrics is a Seller Account suspension. Should this happen, make improvements at once before appealing to Amazon or Walmart.
Onboarding & Listing
Once you’ve purchased a selling plan and set up your account on Amazon, you can create your first listings through the Seller Central dashboard.
You can either create individual listings manually or upload listings in bulk using an inventory file template. Walmart’s onboarding process is a bit tricky. New sellers must send in an application and undergo a “trust and safety” review. which can take several weeks.
Once accepted, you will receive a launch checklist with instructions for registering your company. You can then create new listings manually or through Excel uploads. Shopify is more time-intensive. It may take a few days to puzzle out how the platform operates, which storefronts are best suited to your business needs, and how to make a store live. However, Shopify is highly customizable. It offers 70+ free and paid tweakable themes to create a custom storefront.
Amazon, Walmart, and Spotify offer their own distinctive routes to success. The path to success for sellers is unique on each platform, and the results or user experience may be different. It may not be necessary to make a choice, however.
Sellers recognize that each platform has its appeal and advantages. They all have pros and cons, but the better option to diversify your business may be to ensure a presence on all.
In a nutshell:
- Amazon is a customer-centric marketplace, good for small and big sellers alike who don’t want to pay an upfront cost in advertising. Additionally, the platform boasts an outstanding reputation among e-shoppers around the world.
- Walmart rose to second place in eCommerce retailers in the US. It offers a great opportunity for online growth.
- Shopify gives you more independence, allowing you to personalize the front end of your website while building a stronger brand identity, and more scalable pricing.
In the end, big names such as Spotify, Walmart, or Amazon bring more customers and increased visibility. It’s up to you which one you chose to kickstart or grow your business. Good luck!
Esteban is an SEO copywriter at AMZ Advisers, with several years’ experience in digital marketing and e-commerce. Esteban and the AMZ Advisers team have been able to achieve incredible growth on the Amazon platform for their clients by optimizing and managing their accounts and creating in-depth content marketing strategies.