Back in March 2021, Walmart decided to change its mind on a subject they had strong opinions about previously, but one with a direct effect on their overall business operations and bottom line worldwide. For the first time, sellers on the platform do not have to be registered in the United States to be able to sell on Walmart.com.
This move was obviously predicated by the retail giant's desire to continue to chip away at market share owned by Amazon, but also to tap into the massive networks of manufacturers overseas in places like China and Vietnam to which they have previously not had easy access.
Change won't happen overnight. Walmart has been a staunchly America-first company prior to now, and the vast majority of sellers on the platform are based in the United States. But change will happen. Walmart is showing with this move that they intend to be an international player moving forward, and although non-US sellers migrating to the platform may be more of a trickle and a rushing river at the outset, that could change very quickly as these sellers build some momentum and have some success diversifying where they sell.
And let's not mince words: this move is about China. Walmart has finally realized that to be competitive on a global scale, they need access to both Chinese manufacturing capability and the Chinese seller market. Amazon wouldn't be Amazon without the impact of the tremendous volume of sales done by Chinese sellers, and the growth provided by a constant influx of new sellers from the country. This impact has been ignored by Walmart prior to now, but they finally realized it was being ignored at their own peril.
That said, Walmart has been dedicated to providing a marketplace for domestic US sellers and will continue to do so going forward. These sellers will now be participating in a much more competitive marketplace, however, and will have to get creative with their marketing, customer service, and sales initiatives with overseas sellers who will likely be able to undercut them on price as a way to enter the market with a competitive mindset.
It's interesting to consider a side-by-side comparison of Walmart and Amazon now that the playing field has been leveled by this move, to an extent. Looking through the lens of a few topics is valuable for this exercise, including core services, delivery methods & infrastructure, supply chain practices and manufacturing, and the evolution of market position for both brands.
Let's take a closer look at each of these factors one by one.
Walmart vs. Amazon
First, let's take a look at the core competencies of Walmart and Amazon that make them unique.
Walmart's Core Competencies
Unless you've been living under a rock for the past few decades, you're familiar with Walmart's ubiquitous slogans, "Everyday low prices" or "Always low prices." They've been everywhere, all the time, for years in our collective consciousness in the US. These slogans were plain and simple but spoke to the truth of Walmart's incredible competitive advantage in the American marketplace. They've recently changed their primary marketing slogan to "Save Money, Live Better." but the notion is the same.
Walmart's incredible corporate buying power, best-in-class logistical processes, and a supply chain that's envied around the world have allowed perpetual leverage to offer lower prices to their customers. It's easy because they're saving money through efficiency in every step of the process to source products, moving those products into their retail stores and the online marketplace, and then market these products (both of their brand and those sold by third parties) to their customers.
What people may not realize is that Walmart is the largest grocery store in the United States. You don't necessarily think of groceries when you think of Walmart - you probably think about your local chain - but 59% of Americans have purchased groceries from Walmart in the last calendar year according to MarketResearch.com.
And they also offer financial services. Yeah, crazy, right? Through their in-store Money Centers you can cash checks, wire money in the US and overseas, exchange coins for cash, buy reloadable debit cards and gift cards, and even pay your credit card bills.
Where Amazon has maintained a laser focus on dominating online sales, Walmart has maintained a similar laser focus on being the king of brick-and-mortar retail. This is why their decision to open up their online marketplaces is such interesting news because it signals a shift in their willingness to compete with Amazon head-on rather than as an experiment in business.
Amazon's Core Competencies
Amazon has stated they want to be the "world's most customer-centric company." Well, it's hard to debate that they've gotten there. Even if you're an Amazon seller reading this article, think of your experiences as an Amazon customer. Where else on the internet can you order something and have it land on your porch in the next 24 hours (if not sooner)?
I'll wait. We all know the answer is nowhere else.
Amazon's biggest core competency, then, is its ability to leverage a staggeringly large logistical cache and supplier relationships to deliver products to customers in next to no time. Tie this in with the support and platform they offer sellers, and they become a massive challenge with which to compete for any other online retailer, Walmart included.
Another of Amazon's core competencies is their very carefully curated and incrementally growing "ecosystem." Consider all of the people that interact with their platform on a daily basis. It's not just sellers and buyers. There are people creating content for the blog to build the corporate voice, app developers constantly tweaking the mobile experience, salespeople finding new avenues for growth, and evangelists who have had great experiences building businesses on the platform and want to spread the word. There's an army of people working behind the scenes that make the Amazon marketing machine all but unstoppable.
Sure, Walmart has some of this same backbone, but Amazon's word of mouth and community marketing (which doesn't cost them one cent) is unlike anything else in modern business (apart maybe from Apple). The power of that word of mouth cannot be overstated.
How Do the Walmart and Amazon Application Processes Work?
Walmart and Amazon approach the application process to access their marketplaces very differently. Walmart has an eye out for sellers who already have established e-commerce businesses and have proven they have the chops to be successful. Amazon is more "democratic" with their admission of new sellers, and previous success selling isn't a prerequisite, but they're also in no hurry to add new people to the overwhelming numbers of sellers already on the platform.
Given this, it's important for non-domestic US sellers who can now access the Walmart marketplace to consider the time value of money. If they have an established business, there may be less initial competition by jumping onto Walmart and seeing how quickly they can gain traction versus diving in with the millions of sellers on Amazon to try to do the same.
If they don't have an established business, starting with Amazon (or sticking with Amazon as a focus, if they're already there) could make more sense. As you know, building a new e-commerce business from the ground up is back-breaking work, and by the time you get this done, Walmart may also be overwhelmed and the opportunity to be a quick entry into your niche lost.
The Walmart Application Process
To be approved as a Walmart seller, there are several smart steps to take:
- Sell elsewhere first. Show you can walk the walk.
This step sounds counter-intuitive, but as we mentioned above, Walmart is likely to reject you from selling on their platform unless you've proven you can do so elsewhere. Think about it from their perspective: Why would they risk-taking on new sellers with no proven skills over sellers who have previously been successful, even if on other platforms? So, build a Shopify store, sell on eBay, keep at it on Amazon. Take your pick. But make sure you can speak to these successes on your Walmart application.
- Wherever you're selling, make customer service priority No. 1.
Walmart will absolutely check to see how customers rate your products and the reviews they leave. Make sure you have systems in place to ensure customer satisfaction on your existing platforms so no doubt is left that you'd do the same on Walmart.
- Have a product mix that Walmart needs and offer "Walmart-friendly" prices.
This element is fairly self-explanatory. Walmart will be more likely to accept you onto the platform if you're selling something they need in their larger product mix. Also, make sure your prices are as low as possible while still protecting your margins. Walmart has built its entire reputation on low prices, after all, so make sure your product prices align.
- Keep Organized & Make Your Fulfillment Logistics a Priority
Walmart wants to see that your stores on existing platforms are well-organized and easy to navigate. Stands to reason that if this is true on eBay or Amazon that Walmart can expect the same when you set up your store with them. Make sure the user experience within your existing storefronts is first-class before you apply, and sort your products to mirror Walmart's product categories before you apply. Also, make sure you're fulfilling customer orders in a timely manner, and providing shipping and status updates consistently to keep customers informed about the progress of their orders.
The Amazon Application Process
Amazon's application process is straightforward for new sellers and isn't as dependent on past success. In fact, if you've never sold anything at all and you complete a strong application, Amazon will be likely to admit you onto the platform. After all, there's no way they could have reached millions of sellers without being a little looser with their requirements.
That said, there are still some best practices to follow to ensure things go smoothly:
- Consider if you want to be a reseller or a brand owner.
These are very different experiences on the Amazon platform. As a reseller, you're primarily selling products you can find readily available on Amazon within your store. There isn't as much brand development to be done, and the barrier to entry and getting started is much less than if you're going to be building a brand. Most of the legwork comes in doing product research and figuring out which products have a high level of popularity, but also a relatively low competition level so you're able to hit the ground running when you offer them.
If you want to be a brand owner, you're going to be manufacturing your products or finding them through a supplier who's willing to work with you as you "white label" the products they develop. There's more initial legwork here, but also more control over what you're selling in the long run.
- Figure out how you want to market to your customers.
Marketing on the Amazon platform can get expensive, quickly. Massive stores and retailers have the market cornered on the majority of the top keywords and product categories and will make your life difficult if you want to compete. Figure out how much of a stomach you have to go head to head with the big boys and plan accordingly. If you have an unlimited marketing budget, go for it! Otherwise, it's important to consider how the costs you'll absorb to market your products will be offset by future sales.
The ease of applying is definitely a factor but it's also important to consider how Walmart and Amazon's delivery and supply chains work before you make a decision on where to focus.
What Are the Differences in Walmart and Amazon's Supply Chains?
It's arguable that Walmart has the best supply chain in the world. Their ability to move products to the right customers in a timely manner, with great efficiency, goes toe to toe with Amazon's. Walmart stocks products made in more than 70 countries and manages a whopping $32 billion dollars worth of inventory annually. Now, with their move to allow non-domestic sellers access to their online selling platform, some of that product will start to change hands outside of what is sold in their brick-and-mortar stores around the world.
All moving parts within Walmart's supply chain are collaborative. Everyone who operates within the chain has access to a central database, they use similar point of sale systems in their stores, and everything is backed up by massive satellite infrastructure. In other words, they're organized as it gets.
With the onset of COVID, Amazon shifted quickly to make the curbside pickup at their stores and easier online ordering a core component of their sales operations. Had they not, it would have been very easy to lose traction to Amazon which seemed to predict how people would shop during COVID years ago and absolutely benefitted from that foresight.
If you've been selling on Amazon for any time at all you know their differentiator: Amazon Prime. With the introduction of quick turn-around times within Prime, Amazon changed the game forever. With the introduction of Prime Now in 2014, things went to a whole new level. Who would have imagined being able to order something and have it delivered right to your door a few hours later?
There's nothing Amazon can't do when it comes to its supply chain and logistics. Their combination of computing power, transportation, logistical efficiency, and operational cohesion is unmatched.
That said, Walmart's move to open up their platform to sellers across the world has to have them at least a little nervous. It's a new frontier they'll have to traverse, but they've never had problems doing this before now.
Walmart’s decision to open up its platform to non-domestic US sellers for the very first time in the history of the company raised some eyebrows in the e-commerce community. If they’re able to execute this move at a high level, then Amazon could have the first real threat to its dominance in the global marketplace in quite some time.
Time will tell, though, and the smart money’s always on Amazon. Bet on Walmart if you’d like to but be aware that Amazon will do everything in their power to stay on top.
If you’re a risk-taker, though, now’s the time to ride the wave of Walmart’s willingness to shake things up and do their best to play David to Amazon’s Goliath.
To keep track of the news in this emerging battle, continue to visit our website and also check out our Resources for more ways to make the most of your experience selling on whichever platform you may choose.
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