Selling on Walmart Vs. Amazon in 2021 | Costs, Pros and Cons
Ecommerce sellers often wonder what is the difference between selling on Walmart vs. Amazon. Retailers and marketplaces alike have tried to compete with Amazon for years. However, there are HUGE differences between both giants.
One well-known example is Walmart.
Although there have been people pointing out Walmart’s success in the eCommerce scene, there are those that expect that the position of leading retailer will pass from Walmart to Amazon by 2022.
With the influence of coronavirus drawing more attention to the risks involved in relying too heavily on Amazon, sellers are taking notice of Walmart Marketplace. However, there are huge differences between both marketplaces.
Here’s what you can expect from both marketplaces, so you can succeed on the platform of your choice.
Selling on Walmart Vs. Amazon| Costs
Both platforms offer sellers attractive customer numbers, tools, and opportunities to promote their brand. The cost to list on either Amazon or Walmart can be divided into:
This is a fee that sellers pay every month in order to sell on Walmart or Amazon.
Amazon has two types of accounts, Individual and Professional. On an Individual account, sellers have no monthly fee and have a limit of 40 listings per month in over 20 categories.
An Amazon professional account costs $39.99 per month. With no limit on the number of listings in over 20 categories and you can apply for an additional 10.
Walmart has no monthly fees, there’s no limit to the number of listings, and you have access to all categories.
Sellers are charged sales fees on each individual item that is sold through the marketplace and can include a per-item fee, referral fee, closing fee, and high-volume fee.
|Account||Per-item fee||Referral fee||Closing fee||High volume listing fee|
|Amazon Individual||$0.99 per item sold||6%-45% of selling price||$1.80 per media item||$0.005 on items over 100,000|
|Amazon Professional||None||6%-45% of selling price||$1.80 per media item||$0.005 on items over 100,000|
|Walmart||None||6%-20% of selling price||None||None|
This chart shows that Walmart, with its lower referral fees and no additional costs, has edged out Amazon in terms of sales fees.
Selling on Walmart vs. Amazon | Fulfillment costs
Members of Amazon Prime benefit from free shipping on both two-day and next-day deliveries.
Because of this, 73% of all sellers on Amazon utilize FBA (Fulfillment by Amazon) to gain access to the Prime badge–which allows sellers to better compete on Amazon. ç
However, in recent months, with thousands of sellers having been forced to close down shop overnight due to Amazon’s temporary banning of nonessentials from FBA in March 2020, exclusive reliance on FBA has shown itself to be dangerous.
ShipBob, for instance, is a popular tech-enabled 3PL that offers two-day shipping and greater visibility over the location and status of your inventory.
Amazon’s SFP beta program allows FBM (Fulfilled by Merchant) sellers to join Prime after meeting strict requirements, While at this time new applicants are not being taken on, there is a waitlist one can join if or when it resumes accepting interested sellers.
The tech giant always invests boldly in its logistics operations. Recently, the company announced that it was going to add 12 more widebody cargo jets to make up a fleet of 81 aircrafts. This fleet takes an estimated $100 billion from the most popular shippers like UPS.
The company also ordered 100,000 electric delivery vans. These investments add value to Amazon’s reputation of strategic moves. This places them on top in terms of delivery and customer expectations in that area.
Walmart’s Loyalty Programs
Walmart’s new loyalty program is their answer to Amazon Prime.
They offer free, unlimited same-day shipping on all grocery products and other offerings such as a scan-and-go service for customers who shop in the store.
Walmart grants customers who have orders over $35 free two-day shipping without requiring membership. Sellers are also encouraged to participate in Walmart’s TwoDay Delivery Program where their listings can be granted two-day shipping tags that raise their rankings in searches as well as boost their buy box win rate.
3 methods of qualifying for two-day shipping tags:
You must have been a marketplace seller for at least 90 days and meet strict performance standards before being able to apply.
2. Deliverr, Walmart’s official fulfillment partner
When you outsource fulfillment to Deliverr, you are pre-approved for Walmart’s fast shipping tags.
This service is only available to established marketplace sellers, but new sellers can complete a form to express their interest, suggesting that Walmart plans to roll it out more broadly.
If sellers opt for self-fulfillment, they cannot have their brand on the packaging or include any of their own marketing materials. Sellers are therefore not allowed by Walmart to use Amazon’s Multi-Channel Fulfillment (MCF).
It will not acknowledge Amazon Logistics codes as valid tracking codes and will dole out a suspension if you are caught using them.
Walmart also offers the choices of NextDay Delivery and two-hour delivery, also known as Express Delivery. The latter was launched in April 2020.
The company, as it continues to grow its marketplace reach, is likely to pursue profitable ways to assist sellers in offering and promoting the fastest shipping possible.
Both Amazon and Walmart offer a variety of fulfillment options, with associated pricing:
|Account||Fulfillment options||Fast shipping program eligibility||Multi-channel support|
|Amazon||Fulfillment by Amazon(fulfillment fee plus monthly storage fee)||Yes||Yes, through Multi-Channel Fulfillment (MCF), with higher fees|
|Walmart||Preferred fulfillment provider Deliverr(fulfillment fee plus monthly storage fee)||Yes||Yes|
Fulfillment calculators are tools that can help business determine the most cost-effective solutions.
Identify whether an all-inclusive fulfillment provider with no added costs, long-term contracts or hidden fees works out cheaper than your own warehousing, staff, packing, shipping, and security costs (as well as your ability to deliver a satisfactory service).
If you use Deliverr for fulfillment, you get pre-approved access to Walmart 2-day delivery. You can also use Deliverr to fulfill your FBM orders, creating a safety net in case your FBA listings sell out.
If you are a seller that is considering outsourcing your fulfillment, these 16 all-important questions before committing are a helpful guide.
Selling on Walmart vs. Amazon | Storage fees
Amazon charges $0.69 / cubic square feet /month except for the months of October, November, and December where they charge $2.40.
For Walmart, if sellers decide to use Deliverr to fulfill orders, they charge $0.75 /cubic square feet /month.
Pricing and Buy Box competition
Competition in the marketplace has made these costs something that sellers should seriously consider. Amazon’s larger seller figures mean that you’ll spend more money on CPC campaigns, external marketing, competing for the buy box, and lowering your prices to be seen by potential customers. On the other hand, reaching the top spot on Walmart will cost much less.
Amazon runs a marketplace that welcomes sellers of all kinds with 459,000 active sellers in the U.S. alone and more than 86,000 new sellers joining just in the year 2020.
There are a notable number of sellers based outside the U.S. also. In the top 10,000 sellers, more are based in China (49%) than in the U.S. (47%) according to statistics on Marketplace Pulse.
This can result in intense and rapidly fluctuating price competition. To keep up in the competitive scene, sellers may need to consider a repricer that can automatically adjust to rapid prices changes.
The best options are arguably algorithmic—they can keep you winning the buy box at the highest possible price, so you neither lose a sale nor kill your margins.
However, winning the buy box is much more than just having the lowest price.
FBA and SFP
In the past, sellers who used FBA and SFP (Seller-Fulfilled Prime) have come out on top over other sellers, despite some having slightly higher prices. This is because compared to the average FBM seller, Amazon is more reliable in assuring deliveries are on time and products are not defective.
According to Buy Box Experts, on the organic front, sales history takes priority over pricing. The faster you make sales, the higher the probability of ranking Amazon’s search pages is.
Other things one must consider in terms of rankings are text matches, product availability, reviews and selection. Some analysts note that the A9 algorithm still looks for listings that deliver better margins for Amazon, whether via FBA or advertising participation.
In terms of pricing, Walmart is strict. Walmart’s top reason for delisting is pricing that cannot compete on its marketplace.
A study of prices for 50 different products revealed that by 10.4%, Walmart was generally cheaper than Amazon, having lower prices on groceries, technology and home goods, whilst having comparatively higher prices on kitchenware and appliances.
If you are a seller on Amazon, competition is a large factor in driving prices down. If you are a seller on Walmart, on the other hand, there are two main rules that define it’s pricing:
1. Price parity
If a buyer can purchase the exact same item from you as a seller on a competitor website at a lower price (shipping included) than is being sold on your store on Walmart, it is considered an unfair practice and Walmart will have that product delisted.
2. Price leadership
If any seller on Walmart.com or any competitor website offers the same item that is radically cheaper in price (shipping included) than is offered on your store on Walmart, the product will be delisted.
With Walmart having an objectively small 46,000 domestically based sellers, there is generally less competition on the platform.
According to Walmart, sellers are getting 13x the number of visitors monthly in comparison to Amazon sellers, making the less crowded marketplace attractive to new sellers.
Buy box competition is also less intense.
Take into consideration that repricing on Walmart is restricted to about once a day, meaning the use of a repricer won’t be the same as it would be on Amazon. Pricing updates need to be extremely deliberate, while at the same time reactive to various market variables.
Selling on Walmart vs. Amazon | Advertising costs
Advertising is another cost that needs to take into account.
The comparable CPC format of both Walmart Performance Ads and Amazon Sponsored Products and Brands allows sellers control over campaign budget and spending. According to a seller who uses Deliverr, Walmart ads tended to cost less than Amazon.
78% of searches on Amazon are unbranded, meaning consumers are looking for a type of product rather than a specific brand. This emphasizes how important it is for sellers to advertise so customers become aware of their brand and they can convert the sale. This has become part of the cause of the rapid growth of advertising on Amazon.
The company saw an ad revenue growth of 40% in 2019 exceeding $4 billion which was more than ever before.
Consequently, paid placements which dominate result above the fold. have began to crowd both search result pages as well product detail pages.
Selling on Walmart vs. Amazon | Some Additional Tips
Sellers enrolled in Amazon’s Brand Registry can enjoy branding opportunities and services.
Probably the most significant of these services is security against IP infringement or unauthorized resellers that post inaccurate content in listings. An additional benefit is access to Enhanced Brand Content which grants sellers the ability to make more distinctive listings.
While registered brands can access Brand Analytics data for deeper insight into their customers, Amazon still owns all the customer data.
Wall Street Journal recently reported that Amazon may use data from marketplace sales to develop its own competing products. Sellers may want to look at creative means to drive returning customers to their personal online store.
Through instructional YouTube videos, for instance, and develop awareness across all channels.
Walmart, known as a more conventional retailer, is more known for the brands it carries. Although it is likely that most searches are broad, there is a higher probability that products are being filtered by customers buyers based on the brand.
Because of its comparatively smaller number of sellers, it may be no surprise that, in terms of advertising, Walmart is much less saturated than Amazon. According to Teikametrics, a mere 1.6% of sellers are presently advertising on Walmart, this suggests lower CPCs across the board.
Advertising on Walmart vs. Amazon
Ads on Walmart could be more complicated to manage.
They work on a first-price auction—you pay whatever amount you bid when you won the auction, even if it’s 10 times higher than the next highest bidder.
Amazon, on the other hand, uses a second-bid model whereby the auction winner pays just one cent above the second highest bid.
While Walmart does not have services explicitly for brands, its application process does help cut down on infringement concerns, which played a role in Amazon’s creation of its Brand Registry.
Since Walmart Marketplace is pitched as trustworthy partner aligned with the business needs of sellers and their brands, they may soon begin offering services that contend with Amazon.
Selling on Walmart vs. Amazon | Pros and Cons
85 percent of US transactions still take place in physical 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.)
In terms of revenue, Walmart sales surpassed $500 billion in 2018. In the same year, Amazon’s North American sales reached $141.4 billion.
Grocery sales reveal a larger revenue disparity with Amazon making up to $20 billion last year and Walmart knocking that number out of the park with an approximate $270 billion in generated revenue.
While Amazon’s ownership of Whole Foods gives avenue for grocery delivery by means of Prime Now, AmazonFresh, and Prime Pantry. However, Walmart is still the largest grocer worldwide.
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 (you need to pay for a subscription to Amazon’s grocery services).
Walmart’s online food sales increased 53% in 2018 whereas Amazon’s digital sales increased by 8%.
The options for delivery/shipping that Walmart presents are more accessible and come at a cheaper price than on Amazon.
While Amazon has Prime, which is a comparatively more expensive subscription that no longer guarantees two day shipping, Walmart has a number of different options for free shipping without needing to pay for a subscription.
Based on where you are, Walmart offers free next-day shipping on eligible orders that are over $35, free 2-day shipping on orders that are over $35, and free 3-5 day shipping on products that aren’t indicated as “free 2-day shipping”.
(Note that this is for non-marketplace items.)
Amazon’s focus on technology, innovation, and the digital scene is its greatest advantage. It’s anticipated that is expected Amazon’s digital ad spend share will increase from 3% in 2018 to 8% in 2023.
Amazon Web Services (AWS) is a business arm of that company and is both Amazon’s most rapidly developing and most profitable. AWS has had its cloud offerings expanded in order to reach more clients.
A self-serve mode was recently introduced by Walmart that is similar to Amazon’s and used for on-site ad placements.
However, there is still a long road ahead before it can be on par with advertising offerings Amazon has for its sellers.
With a report of 50% of sales coming from Amazon’s third-party selection, Amazon has a better established third-party marketplace compared to Walmart.
With the try-before-you-buy feature that customers have access to through Prime Wardrobe, as well as the acquiring of Zappos in 2009, Amazon is a dominating force in the apparel scene, not to mention that more than half of Amazon’s 75+ private label brands are clothing lines.
For $13/month or $119/year customers can enjoy benefits including, but not limited to, free shipping, video content, music streaming, and ebooks, as well as free 2-day, one-day, or 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.
As a new player on the block, lack of experience and expertise in the ecommerce frontier is probably Walmart’s biggest weakness. Prior the acquisition of Jet.com in 2016, the company had not centered their attention on ecommerce beyond the bare minimum. In constrast, Amazon was created as an ecommerce-first retailer.
Having a product placement strategy that is not very seller-friendly is definitely a point off of Walmart. Sellers are mandated by the company to list their products at the lowest price that can be found anywhere online (not even exclusive to Walmart.com) in order to gain exclusive Buy Box placement. Also, sellers have fewer resources to work with on Walmart.
With more than 11,000 stores, Walmart dominates the brick-and-mortar scene. In fact, 90% of Americans live within 10 miles of a Walmart store.
Although Amazon has launched physical stores such as Amazon Go and Amazon brick-and-mortar bookstores, it is a ways away from catching up to Walmart’s physical presence.
Amazon also has a track-record of replicating the most successful products third-party sellers, putting their own private label, and then listing them for cheaper, at cost or even at a loss.
Walmart, conversely, is not as likely to create its own private label line of products to compete with its third-party sellers.
Amazon’s willingness to prioritize high customer satisfaction at the cost of its third-party sellers or its own profit margin is a risk that sellers have to take when deciding on Amazon as the online marketplace for them.
Now that you know the main differences between selling on Walmart vs. Amazon, you might consider the following:
Walmart is not far behind Amazon however, it is still striving to improve its ecommerce services and its marketplace for third-party sellers.
With a growth of 40% in online sales in 2018, Walmart rose to the third place on the ranks of ecommerce retailers in the US. It saw a 207% growth in its ecommerce buyer base between early 2017 and early 2019.
This battle is far from being over though, with Amazon’s huge digital advantage online fairly counterbalanced by Walmart’s foothold in retail.
Sellers recognize that both platforms have their advantages.
Walmart has shown and proven that they plan to stay in the game for the long haul, and there are many that are excited for them gain even more momentum.
Both Walmart and Amazon offer to sellers their own distinctive routes to success on their platforms.
The results or user experience may be different on Walmart Marketplace than it will be on Amazon, however sellers can rely on the progress that will occur in the upcoming years.
Walmart offers a great opportunity for growth and those that invested their business in Walmart during its early stages may find their businesses grow and mature alongside Walmart through it’s ecommerce journey.
Related content: What You Need To Know About The New Walmart Self-Serve Ad Platform
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