Last week, we talked about how some core differences between Amazon and eBay that make a straight comparison difficult. Amazon and Walmart also differ in a few key aspects that would take away from the main points that make each store great. Amazon has grown to be the online retail giant that is reaching into the physical store scene, and Walmart sits on its brick and mortar throne, extending its hand into the Internet space.
Both Amazon and Walmart are highly recognizable brands, not only in the US but all over the world. Since the fourth quarter of 2016, Walmart’s online reach has grown. There are no longer any doubts that this retail giant has what it takes to compete online. Walmart is the second most visited shopping website in the United States, and recent acquisitions have put the company in a position to beat out Amazon. So what do we see from the seller perspective when we look at these two superstars side by side?
Joining the Marketplace
Amazon sellers may complain about all the hoops that they have to jump through to be accepted on the platform, but Walmart has even stricter criteria for membership. Sellers may join Walmart by submitting an application for review, but the process can take up to four weeks. Walmart screens all new members, verifying their seller reputations and order ratings on Amazon and eBay before allowing them on their marketplace.
The competition on Amazon is the fiercest there is online because of the sheer number of sellers competing with each other and Amazon itself to sell similar products. Third party sellers on Amazon face about two million other stores.
Walmart has a small number of third party sellers – a few thousand currently – so the competition is the least of their worries. Once in, a Walmart seller can enjoy an open platform on which to showcase stellar products and service. Walmart’s average growth rate is about 100 sellers per month. This is a reasonable number for existing sellers to manage making adjustments for. The Walmart Buy Box is also much easier to win with such small numbers. All a seller has to do is offer the cheapest price as opposed to being ranked for sales, fulfillment, order defects, and many more factors in addition to overall performance.
Another result of Walmart’s steep barrier to entry is a smaller product selection. Fewer sellers means fewer choices, under twenty million to date. Amazon by comparison has more than 260 million SKUs. Amazon is pushing forward at full speed, but Walmart has no plans of stopping, either. Walmart acquired Jet.com last August, an ecommerce startup with the same mission as Walmart – to offer the cheapest prices possible to consumers. This gives Walmart the distinct advantage in the wholesale shopping arena. It also shows us that it is safe to assume that Walmart will reach a competitive number of unique product offerings soon. The move is proof that Walmart is serious about upping its game on the Web.
Advertising to Shoppers
Amazon has a unique consumer-centric approach and has invested much in data analytics to best serve their shoppers. Amazon uses its own quite successful algorithm for selecting which products to sell on the marketplace and how to price them. Walmart has no internal mechanism for collecting real time data or using it to deal with dynamic pricing. Consumer data is key to exponential growth, as we have seen in the path that Amazon has cut out for itself. Walmart takes the backseat in this aspect, and will not be able to get much further with its online store without it. Online sales for Walmart currently account for only about 3% of their total annual revenue, and are about 7.6% of Amazon’s total sales. To add a bit more perspective, however, Walmart’s total annual sales are 4.5 times Amazon’s. The glow on the horizon for Walmart is that Jet.com does have experience with consumer data gathering, and will be able to usher the old-timer into the Internet era.
Amazon and Walmart are both clear leaders in their respective playing fields – online and physical. Both retailers want to provide shoppers with the most convenient experience possible, giving them the best mix of flexibility and reliability. This is the one point where the two come into complete juxtaposition. Amazon wants the physical network that Walmart holds while Walmart lacks the online one that Amazon has built. The question rests on which one will be able to expand their capabilities faster and maintain the advantage. Both will have to learn fairly quickly how their new targets want to be served, then predict demand and position their inventory accordingly.
Amazon has the most highly streamlined fulfillment network that the online world has ever seen. Walmart has also built a strong and similar pick, pack and ship process. Amazon has been able to optimize its system by controlling fulfillment in their own centers, but Walmart takes advantage of a broader network. Walmart fulfills orders through its own fulfillment centers and also through its 4,500 stores, store distribution centers, and a first-rate transportation fleet.
Walmart’s online sellers cannot offer the store pickup option to their customers at this time. Amazon therefore maintains the advantage where pricing is concerned, offering its customers much lower rates for rush shipping. Walmart has tried to compensate this year by lifting the annual premium for membership that gave shoppers free two-day shipping. This should be appealing to non-Amazon Prime members, but may not sway Amazon customers who enjoy other Prime membership benefits. For starters, Walmart offers free shipping on only two million items – its best sellers – while Prime offers it on more than 50 million products. Regular online shoppers may remain loyal to Amazon while dabblers turn to Walmart’s thrifty option.
The physical and the online spheres have been claimed, but the battle for mobile dominance remains unwon, as does the scramble to gain ground in virtual and augmented reality. Currently, neither Amazon nor Walmart is making any great moves to compete with the much smaller niche stores that have begun to offer this new experience to their shoppers.
Amazon or Walmart?
As a seller, there are a lot of factors to consider before making a decision to select, switch to, or join an additional marketplace. If you are already on Amazon, you may not be impressed by what Walmart currently has to offer. To dismiss them offhand would not be a wise decision, however. Walmart has lots of room to grow, and it has been taking some very decisive steps to grow its online presence. The difficulty of getting onto the marketplace may be discouraging. Still, it is well worth the effort for serious sellers who are dedicated to creating an excellent shopping experience for their customers.