How Walmart’s Online Grocery Business Works

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How Walmart’s Online Grocery Business Works

The battle for dominance in the eCommerce world is being fought on all fronts. Two of the largest players are Amazon and Walmart with over $255 billion in combined sales last year. The online grocery market is continuing to develop. It presents an incredible opportunity for the platform that can nail down eCommerce grocery shopping. Both Amazon and Walmart’s online grocery businesses look positioned to take control.

Total online grocery shopping will increase drastically over the next decade. Estimates by the Food Marketing Institute have the total online grocery sales at $100 billion by 2022.

Amazon has already created two programs designed to take advantage of the growth in AmazonFresh and Prime Pantry. Walmart dominates traditional grocery sales in the U.S. and is positioned well to take over the eCommerce grocery world.

How Walmart’s Online Grocery Business Works

The battle for dominance in the eCommerce world is being fought on all fronts. Two of the largest players are Amazon and Walmart with over $255 billion in combined sales last year. The online grocery market is continuing to develop. It presents an incredible opportunity for the platform that can nail down eCommerce grocery shopping. Both Amazon and Walmart’s online grocery businesses look positioned to take control.

Total online grocery shopping will increase drastically over the next decade. Estimates by the Food Marketing Institute have the total online grocery sales at $100 billion by 2022.

Amazon has already created two programs designed to take advantage of the growth in AmazonFresh and Prime Pantry. Walmart dominates traditional grocery sales in the U.S. and is positioned well to take over the eCommerce grocery world.

How Does Online Grocery Shopping Work on Walmart

Walmart customers can place grocery orders on the Walmart website or the Walmart Grocery App. Shoppers can choose from over 220,000 products combined between the Walmart website and shopping apps – including both perishable and non-perishable food items.

Many perishable items featured on the website are only available for in-store purchase such as dairy products. Other products like produce is available for delivery and in-store pick up. We expect that as Walmart’s delivery network improves, more perishable products will become available for delivery.

Where is Walmart’s Online Grocery Shopping Available?

Walmart’s online grocery footprint is growing rapidly. Just 5 years ago no Walmarts offered in store pick up for grocery. Now more than 2,000 stores in the U.S. fulfill online grocery orders for customers that want to pick up in store. That covers more than 70% of the U.S. population. Walmart will also double the number of stores that offer grocery delivery from 800 to 1,600 stores.

Currently, grocery in store pick up is available in at least 1 city in every U.S. state except Hawaii. Walmart has also partnered with a variety of companies including Point Pickup, Skipcart, AxleHire and Roadie to make grocery delivery more available. Grocery delivery is currently available in more than 100 different metro areas. Walmart’s new, and existing, partnerships will help take that number to more than 300 metro areas by the end of this year.

Walmart Online Grocery Shopping Delivery Options

Shoppers on Walmart have a few different options when it comes to getting their groceries. As we previously said, in-store pick up is available in most metro areas in the United States. In-store pick up allows customers to schedule a pick up time. Walmart even offers discounts on certain items purchased online.

Customers can also enjoy same day grocery delivery from Walmart stores in certain metro areas. Groceries are picked by Walmart’s personal shoppers team. They are then delivered by their delivery partners during a specific time window.

Apart from in-store pick up and fresh grocery delivery Walmart customers can have free two-day shipping to deliver non-perishable items. This option actually compares well to Amazon’s Prime Pantry offering. Amazon cannot guarantee two-day delivery on non-perishable grocery goods.

What type of Groceries Can I Sell on Walmart

Similar to Amazon, Walmart has both vendors and third-party sellers. Vendors have less restrictions on the type of products that they can sell. However it is difficult to get accepted into their vendor program.

Third-party sellers have restrictions on the grocery products they may sell on Walmart. Walmart’s prohibited food items include some basics. Unsafe foods, expired foods, foods that have drug claims, etc cannot be sold on the marketplace. But third-party sellers are also restricted from selling infant formula, fresh food and frozen foods as well.

Guaranteeing quality is the main concern for Walmart. Enforcing that on third-party sellers would be extremely difficult. Walmart limits food sales by third-party sellers to maintain quality.

Grocery Order Fulfillment on Walmart.com

The first and third-party models on Walmart fulfill orders in different ways. First-party vendors ship goods directly to Walmart fulfillment centers. The fulfillment centers handle the store distribution. Then each individual store handles Walmart’s online grocery delivery.

Third-party sellers on the Walmart marketplace are responsible for all the shipping, returns and customer service for their products. Sellers can choose two different methods to set the shipping costs – tiered pricing based on item value or quantity or weight pricing. Each individual seller can also specific expected delivery times for their products.

3P sellers on Walmart have certain shipping metrics that they need to meet. Maintaining fast and prompt shipping is the best way to maintain those metrics. Fulfilling orders within 1-2 days is required to be in good standing on Walmart.

How to Apply to Sell Groceries on Walmart

Walmart has similar acceptance policies for the 1P and 3P models to Amazon. Walmart invites companies to be a vendor depending on the category of the products. There does not appear to be any direct way to get an invitation to become a vendor using the 1P model.

Companies that are not invited to be a vendor can apply for the 3P side. Walmart can take up to 2 weeks to review and approve and application to be a third-party seller. There are a few key considerations that the review teams take into account.

Brand Recognition

Walmart wants to have the most recognized and respected brands on their platform. Application reviewers may consider your customer service or fulfillment reviews from other platforms, and your brand’s positioning within its industry. Unknown brands can still get approved however it is significantly more difficult.

Sales Forecasts

Walmart has its own forecasting models that project what your product sales will be. They base the forecasts on similar products and price point. If Walmart does not believe that your brand will not meet certain thresholds, they may determine that you are not a good fit for the marketplace.

Reputation

Your company’s reputation in relation to non-marketplace metrics can also be considered. Walmart is known to consider established brands that are able to sell at scale. This includes considering your pricing and customer service track records.

Selling Groceries on the Walmart Marketplace

Getting approval to sell on the Walmart platform can take months. However, it has the potential to be extremely worth the wait if you are a grocery brand. Walmart’s shopping options make it easy for customers to get their groceries. The convenience of the Walmart platform can position Walmart to take advantage of eCommerce grocery growth.

Walmart’s online grocery business currently places certain limitations on sellers that we expect will change in the near future. As the growth of cold-storage fulfillment services continue and eCommerce shopping become more popular there will be increasing demand for product availability. We believe platforms like Walmart will have no choice but to accept more fresh and frozen food companies on the platform. Our experience with grocery brands shows us that positioning your brand on Walmart as well as Amazon will help you take advantage of the coming opportunities in the eCommerce space.[/vc_column_text][/vc_column][/vc_row]

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