September 10, 2009
Walmart.com recently launched the Walmart Marketplace, that allows a "a select group of retailers" to offer additional products for sale through Walmart.com. According to Walmart.com this is adding nearly one million new items to it's catalog. Today there are only three retailers participating (ebags, CSN Stores and ProTeam); however, according to Walmart.com they are going to grow their marketplace with additional retailers over the next year. Buyers buy through Walmart.com's checkout; the order will be sent to the 3rd party retailer who will pack and ship the order, handle support and deal with exchanges and returns.
The retailers get a new high traffic sales corner, Walmart.com gets more products and revenue without having to touch the inventory or have the risk or returns. Pretty standard. I wonder who sets the retail and wholesale price of the item and what the cost to the retailer is to participate? If anybody knows, please comment.
There have been quite a bit of coverage on this topic from news agencies and bloggers. The Walmart Marketplace is noteworthy for a few reasons:
1. This squarely competes against Amazon, eBay, shop.com (One Cart) and buy.com. Amazon growth exploded in 2006 driven by Prime and their new 3rd party seller program which opened up their marketplace to sellers that greatly expanded Amazon's product catalog and ensured buyers found more product choices on Amazon. Walmart.com is clearly doing the same thing; albeit, today it is very closed down to only a few select sellers.
2. In the near future, Walmart.com may become a valueable new sales channel for larger retailers. A few comments in a minute on some of the pros/cons of this.
3. Once this has been tested on larger retailers, maybe it will be open to smaller manufacturers and retailers.
Shipwire is commenting as this could be a new sales channel open to sellers generally soon. We already do fulfillment for Amazon orders, ebay fulfillment services and can connect to other marketplaces. Soon, perhaps Walmart will open up Marketplace API's for us to connect to as well.
The characteristics of Walmart Marketplace look very similar to Amazon's third party selling program or a supercharged drop ship program where the retailers get to keep their brand closer to the buyer. The Walmart catalog clearly calls out when a product is from a Marketplace seller and even asks the buyer to acknowledge this in checkout. Do the retailers get to cross-market or do follow-up sales to the buyers that come through Walmart.com? Doubtful. Like third-party sellers on Amazon, Walmart Marketplace retailers probably gave up that right to be on Walmart.com. The buyer is likely owned by Walmart.com; but, Walmart.com has successfully pushed the cost of inventory and returns risk off to the seller (along with the cost of shipping and fulfillment). Walmart is going to collect a lot of sales data from this, will they then source and directly sell those products that do well? What happens when Walmart sells the same product as a Marketplace seller?
Will Walmart.com end up operating for third party sellers like Amazon.com or will there be something different here? Retailers need to participate with open eyes! Realize what you give up in exchange for the sales volume and make sure you know the ground rules before you invest in the channel.
If anybody knows anything more about Walmart Marketplace please comment.
Business Insider just posted about Walmart Marketplace, covered some of the thoughts above and Shipwire commented.