Walmart is using an Amazon-style strategy to boost its fast-growing third-party marketplace and steal market share from its competitors.
On Tuesday, the country’s largest retailer announced a number of new updates for merchants selling on its online marketplace during its second annual Seller Summit in San Francisco. For example, Walmart is bringing premium beauty to its marketplace, launching with a lineup of 20 brands such as Beachwaver and T3. It’s a sign that the retailer wants to protect its dominance in the beauty category from rival Amazon, which is increasingly luring high-end brands to its own platform.
Walmart is also expanding its used and collectibles offerings with the launch of Resold at Walmart, a souped-up version of Walmart Restored that sells refurbished electronics and small appliances. The company’s used and collectibles assortment currently includes five million items from more than 1,700 sellers across a wide range of categories, according to Walmart.
This is the latest sign that Walmart is betting on its third-party marketplace to grow beyond its retail footprint and become an e-commerce giant that can compete with the likes of Amazon. To that end, Walmart said it expects its e-commerce business to be profitable within the next two years, according to Bloomberg. Walmart’s global e-commerce sales topped $100 billion in 2023, a first for the supermarket. While this shows Walmart is catching up to Amazon, the e-commerce giant recorded over $231 billion in net sales from its online business last year. To close the gap, Amazon is taking a cue from its rivals.
Walmart’s new merchandise offerings reflect consumer demand and will drive further growth, Michael Mosser, vice president of categories at Walmart Marketplace, said in an interview. Walmart’s massive retail presence with physical stores across the country also means its marketplace is “uniquely positioned” in an increasingly competitive e-commerce landscape, he added.
“We have more than 255 million customers a week shopping in Walmart stores and online, so this is an opportunity to build meaningful business for our sellers,” Mosser said.
The Bentonville, Arkansas-based retailer is also continuing to expand its logistics and fulfillment capabilities. Walmart LocalFinds, for example, enables direct pickup and delivery of goods from retailers’ physical stores. In addition, sellers can use Walmart’s supply chain to fulfill orders from any e-commerce site, which will launch in time for the holiday shopping season, the company said. Walmart’s supply chain can now also handle the transportation of goods from Asia directly to Walmart warehouses across the U.S.
In addition, Walmart announced some perks for sellers. For the second year in a row, Walmart announced it would waive peak season storage fees if sellers deliver their holiday inventory to its storage facilities by September 30. (In contrast, Amazon announced its peak season delivery fees earlier this month, but also eliminated the overstock fee.)
The numerous updates come as Walmart’s e-commerce business has seen rapid growth in recent quarters. In its second-quarter earnings release, the retailer reported that online sales rose 21% globally and 22% in the U.S. Meanwhile, market growth has stalled at rival Amazon, whose online store segment grew just 5% year-on-year last quarter.
Walmart Marketplace, in particular, is a key driver of the company’s online sales growth. Walmart’s third-party marketplace has seen sales growth of over 30% over the past four quarters, according to the company. The number of sellers listing items on Walmart.com grew 20% over the last fiscal year, Walmart also said. That growth is reflected in the sheer number of attendees at Walmart’s Seller Summit — more than three times as many sellers as last year, Mosser told Modern Retail.
“Walmart wants to add more value to its marketplace to continue to encourage its customers, especially Walmart+ members, to make more purchases on the marketplace, which in turn will attract more brands and sellers,” said Sky Canaves, retail analyst at eMarketer. “Walmart is closely following the Amazon playbook for building a successful marketplace.”
Take Walmart’s launch of Premium Beauty, for example. A flood of premium beauty brands, including Clinique, Kiehl’s and Too Faced, have signed deals with Amazon in recent months, as Modern Retail previously reported. Premium brands in particular once avoided Amazon due to the stigma associated with the platform. This sea change has come at a cost for Walmart. Although Walmart is currently the largest beauty retailer in the U.S., it will be dethroned by Amazon by 2025, according to Morgan Stanley. Additionally, according to eMarketer, beauty consumers are nearly twice as likely to shop online at Amazon as they are at Walmart.
As the retailer continues to invest in the online platform, Walmart Marketplace is increasingly becoming a viable option for brands looking to expand online, said Neil Saunders, retail analyst at GlobalData.
“Nobody can deny that Walmart, like Amazon, is a fantastic sales driver,” Saunders said. “Walmart has the traffic, the conversion rates and the brand name that draws people in.”
Walmart is also mirroring Amazon’s e-commerce strategy with its expanded resale business, Resold at Walmart, which offers five million items from more than 1,700 sellers. Earlier this month, Amazon announced it would rebrand its online resale marketplace as Amazon Resale, which was previously called Amazon Warehouse. But Walmart’s focus on expanding its assortment to trading cards, for example, suggests the company is also targeting rival eBay, Canaves said.
In fact, eBay’s focus on niche categories has helped the company prevail over stiff competition from Amazon, Walmart and Temu. In the second quarter, eBay reported revenue of over $2 billion, thanks in part to strong performance in categories such as collectibles and refurbished items.
Like Amazon, Walmart is trying to offer its customers a wide range of goods at a time when the e-commerce market is more competitive than ever. For Wade Jubrey, a partner in the consumer advisory practice at consulting firm Kearney, it was inevitable that Walmart would take a cue from its more experienced rivals as it expanded its e-commerce business.
“Current and relevant content and products are critical for marketplaces to remain relevant,” Jubrey said. “Once the content becomes outdated, consumers will stop engaging with it and will choose one of the dozens of other options available to them.”
As Saunders put it, “Both Amazon and Walmart go where there is growth. And why not?”
