When Brandon Harden started to market apparel and other merchandise two years ago on Walmart.com, he did not have particularly high expectations.
His company, Seven Times Six, has been selling on Amazon and eBay for more than 10 years, and it uses roughly a dozen other marketplaces. Last year, his first full year of business on Walmart, sales on Walmart surpassed eBay to become Seven Times Six’s second-largest marketplace.
“Usually these marketplaces take some time to grow,” Harden said. “We didn’t expect there would be such a growth in the first full year.”
While Amazon is the alpha dog of marketplace sellers (for example, Seven Times Six still generates a good 85% its business from Amazon), Walmart’s quick rise is another illustration of its ecommerce ambitions and its ongoing fight against Amazon.
Walmart first started marketplace selling in 2009, but it was years before it began to expand the platform aggressively. In the past year, it has increased its assortment to 50 million items from 10 million, the company said in Q1 earnings announcement in May. (Amazon, in comparison, says it carries “hundreds of millions” of items.)
Walmart declined to give eMarketer Retail a breakdown between company-owned and third-party inventory, but it has cited third-party marketplaces as a contributing factor in Walmart.com's 63% gain in Q1 sales and the 69% jump in total gross merchandise sales. The company also has inked or expanded partnerships with more marketplace tech vendors to make it easier for sellers to get on board its system faster.
“Online shopping is all about where people are going,” said Frank Poore, President and CEO of CommerceHub, which helps retailers and brands sell online. Brands worry about Amazon’s dominance and want to diversify to protect themselves, he said. “They don’t want to have too much concentration in any one channel.”
Plus, brands on Walmart.com benefit from its sizable traffic, he said. Walmart said in its annual report this year that it had an average of 92 million unique visitors a month.
Walmart’s marketplace expansion parallels other ecommerce moves it has made to extend its reach in ways that its traditional brick-and-mortar operations might not, buying men’s clothing retailer Bonobos, outdoor gear seller Moosejaw, and women’s clothing seller ModCloth. Marc Lore, the founder and CEO of Jet.com who now also heads Walmart eCommerce US, has said acquisitions help expand Walmart’s assortment and give it access to more premium brands.It’s a misperception that the Walmart.com shopper is the same as the in-store shopper.
Walmart is “seeking access to brands they haven’t historically attracted to the platform in order to attract new customers,” said David Spitz, CEO of ChannelAdvisor, which helps sellers market via marketplaces. “It’s a misperception that the Walmart.com shopper is the same as the in-store shopper. Walmart.com shoppers tend to be higher-income.”
Walmart’s marketplace, Spitz said, “has been really popular with our customers, because it offers scale and can really move product.”
Indeed, Walmart looks to be the biggest beneficiary in sellers’ move to spread their risks and diversify beyond Amazon. While only 9% of Amazon sellers also sell on Walmart.com (vs 65% on eBay, for instance), that percentage jumped to 36% among merchants with $2 million plus in annual revenue, according to a survey this year of 1,600 US Amazon sellers by Feedvisor, which helps Amazon sellers with repricing and other strategy. In another telling sign, when asked about other channels they want to expand to this year, Walmart, cited by 29% of Amazon sellers in the Feedvisor survey, garnered the top spot alongside sellers’ own websites, beating all other marketplaces including Shopify, eBay, Walmart’s own Jet.com and Etsy.