It's not always easy being Walmart in an Amazon world. If customers prefer to search on Amazon over Google when looking for shopping ideas, then Walmart's work is clearly cut out for them.
But there's one key advantage Walmart has simply by their track record alone: community. Families don't just shop at a Walmart store to save money. They shop there because it's a marketplace; a diverse microcosm of a much broader customer landscape that Amazon simply can't address.
But despite Walmart's omnichannel strategy, innovation has never been the retailer's strong suit. It may be Amazon's largest competitor in the digital marketplace. But despite an eCommerce history extending over twenty years, it has yet to build on the legacy that Amazon was founded on.
Could Walmart's partnership with Spotify change that?
Walmart's Dive Into eCommerce
Walmart knows its customers. It has to. Otherwise, they wouldn't be the largest retailer in the U.S.
But digital retail is an entirely different beast from physical retail. It's historically been an area where Walmart lagged behind. But that changed when the Arkansas-based titan reported a 74 percent increase in online sales for the first quarter of 2020, prompted in no small part by the Coronavirus pandemic.
By comparison, Amazon's sales for Q4 2020 were only $75.5 billion; a 26 percent increase from the first quarter of 2019.
A one-time fluke? Perhaps. But Walmart has always had its eyes on the digital prize commanded by Amazon. And their persistence has apparently paid off.
A recent poll from First Insight indicated 55 percent of consumers surveyed prefer shopping at Walmart over Amazon. While that doesn't indicate Amazon is on their way out anytime soon, it does mean Walmart's is gaining considerable traction.
Walmart's Partnership with Shopify
In June 2020, Walmart announced their formal partnership with Shopify—one of the leading eCommerce tools for small businesses—in a bid to increase their share of the overwhelmingly competitive digital retail landscape dominated by Amazon.
Investors took notice. Shopify's shares increased by 7.1 percent immediately following the announcement, heralded by the likes of Forbes magazine as a “stroke of omnichannel genius.”
Except it isn't. At least, not necessarily. In May 2020, Shopify previously established a formal partnership with the Facebook Shops to help sellers establish customized storefronts via Instagram and Facebook.
What many presumed to be a forward thinking gamble two years ago turned out to be little more than a crapshoot in retrospect. As of October 2022, Facebook Shops has yet to catch on, in spite of early hopes and Shopify's partnership.
All of this may be food for thought for investors. But what does it mean for sellers?
An Advantage For Shopify Sellers?
Shopify may have over one million sellers currently using its platform. But only 1,200 will be eligible to take advantage of Walmart Marketplace—specifically those which have a proven “track record of exceeding customers' expectations,” whose products align with Walmart's reputation. Those few that are eligible will gain access to a robust online audience reportedly in excess of 100 million unique customers per month.
That sounds like a plus for any small or medium sized business. And that's the target business audience Walmart promises will benefit from the partnership.
But a closer examination of just who's selling on Shopify includes the likes of Hasbro, Crabtree & Evelyn and Tesla—companies whose track record far exceeds customer expectations.
It's been estimated that larger businesses account for close to a quarter of Shopify's annual sales. And given Walmart's promise of providing customers with rock bottom prices, the likelihood of the partnership being strictly limited to small businesses isn't likely to be all that high.
All of which means if you're a smaller Shopify seller competing against big draw brands, you may have to face a much lower profit margin; something few small businesses can afford.
Walmart Marketplace Channel Restrictions
But there's an even bigger problem with this stroke of “omnichannel genius.” It's the potential for channel restriction being limited to Walmart Marketplace.
Walmart doesn't currently offer multi-channel fulfillment (MCF.) In fact, they tend to frown on merchants selling through multiple channels and actively prohibit sellers using Amazon's MCF. Amazon in return has been known to penalize users offering lower prices on competitive channels.
It's a Catch-22 your business may want to consider first.
A Proven Track Record Of Partnership With Walmart?
2016: Walmart enters into a partnership with Uber and Lyft to provide grocery delivery services to compete with Amazon. The partnership with both companies was dissolved two years later in order for Walmart to focus on their other delivery solutions.
2016: Walmart acquires Jet.com for $3.3 billion in an attempt to focus their online strategies towards a younger, city-dwelling audience. Four years later, Walmart announced it would be discontinuing the Jet.com brand, indicating the acquisition was “critical to accelerating our omni strategy."
2017: Walmart acquires online footwear retailer Shoe Buy through its then-subsidiary Jet.com. The company remains active under the name Shoes.com.
2017: Walmart acquires highly successful apparel retailer Bonobos for approximately $310 million. The company continues to be successful, despite highly publicized corporate departures and layoffs
2018: Walmart partners with Google backed startup company Deliv in another attempt to compete with Amazon's grocery delivery solutions. Less than a year later, Deliv dissolves the partnership, with sources claiming the retailer was unable to process orders quickly enough.
Can Your Shopify Store Succeed on Walmart Marketplace?
Chances are your Shopify store may be able to succeed through Walmart's partnership. Walmart doesn't just have name recognition. Their seller support and order fulfillment resources are well-established, in addition to already maintaining a highly visible and increasingly loyal customer base.
But you will have to take into account Walmart's limitations. That customer base is loyal largely because of their price advantage. And with the threat of inflation looming over many shoppers, saving money can come with a much heftier price tag for smaller sellers.
For another, Walmart has a seller vetting process which isn't just notoriously slow. It can also be confusing and intricate, with merchants sometimes waiting well within excess of a month before even receiving approval. And if you have yet to exceed customer expectations on Shopify, you may find exclusively selling through Walmart Marketplace to be an uphill battle.
We're fully aware that eCommerce isn't just a highly competitive landscape by default. In many ways, it needs to be. It's still relatively young compared to its physical counterpart; a counterpart which Walmart's proved highly adept in dominating. What we're suggesting is to review the options that make sense for your brand growth.
Piggybacking on Walmart's shoulders can get you there—but it comes at a certain price. Just make certain the price is to your advantage.
Looking to grow your Shopify store through Walmart? We can help. Find out more at Color More Lines