While the worldwide pandemic has made the state of offline retail stores take a turn for the worse since 2020, the scenario has been completely opposite for Ecommerce, however! With stores and marketplaces shutting down, more and more people have turned towards buying their essentials and not-so-essentials online, and due to the convenience that online shopping offers, the trend hasn’t died down even when the Covid pandemic almost has.
That being said, this shift has brought in a good tide for online retailers, and the question of which online marketplace to choose to sell their wares has been burning at the back of their minds for long. Among every other marketplace, the two that have been prominently leaving their mark are Amazon and Walmart – and the competition between them has been going neck to neck as far as features and conversions are concerned.
As an online retailer, if this is a question that has plagued your mind, we will make it a wee bit easier in this comprehensive guide!
Amazon vs. Walmart Advertising: A Preview of Your Battlefield
With the battle still raging between the two retail giants in more ways than one, it would be prudent to take an overview of each of them before emerging into the comparisons:
Amazon-The ECom Juggernaut
What started as a humble book-selling platform in the garage of Jeff Bezos’s rented home in Seattle in 1994 has now emerged as the biggest name in online retail and has marked its place in one of the Big Five alongside Apple, Facebook, Google, and Microsoft.
At present, Amazon has control over nearly 40% of the eCommerce market in the US.
Walmart comes in second with a little over 5 percent, with eBay close behind it.
Success in the eCommerce world aside, Amazon also owns Twitch, The Washington Post, Joyo- the Chinese online selling giant, and Whole Foods.
Walmart – The Emperor of Brick & Mortar Retail
Unlike Amazon, which began its online journey from its very inception, Walmart’s genesis follows a more traditional history and is, in fact, a lot older.
Sam Walton in Arkansas opened the first Walmart store in 1962 with the key principle of offering excellent service at low prices – a motto that the company carries to this day.
Some quick facts about Walmart:
- Walmart operates over 5,000 retail units in the US alone;
- The employee strength stands at roughly 2.3 million people worldwide;
- Nearly half of the 125,971 Walmart Marketplace sellers had joined just last year;
- With a massive revenue of $524 billion for 2020, the brick and mortar retail chain has secured the number one place in the Fortune 500
- Despite its vast physical presence, Walmart’s eCommerce footprint is comparatively still small.
Walmart’s slow transition to eCommerce began when it launched Walmart Marketplace in 2009, opening doors for third-party sellers and evolving into a viable eCommerce channel for established businesses.
Its growing portfolio of eCommerce brands includes Bonobos, Hayneedle, and Moosejaw.
Amazon vs. Walmart Selling: A Categorical Comparison
The professional selling plan for Amazon costs $39.99 a month with a referral fee for each sale, usually ranging between 8% and 15%; Several categories may charge as much as upto 20%, however. Amazon also has the policy of a minimum referral fee per category, although there are no separate listing fees.
Some categories (like media) come with service fees or additional closing fees that are generally variable. The vast majority of Amazon sellers, about 73% – if we are talking about stats- also pay Amazon FBA fulfillment fees, determined by unit or weight. Storage fees are charged separately, as are many other related services (FBA label service, returns processing, and removal orders, to name a few). These fees can quickly stack up if you’re not keenly aware of how they work or how your inventory is performing.
On the other hand, Walmart does not charge any amount for setting up an account, although it imposes a referral fee of 6% to 20%, depending on the item type, just like Amazon. No other selling fees are charged by Walmart either, and it has an unlimited Listings setup policy.
Ease of Selling
Right off the bat, we can tell you that it is way easier to start selling on Amazon, even if you are new to the game. Applying for Amazon is as easy as just filling out their forms, verifying your identity, and providing the billing information where you will be charged for their services.
On the other hand, Walmart Marketplace is much more selective and favors established sellers who have already navigated the complex waters of an eCommerce business.
Walmart also looks at things like reputation, sales records, and seller ratings in deciding who to let in, which means that if you’re not already running a business, Walmart is practically a no-go.
One of the obvious pros of selling on Amazon is the well-established Fulfillment by Amazon (FBA), which takes most of the inventory management work off your hands and into their extended fulfillment centers.
The services include storing, picking, packing, shipping, and handling returns for your products.
In February 2020, Walmart launched its fulfillment services by the name of Walmart Fulfillment Services (WFS), which provides its sellers with the same inventory management services offered by FBA.
One crucial difference between FBA and WFS is that Walmart requires its products to be shipped into fulfillment centers only within the United States.
In contrast, FBA allows you to import your products from outside the US and store them inside Amazon’s warehouses.
Competition for Sellers
Currently, Amazon hosts 2.4 million active sellers worldwide. This colossal share of Amazon in the eCommerce field signifies a much higher potential for sales. The downside is that the highly saturated community of sellers makes it much harder to make your products stand out.
With roughly 70,000 users in its arsenal, Walmart stands at a position way behind Amazon as far as user number is concerned. However, Walmart’s steep entry challenges and selectiveness in admitting sellers make for a less competitive marketplace, which is a plus point if you want your products to get more exposure.
With a more extensive user base and customer traffic, conversions are more likely to happen on Amazon, leading to greater profits despite the fees. The far-reaching popularity of the platform is also a definite plus for sellers looking to progress in their businesses.
Since Walmart is founded on the policy of offering low prices and great service, there are specific rules that you must follow to avoid having your listings automatically unpublished.
The two most important are:
- Price Parity Rule: Walmart will automatically unpublish items if they can be bought for less from the same seller on a competitor’s website (including shipping costs);
- Price Leadership Rule: Walmart will automatically unpublish items if a customer can save by purchasing the same thing on a competing website, regardless of the seller (including shipping costs).
Since you have less control over Walmart pricing than Amazon, your profit margins might not be as high as you would like them to be.
From the analysis we have undergone above, Amazon may stand out as the more practical choice any day. Still, it is not sans flaws either – steep account fees, complex inventory navigation, and additional advertising costs being some of them. But with an experienced Amazon PPC management firm on your side, the task gets way more manageable.
On the other hand, despite starting traditionally, Walmart is catching up fast to the fad of ECommerce and is believed to become an even stronger competitor to Amazon than it already is in the coming days. Where you want to place your bets is on you, it can even be both – but if you find navigating these complexities too much to handle on top of managing a business, you can always approach our experts at Sellryt – a trusted Amazon advertising partner – for both!