Walmart is often viewed as the Goliath to small businesses’ David, stomping out local retail competition and dragging down employee wages with every new location they open.
Whether or not that reputation is justly earned, with over 11,000 stores worldwide and $524 billion in annual revenue, it’s no wonder Walmart is still seen as the original ‘retail giant.’
For brick-and-mortar retailers, the so-called ‘Walmart Effect’ is old (albeit still frustrating) news. Meanwhile, online retailers — who aren’t limited to a local customer base — haven’t had to worry about it all that much, at least when compared to other retail giants (looking at you, Amazon).
That is, until Walmart Marketplace emerged as a new player in the e-commerce market.
Walmart’s online sales got a serious boost during the pandemic, and as the balance of online vs. in-store shopping continues to grow, you can bet they won’t be left behind.
So, what does this mean for online retailers — especially now that Shopify sellers can easily bring their products to the Walmart Marketplace? Will the ‘Walmart Effect’ come into play? Or is Walmart actually helping small businesses “live better”?
In this article, we’ll bring you the inside scoop on whether that notorious ‘Walmart Effect’ is something your online business should worry about, as well as the pros and cons of being a Walmart seller.
The ‘Walmart Effect’ and its negative impact on small businesses derives from the company’s enormous buying power, which enables them to dictate to wholesalers and offer lower prices to consumers. It can even impact suppliers who have to drive down their own production costs to make their relationship with Walmart profitable.
At least, that’s the part that usually gets all the buzz: ousting mom-and-pop stores, turning downtowns into ghost towns, etc.
The reality of the ‘Walmart Effect’ is it’s not all bad: In addition to curbing inflation and helping consumers save money, some research has shown Walmart’s presence may actually boost entrepreneurial ventures and drive economic progress. 🚀
Since 2013, the company has also hosted annual Open Call events, inviting small businesses from across the country (and around the world) to pitch their US-manufactured products for in-store placement at Walmart and Sam’s Club.
Of course, the rules of engagement are a bit different online than they are for physical stores. Instead of foot traffic, you’re competing for online traffic; rather than real estate, you’re fighting for SERP positions.
There’s no doubt Walmart is coming into the game with deeper pockets than most small online businesses can dream of. So, e-commerce SMBs have good reason to be intimidated by the Big W.
But online retailers also have an opportunity that their brick-and-mortar, mom-and-pop predecessors didn’t have when Walmart first came to town: the Walmart Marketplace.
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Like other online marketplaces, the Walmart Marketplace allows professional retailers to sell products on their platform alongside Walmart’s own inventory. By partnering with Shopify, Walmart has also made it even easier for online sellers to take advantage of what they have to offer.
Though it’s not everyone’s dream, one of the biggest retail growth markers is getting your products in a big box store like Walmart. For the right brand, selling on Walmart Marketplace can be as good as having in-store placement — but it’s not right for everyone.
So, how do you know whether to join the retail giant or steer clear? Here are some of the challenges and benefits prospective sellers should consider before selling with Walmart.
According to Laura Phillips, Walmart’s senior VP for global sourcing and US manufacturing, “No other retailer provides small businesses with as many channels and avenues to success.”
So, that’s a yes then.
It’s clear the company has made an effort to create a great Marketplace experience for customers and sellers alike. The strong suite of tools, programs, and other support resources are designed to help sellers succeed. Plus, the platform’s high seller and pricing standards help protect brands (and consumers) from bad and illegitimate sellers.
Though the Walmart Marketplace is still relatively new in the e-commerce world, there are already quite a few small businesses — and bigger brands too — who have benefitted from the opportunities Walmart offers.
All that said, the challenges of selling with Walmart shouldn’t be discounted. If you’re new to online retail, Walmart isn’t going to give you a boost until you’ve got a proven track record. And even if you do make it into their exclusive partner lineup, you’re still subject to some pretty ruthless rules.
