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 scoop on how Walmart affects small business
- Let’s talk about the ‘Walmart Effect’
- What Walmart’s effect on small businesses means for your e-commerce store
- Golden opportunity… or golden handcuffs?
- 3 major challenges for Walmart sellers
- 6 awesome benefits for Walmart sellers
- Is the Superstore becoming a small biz superhero?
Let’s talk about the ‘Walmart Effect’
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.
What Walmart’s effect on small businesses means for your e-commerce store
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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Golden opportunity… or golden handcuffs? ⚖️
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.
3 major challenges for Walmart sellers
- The biggest challenge for Walmart sellers is actually becoming a seller in the first place. Walmart has far stricter seller standards than other marketplaces, which means you need to have a strong performance history to be considered.
- In a similar vein, Walmart takes their reputation for low prices very seriously. As a seller, your products may be delisted without warning if their price monitoring algorithm finds identical products for sale on another site or marketplace at a lower price.
- You can’t get something for nothing. Like other marketplaces, you’ll pay a fee to sell with Walmart. Their referral fee structure ranges from 6% to 20%, depending on the product category, with most categories charged around 15%.
6 awesome benefits for Walmart sellers
- The most obvious advantage of selling on Walmart Marketplace is the ability to get your products seen by Walmart’s sizable audience. And given the massive 74% surge in e-commerce sales during the pandemic, it’s an opportunity that’s getting bigger all the time.
- Although it may be difficult to become an approved Walmart partner, it just goes to show how hard the company is working to create a curated shopping experience for their (and hopefully your) customers.
- Walmart offers a wealth of resources — including powerful analytics tools like the Listing Quality Dashboard — to help sellers optimize product listings and earn more sales.
- When selling with Walmart, you can also take advantage of brick-and-mortar locations to offer painless returns for your customers — and improve customer satisfaction.
- Walmart understands customer expectations on delivery speed, so they offer several expedited shipping programs and their own fulfillment service to make speedy shipping even easier for sellers.
- Approved Shopify sellers can seamlessly list items on Walmart.com thanks to Walmart’s new partnership and integration.
Is the Superstore becoming a small biz superhero?
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.