With slashed prices and unbelievable discounts, Walmart has become the go-to for all types of shoppers — from frantic parents on a last-minute diaper run to college students looking for the best deals on late-night snacks.
And it’s not over yet.
Walmart plans to grow even more, both physically and logistically. With the help of Walmart Fulfillment Services (WFS) launched in 2020, the mammoth-sized retailer plans to host over 200 million e-commerce items by the end of 2023.
Given the amount of competition in this space, it’s amazing that Walmart Marketplace hasn’t only stood its ground but has also developed one of the best supply chains in the world.
So, why is this a good thing for sellers?
If you’re already a seller on Walmart Marketplace or you’d like to sell there in the future, the WFS model can add stability and support — and increase your business’s bottom line. By taking advantage of Walmart Fulfillment Services, you can tap into the number one ranked marketplace in customer loyalty and boost sales without stressing about inventory.
In today’s article, we’re taking a closer look at how Walmart Fulfillment Services works, and the unique challenges and opportunities it has in store for sellers. We’re also taking a look at how Walmart Fulfillment Services stacks up against one of its top competitors, Fulfilled by Amazon.
Ready to learn more?
Here’s what we’re covering today:
The Scoop on Walmart Fulfillment Services
- First, how does Walmart Fulfillment Services (WFS) work?
- What’s so great about WFS for sellers?
- Walmart Fulfillment Services vs. Fulfilled By Amazon: What’s the difference?
- Making the choice: WFS challenges and opportunities for sellers
Psst…if you’re thinking about expanding to Walmart Marketplace, don’t miss our complete online retailer’s guide to selling on Walmart.com!
First, how does Walmart Fulfillment Services (WFS) work?
Walmart Fulfillment Services prides itself on helping sellers set up and scale their WFS sales quickly and efficiently. Its mission? Providing the tools third-party sellers need to grow their businesses sustainably.
To start selling through WFS, create an account on Walmart Marketplace and set up your products in the Seller Center. Once your application is approved, you can ship your inventory to a WFS warehouse. And that’s it! WFS takes care of everything else from that point on, including storing, packing, shipping — and even, customer assistance. (Insert heart eyes here.)In other words, WFS takes care of the heavy lifting for you, so you can focus on more important things, like product development and growing your business. Or, you know, lounging around in your pajamas, if that’s your jam.
Some other perks WFS offers sellers include:
- Low-cost two-day shipping
- Higher search rankings
- Improved visibility and conversions
- Quick two-day stocking
- Personalized optimization recommendations
WFS is especially helpful for sellers that have a high volume of products that are easy to pack and ship.
What’s so great about WFS for sellers?
From affordability to end-to-end fulfillment, WFS offers many incentives to its sellers. Let’s take a closer look at how WFS can benefit your business.
- Faster delivery
In a 2019 survey, 40% of online consumers in the US said they were willing to wait two days to receive a delivery. Only 2% said they were willing to wait more than a week…yikes! As an independent seller, navigating production, order management, and shipping is a daunting task at best.
That’s where WFS swoops in to save the day with its order management and shipping features.
WFS also offers a Free & Easy Returns program, so you don’t have to worry about managing returns and exchanges either. This is gold people!
- Takes over customer service
Providing fast and quality customer support (CS) is essential to business success. But we all know how time-consuming handling customer issues can be. One of the biggest perks of using WFS is that it handles CS for you — at least, to a certain point. While WFS can’t provide direct support for product issues, it can help customers navigate shipping, handling, and product exchange issues.
However, it’s important to note that you’ll still need to keep tabs on any product quality issues customers may bring up.
WFS’ customer-centric model aims to ensure that a certain standard of quality is maintained across all of its products, so if you get too many complaints, you could get banned from the platform.
- WFS gives sellers a visibility boost
With most e-commerce marketplaces, sellers can list their products for free, which encourages more retailers to sign up. This increases competition for visibility because customers can choose cheaper products.
Walmart Marketplace, however, has a thorough vetting process. The standards for getting approved are high. Walmart.com judges sellers based on their experience, product catalog, and customer satisfaction levels.
While the vetting process can be overwhelming, it can also be worthwhile — especially for sellers taking advantage of WFS. In other words, once you’re in, your products are more visible and accessible than ever.
For example, WFS items are displayed with ‘TwoDay Delivery’ and ‘Fulfilled by Walmart’ tags which help grab shoppers’ attention and keep the conversions coming.
- Transparent cost structure
Unlike other marketplaces (looking at you, Amazon FBA), the WFS cost structure for sellers is pretty transparent.
The WFS Calculator is a great way to estimate how much you might be spending on fulfillment services, so you can take this information into account as early as the production phase.
In a nutshell, WFS storage prices are based on volume. Sellers have complete control over how much inventory they want to store in Walmart’s warehouses, and how much they’re willing to spend on storage fees. Many fulfillment services, including FBA, require sellers to buy a subscription package and then go on to charge heavy fees based on product dimensions, seasonality, and delivery needs.
These variations can make it difficult to plan ahead financially.
Rather than committing to a subscription, walmart.com sellers can start with a smaller inventory, significantly reducing the fulfillment prices they pay The bottom line? The control you get with WFS is especially important if you’re not quite sure how your business will perform on Walmart Marketplace.
- Simplified storage and order management
Keeping up with inventory is a full-time job. From finding the right partners to managing stale shelves, inventory can significantly increase your business’ overhead costs.
And it’s not going to get any easier.
In fact, a 2021 report predicts that the US will need an additional 330 million square feet of space just to keep up. Say what? That’s why Walmart’s storage option is the frosting on top of its seller-incentive cake. And, it also helps with inventory tracking. With this approach, sellers can take a slightly more ‘hands-off’ supervisory view of their order management.
By keeping track of big-picture inventory handling, such as focusing on top-selling goods, both WFS and its sellers can promote high customer satisfaction.
Walmart Fulfillment Services vs. Fulfilled By Amazon: What’s the difference?
Walmart Fulfillment Services’ biggest opponent in the ring is Fulfilled By Amazon, aka FBA. While Amazon is still at the top of the e-commerce marketplace food chain, WFS is slowly gaining speed. With that said, let’s take a look at how WFS and FBA stack up against each other.
Where does WFS win?
Here are three ways WFS beats Amazon FBA:
- Less competition
Walmart’s stringent vetting process cuts ties with brands that aren’t up to the mark, which means there are far fewer sellers — we’re talking 30k to FBA’s 3 million. This reduces competition for storage space, which allows WFS to keep more inventory and provide faster delivery.
Less competition also gives way to more sales and visibility since customers aren’t flooded by numerous brands selling similar items. Couple this with its featured listings, such as 2-day shipping, and the opportunity for sales increases even more.
- Cost structure
WFS lays out a cost structure specific to each brand.
The cost is based on the size and weight of your products, which means there’s no blanket subscription fee. This transparent cost structure makes it easier to calculate future ROI before signing on to WFS — an advantage not currently offered by FBA.
- Personalized support
WFA provides customized support to sellers as part of its package. This means, you not only get support to resolve issues, but you also receive feedback from leading WFS fulfillment experts on how to make the best use of the platform.
FBA, on the other hand, charges an additional fee on a monthly and per-product basis for the same level of support.
Where does FBA win?
Here are two ways FBA beats WFS:
- Lower barrier to entry
When it comes to providing a platform for new brands, FBA makes it easy.
Since FBA doesn’t have an intense onboarding process like WFS does, new sellers can get started quickly. However, this also means there could be an influx of new sellers every day, which can significantly increase competition.
- Synonymous with online shopping
When somebody brings up online shopping, you immediately think of Amazon, right? Since Amazon has become synonymous with the term “online shopping” you might end up getting more eyes on your store, faster than you could with WFS.
PS: Already killing it on Amazon? Here’s how to know if now is the time to expand to Walmart Marketplace.
Making the choice: WFS challenges and opportunities for sellers
When it comes down to it, WFS works better for some brands, while FBA is the optimal choice for others. Some brands also sell on both platforms.
Whatever your situation is, be sure to iron out all of the financial and inventory details before choosing one — or both platforms.
You’ll also need to consider marketplace fulfillment thresholds.
The gist? If you have a lot of products but only sell a few units per month, using Walmart could lead to revenue loss. But if you have fast-selling, large quantity items, WFS can be a cost-effective, revenue-boosting option for your business.
Amazon’s fluctuating fees might also make WFS a more consistent and accurate fulfillment service for any seller lucky enough to get into Walmart Marketplace.
In the end, WFS and FBA aren’t mutually exclusive. The path you choose will depend on your unique business needs and goals.
So whether you pick one or the other, or whether you opt for a multichannel approach, be sure to weigh out all of the pros and cons before making a decision. Ecommerce is booming, and traditional banks and funding partners are still catching up. At SellersFunding, we’re changing the way e-commerce sellers scale by providing them with fast, flexible funding options they can’t find anywhere else. Watch our quick, two-minute demo to learn more about how we can help you scale.