By Business of Fashion
Walmart Inc. has removed rules requiring sellers on its marketplace website to be registered in the US — an attempt to close the e-commerce gap with Amazon.com Inc. and tap into China’s vast network of manufacturers.
This month, the world’s largest retailer began opening up its third-party marketplace to foreign sellers, who no longer need a US address or business tax identification. The vendors will still be carefully vetted, both locally and by Walmart’s global trust and safety team, to prevent the listing of unsavoury items. The new sellers will make up just a fraction of Walmart’s total seller population, which is mainly based in the US.
Walmart is looking to expand its marketplace, where suppliers can offer their products via the company’s website, and the services that branch off of it, like fulfilment and advertising. For retailers, marketplaces are attractive because they provide revenue from fees without the cost of storing inventory. Last year, Walmart began offering fulfilment services for its marketplace sellers, a move that Amazon made 15 years ago. Sellers can also purchase advertising on Walmart’s websites, which supports the company’s new Walmart Connect media platform.
Chief Executive Officer Doug McMillon has said that Walmart’s marketplace business is a “huge opportunity” for the retailer, and in February told investors that Walmart would make a “greater push” to expand new services like fulfilment.
“We have strong relationships with many reputable companies around the world and we have some of the most rigorous seller requirements in the industry,” Walmart said in an emailed statement. “As a result, we are opening our US marketplace to a limited number of international companies who share our commitment to customer trust and safety.”
There are risks to opening the doors, however. Walmart’s marketplace, along with Amazon’s, has faced criticism over the years for carrying offensive items like Confederate flags. Several years ago, Walmart pulled about 20 million items off the marketplace that failed to meet its quality standards. Though Amazon’s marketplace is open to virtually anyone who goes through an online registration process, Walmart’s is invite-only so it can vet sellers. Walmart has also made deals with Shopify Inc. and BigCommerce Inc. over the past year to widen its reach.
For Chinese manufacturers, US marketplaces have become a popular way to reach American customers. Nearly 40 percent of all Amazon marketplace sales to US shoppers come from Chinese merchants, according to researcher Marketplace Pulse, which monitors the site. In January, Chinese merchants represented 75 percent of new Amazon marketplace sellers, the firm found, and Walmart will likely see a similar ratio.
“This will get Walmart more selection, more affordable goods that already dominate Amazon best-sellers lists,” said Juozas Kaziukenas, founder and CEO of Marketplace Pulse. “To an investor, that reads as positive news.”
The move was noted earlier by Chinese e-commerce publication Ebrun.com, but hasn’t been reported outside of China.
More than 60 percent of the $532 billion global shoppers will spend on Amazon this year will go to marketplace merchants, according to researcher eMarketer. Amazon charges a commission — typically 15 percent — on each transaction plus additional fees for warehouse storage, packing and delivery. Amazon also charges its marketplace merchants to advertise on the popular website. Amazon’s advertising business will grow 30 percent this year to reach $23 billion in sales, according to eMarketer.
Walmart doesn’t disclose how many marketplace sellers it has, but Marketplace Pulse pegs it at about 80,000. Walmart carries more than 80 million unique items online. Not all of the new vendors will be based in China.
While the company is opening up its marketplace to international sellers, it’s also making a push to stock more US-made products in its own aisles.