The Supply Side: Marketplace an expanding growth engine for Walmart

Walmart’s Marketplace business helped the Bentonville-based retail behemoth cross $100 billion in online sales last year. That was a milestone, but Walmart is doubling down with its bet that the business has plenty of room to run.

In the recent quarter, Walmart CEO Doug McMillon said marketplace sales grew 32% year over year, and in Mexico, marketplace sales grew 60%. The Marketplace platform provides a space for third-party sellers to use Walmart’s reach and technology.

Walmart Marketplace has achieved more than 30% sales growth in each of the past four quarters and is driving the retailer’s sustained e-commerce success. Walmart’s U.S. e-commerce business has delivered double-digit growth for six consecutive quarters. The number of sellers listing items on Walmart.com grew 20% last fiscal year, the retailer said at its recent Let’s Grow Marketplace Seller event that took place in San Francisco in late August. The event was designed to recruit more sellers to the site.

“We’re executing strategic priorities at Walmart that are helping us to become the customers’ first choice — every day, every season, for every item. Walmart Marketplace is a key component of that mission,” said Tom Ward, chief e-commerce officer, Walmart U.S.

Walmart’s marketplace is now second only to Amazon with more than 410 million unique visitors to Walmart.com each month. Statista reports Walmart Marketplace sellers surpassed 150,000 earlier this year with more than 400 million items. On Walmart’s marketplace site, brands like Toms, Eddie Bauer, Dooney & Bourke and Prada are selling wares to customers in all income brackets.

Latriece Watkins, chief merchandising officer at Walmart U.S., said 30 Walmart merchant buyers attended the year’s event to meet and strategize with marketplace sellers. McMillon said Marketplace is a way Walmart can reach everyone, and it also allows Walmart to work with entrepreneur sellers and multinational manufacturers to ensure customers can find the brands they want. Marketplace also provides additional revenue to Walmart and allows for ancillary service revenue from fulfillment, advertising and data-sharing services offered to sellers.

Jason Goldberg, chief strategic officer at Publicis Groupe, said Walmart’s marketplace is a big reason why its online sales continue to grow by double digits and also why it has more stable income generation in recent quarters. He said Marketplace allows Walmart to compete head-to-head with just about any retailer on the products consumers want, which is why the retailer is gaining market share.

NEW MARKETPLACE SERVICES
Walmart made several announcements during the August event in San Francisco. Walmart Fulfillment Services (WFS) announced new ways for sellers to move merchandise across markets and use Walmart to fulfill any e-commerce retail order.

Matt Lehr, co-founder of Cate & Chloe, a jewelry brand that sells on Walmart Marketplace, said WFS has been a game-changer for his company.

“One of the reasons we chose WFS is that we needed to expand our growth and that was challenging to do with our internal fulfillment team. We had already been selling on Walmart Marketplace and having some great success, but before WFS, we were struggling to keep up with the demand,” Lehr said.

He said customers want their products in one or two days, and without Walmart, such delivery was not feasible with his logistics capabilities.

Walmart will fulfill orders and manage returns while offering plain, unbranded packaging, fast, reliable shipping and competitive rates averaging 15% lower than the competition. Walmart is launching the program on Sept. 10, in time for holiday deliveries.

Also, through its new Walmart cross-border import service for full-container-load shipments, WFS can now handle transportation of inbound goods from ports of origin in Asia directly to U.S. WFS facilities. Walmart is also opening its carrier network to sellers for full truckload shipments. Sellers using the Walmart preferred carrier program through WFS can now choose to ship a few items or an entire truckload at special rates through carriers vetted by Walmart.

STORE CONNECTIONS, GROWING INVENTORY
The combination of Walmart’s digital and physical channels is a force multiplier for Walmart Marketplace, according to Manish Joneja, head of marketplace and fulfillment services at Walmart. He said no other marketplace can offer Walmart’s broad customer reach, physical proximity and seamless integration of digital, and physical convenience.

“Sellers are looking for a smart path for growth,” said Joneja, “We’re bringing all the pieces together to be much more than a marketplace and investing in new ways for sellers to serve customers as we grow together.”

Walmart previewed Walmart LocalFinds to bridge the gap between online and offline shopping with direct pickup and delivery from sellers’ physical stores. It introduces a new way for customers to discover sellers’ merchandise in their vicinity. Paired with Walmart’s last-mile delivery network, Walmart LocalFinds improves delivery speeds and connects shoppers with local businesses through Walmart’s digital channels.

Walmart said this service will launch in Atlanta and Dallas this fall, with other cities to follow. Walmart said 1-800-Flowers.com is the first nationwide seller to participate. Walmart also is trying to boost sales in the beauty category with its new Premium Beauty offering. The new brand has more than 20 new items in the initial assortment of skin care, hair care and hair tool products.

Walmart Marketplace also is introducing Resold at Walmart, its first digital destination for cross-category and pre-owned items from sellers. The market will have 5 million items from more than 1,700 sellers. A new Collector shop tool allows sellers to enable preorders to build customer anticipation for product launches, including releases exclusive to Walmart.

Walmart is enabling several solutions for sellers to support holiday readiness. Walmart said it listened to sellers and their customers to reimagine the Global Seller Center app that provides easy signup for eligible sellers in any market, so they can cross borders by selling in the U.S., Mexico, Chile and Canada. The first sellers to sign up after attending the Let’s Grow event got access to cross-listing capability and free translations.

Walmart also is waiving peak season storage fees for sellers who inbound their inventory to WFS fulfillment centers through Sept. 30. Sellers are encouraged to send their inventory as early as possible to meet customer demand for holiday deal shopping and Walmart events. Walmart is also providing access to capital for qualified sellers in the form of cash advances up to $5 million.

There is also a new Deals Dashboard on the site that should make it easier for sellers to enroll items in Walmart’s deals events. The feature provides sellers with more data and insights to improve the quality of offers and make more deals available to customers during the holidays.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Firebend.