The Supply Side: Walmart Marketplace a launching pad for smaller companies

Walmart continues to grow its online marketplace business. The retailer has more than 200,000 active sellers and has added 44,000 sellers in the past few months, according to Marketplace Pulse, a data analysis firm.

Kantar reports Walmart has more than 120 million shoppers each week on its marketplace, and 37% of U.S. consumers surveyed by the retail consultancy firm found Walmart to be a top shopping destination.

At Walmart’s recent Open Call event in Bentonville, a majority of the 650 companies pitching to buyers were already selling on the marketplace platform, which continues to grow. The marketplace expansion reflects Walmart’s broader strategy to blend online and offline retail. With more than 420 million products now available on Walmart.com — 95% from marketplace sellers — the company is leveraging its 4,600 U.S. stores for order fulfillment while expanding selection through third-party merchants.

Leah Platz, Walmart senior vice president of merchandising excellence, said during Open Call that 60% of Walmart’s suppliers are deemed small businesses, and they play a role in the company’s ability to serve customers.

“We want to be the best place that you can come to sell, but we know that it’s not always easy to get started,” Platz said. “So fast forward to earlier this year, we started a ‘Grow With Us’ program, the first of its kind for us. It consists of four parts: a learning track, a discovery track, a mentorship track and a financing track.”

Walmart makes 30 classes available online that can help new suppliers with retail, marketing and business fundamentals. She said it covers the basics, whether a business is starting or figuring out how to get that first purchase order to the customers with accuracy.

Platz said one of the easiest ways to get products discovered is to become a marketplace seller on Walmart.com. She said companies can become part of the digital business and start selling online quickly. She said Walmart also provides mentors to help with the setup and growth planning phases. Walmart also helps small companies with financial hurdles. She said there is an early payment option made available to small businesses as well as a loan marketplace that helps to pair borrowers with lenders.

Manish Joneja, senior vice president of U.S. Walmart Marketplace, also spoke at the Open Call event about the benefits of marketplace for companies wanting to get their foot in the door.

“The future of retail is not first party [items Walmart buys and resells] or third party, items that suppliers sell to Walmart customers,” he said. “It’s first and third party — all of it.”

Marketplace is a way for brands to get their products discovered. He said Walmart furnishes the demand and provides suppliers with tools to help with fulfillment, delivery and targeted ad searches as ancillary fee-based services. He said there is limited shelf space in the physical stores, and it’s impossible for many brands to get all their products in stores.

“What marketplace does is empower you to bring your entire catalog of items online,” he said. “We know what the demand is. So we have our data teams that actually figure out what customers are looking for, what speed they’re looking for and what price they’re looking for. So when you come into a marketplace environment and expand your assortment, you can think of this as a testing ground. … You can actually push product innovation through it, and that resonates really well. We’ve seen more and more suppliers becoming sellers, and large sellers are becoming suppliers.”

David Guggina, chief e-commerce officer at Walmart U.S., said recently at the Goldman Sachs retail conference that marketplace is a differentiator in Walmart’s growing online business around the globe.

“We have software systems that look at the ecosystem of retail globally and then identify what we call in-demand items,” Guggina said. “We want to have those in-demand items in our network — our marketplace and first party. We had a brand called Arctic that makes insulated cups and coolers. Arctic started as a marketplace seller and used Walmart’s fulfillment services to give expedited delivery to customers. Walmart then deployed it in more and more fulfillment centers, and it performed incredibly well. Then we ended up stocking Arctic in thousands of stores. And today you’ll find the brand in most stores, and Arctic has become a first-party supplier.”

Guggina said many marketplace partners are third-party sellers and first-party suppliers for some items.

“Say you have 100,000 SKUs [items] that are sold in the Walmart marketplace,” he said. “You may have a few hundred items in a thousand stores. You may have 10,000 items that reside in fulfillment centers, and then you may have the other 90,000 other items that reside in our marketplace. Maybe some are fulfilled, and others are part of Walmart’s fulfillment services or in-house operations.”

He said grocery and fresh food are huge differentiators on Walmart’s marketplace.

“If you think of inventory as head, torso and tail, head inventory moves the fastest, then you’ve got torso items that move slightly slower,” he said. “And then you have a long tail of items that people purchase less frequently. Grocery is the fastest-moving item, and we are the largest grocer in the U.S. And what that means is that the frequency with which customers are coming through our platform is significant, and as they learn more about us and our capabilities and noted fast delivery, they’re reaching deeper into the torso inventory for other higher-margin goods like fashion and home.”

He said Walmart sells tires in its stores, but it has more than 100,000 tires sold online in a disaggregated supply chain with more than 2,000 U.S. distribution hubs, which provide tires wholesale to retailers and auto service dealers. Also, Guggina said Walmart operates 2,500 auto care centers in its U.S. stores, and the retailer has connected the online marketplace tire sales business with in-store auto care business.

“We now can take marketplace tires and have them delivered to a store and installed on a customer’s vehicle,” Guggina said. “If the customer can’t find the tires they need in stores, then the marketplace will likely have them. You can schedule a tire installation at a supercenter on the Walmart app. A marketplace seller can move those tires to your local supercenter for installation. And while you wait, maybe you like fishing and can get some new lures, or maybe you need to complete your weekly grocery shopping, and you can do that as well. That’s a way that our marketplace works with our store capabilities.”

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 is sponsored by HRG.