Amazon has long dominated online marketplaces in the US. However, in 2020, Walmart launched a series of initiatives that would borrow from Amazon’s learnings to bring Walmart into a competitive position, such as Walmart Fulfillment Services and a subscription service, Walmart+ (Walmart Plus).
The success of these initiatives immediately underwent a trial by fire as the coronavirus pandemic swept the US. Amidst quarantines and dramatic swings in consumer buying behaviors, Walmart’s online segment has conducted itself admirably.
So, in this post, we’re taking a closer look at how Walmart Marketplace compares to the great leviathan of US ecommerce.
Amazon was founded as an online book seller on July 5, 1994. The company went public just under three years later in 1997, then expanded into music and DVDs in 1998.
Amazon as we know it today, with millions of third-party sellers selling alongside Amazon on its platform, began in 1999, when Amazon launched its third-party seller marketplace. Amazon Web Services, or AWS, joined the fray in 2003.
2005 brought the introduction of Amazon Prime. From there on out, Amazon continued to grow into the behemoth we know today. The last 15 years have been filled with acquisitions and ventures into all types of industries, including mobile phones, robotics systems, the Washington Post, Twitch video game streaming service, Whole Foods, the creation of Echo and Alexa, prescription medication, and more.
This article contains a thorough summary of Amazon’s major milestones over the years.
Walmart is far older than Amazon, founded in 1962. The company went public in 1970.
The next 30 years saw rapid growth in physical store locations, but it wasn’t until 2000, just five years after Amazon launched, that Walmart launched online stores. Likewise, it wasn’t until 2009 that Walmart launched a third-party seller marketplace, 10 years after Amazon.
However, Walmart beat Amazon to the online grocery game, starting online grocery pickup in 2015.
Walmart acquired Jet.com in 2016, a move that would ultimately teach Walmart many lessons about ecommerce, but not drive any immediate, significant growth.
Walmart launched TwoDay Delivery in 2017 to compete with Amazon’s 2-day shipping, then NextDay Delivery in 2019.
Though Walmart had been making progress in developing its online marketplace, it wasn’t until 2020 that their online marketplace really began to capture brands’ attention as a high-opportunity ecommerce marketplace.
In February 2020, Walmart launched Walmart Fulfillment Services. In September 2020, they launched Walmart+, a subscriptions service with exclusive benefits, similar in theory to Amazon Prime, but each offering a different set of perks enabled by their unique positions.
Amazon currently controls roughly 38% of the United States ecommerce retail market, according to eMarketer. On the other hand, Walmart only controls approximately 8% of the ecommerce retail market.
It should come as little surprise that Walmart’s physical locations vastly outnumber Amazon’s, given each company’s history. Walmart has 5,353 US stores as of July 2020, while Amazon had 589 physical stores as of August 2020.
Amazon has marketplaces in 16 countries, while Walmart has its online marketplace available in 10 countries and physical stores in 27 countries.
The answer? Not a whole lot. According to Walmart, Walmart’s and Amazon’s customer demographics are nearly identical when viewed by generations or by income levels.
Walmart’s VP of Walmart Fulfillment Services delved into more Walmart vs Amazon myth busting in our co-hosted webinar. You can watch it for free on-demand.
Speaking of Walmart Fulfillment Services (WFS), let’s take a look at how it compares to Fulfillment by Amazon (FBA).
For the moment, WFS and FBA share many similarities. Both services allow third-party vendors to ship their product at a fulfillment center, where the product is stored until purchased, then fulfilled. Both will:
One big difference is that Walmart.com allows for item pickup at any of its stores, while Amazon only has a few stores that do online pickup.
In terms of marketing, Amazon and Walmart.com are very similar, but Amazon has many more options to choose from.
Amazon marketing products available to sellers include:
Extensive right? In contrast, Walmart offers a limited selection of marketing products for sellers, including:
This difference in selection is not surprising though. Amazon has been focused on ecommerce for 25 years, while Walmart has only really made ecommerce a heavy focus in the last five years. Over time, Walmart Marketplace will develop new marketing services to match Amazon’s list.
For the time being, online sellers will see far greater returns from marketing dollars invested into Amazon marketing than in Walmart marketing. Amazon’s services offer greater control over audience targeting and more data insights, which, in turn, yield higher profitability.
Until recently, Walmart did not have a competitor to Amazon Prime, Amazon’s premium paid subscription service. In July 2020, Walmart announced Walmart+, its own premium paid subscription service. These subscriptions are very similar as both give you access to perks and benefits like two-day shipping and one-day shipping on a host of products.
Amazon Prime costs $119/year, while Walmart Plus costs $98/year. Amazon Prime has 126 million members in the US as of October 2020, so Walmart has a lot of catching up to do.
Amazon has the ignominious reputation of being rife with counterfeits and unauthorized sellers. In January 2020, the United States Department of Homeland Security released a report detailing counterfeiting on the Amazon marketplace platform. The company has been slow to face the issues but has been making some strides.
Unlike Amazon, Walmart.com is a gated marketplace, which has helped mitigate the risk of counterfeits and unauthorized sellers.
Another problem facing Amazon is the accusations of stealing data from businesses that use its marketplace or Amazon Web Services (AWS). Jeff Bezos, founder and CEO of Amazon, testified before United States Congress about these allegations on July 29, 2020, and Amazon provided written answers on September 4, 2020 to the committee’s follow-up questions.
Walmart Marketplace’s greatest hurdle is that it is starting so far behind Amazon in the ecommerce game. However, Walmart has an extensive infrastructure, capital, and the benefits of learning from Amazon’s successes and failures. As we touched on regarding marketing, Walmart is still well behind Amazon, but they have made admirable progress this year with the launch of Walmart Fulfillment Services and Walmart Plus.
As anyone can see, there are pros and cons for both Amazon and Walmart. Amazon may be the giant in the ecommerce space, but that means they have a large target on their back. Both Amazon and Walmart have seen tremendous growth in 2020:
Clearly, both companies’ offer huge growth potential. In general, we recommend prioritizing Amazon over Walmart because the sales potential is, currently, so much greater on Amazon. However, Walmart is growing rapidly, and you would be wise to try to get on Walmart sooner rather than later so you can grow with it.
Want to learn about selling on Walmart.com? Check out our free eBook about Walmart Fulfillment Services!