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To kick off 2023, Walmart’s third-party marketplace is continuing to make moves to expand the number of sellers on the platform with a savings incentive.
The news: Starting this week,Walmart Marketplace is running a Seller Savings promotion for 90 days that provides new sellers with a 25% commission rate reduction. This allows sellers to try new tools including:
- Walmart Fulfillment Services, which allows third-party sellers to tap Walmart’s logistics network, and in turn offer two-day shipping.
- Sponsored search advertising, which allows brands to run search ads within the Walmart Marketplace.
- Repricer: An automated pricing tool that automatically updates prices based on other ecommerce platforms, or Walmart Marketplace.
Growing the Marketplace: Walmart’s third-party marketplace has been a focus area of expansion efforts from the world’s largest retailer, and it showed results in 2022. In the company’s most recent earnings report, executives said the Marketplace’s SKU count increased by 50% to 370 million SKUs, and it onboarded 8,000 new sellers in the quarter.
Along with services such as fulfillment and advertising, Walmart said it is continuing to upgrade its experience for sellers, including introducing a faster onboarding process. In September, the company also provided access to an advertising tool that boosts products to the top of search results called Search Brand Amplifier, and provided automatic onboarding to Walmart's ad portal upon launch. In a move to grow internationally, the company opened the Marketplace to Canadian sellers.
The flywheel spins: For Walmart, the Marketplace is a key part of its bid to grow ecommerce. Adding more sellers allows the retailer to expand the assortment of items available on the platform. This helps the company offer more items that keep shoppers coming back, and keep prices down. At the same time, Walmart is working to engage more repeat customers through its Walmart+ membership program. A bigger Marketplace also bolsters the importance of advertising on Walmart ecommerce, as brands seek ways to stand out on an ever-growing platform.
“We're scaling our newer businesses and connecting them to our larger, established retail businesses, primarily by how we design digital interactions,” Walmart CEO Doug McMillon told analysts on the earnings call. “One example is how our growth in ecommerce, especially the marketplace, fuels our ad business. More items and sellers drive GMV and improved customer satisfaction. And it also drives success in advertising. They're mutually reinforcing.”
What it means for marketplaces: Any discussion of third-party marketplaces would be incomplete without mention of Amazon, which pioneered the model and continues to operate a juggernaut through its Fulfillment by Amazon program. However, Walmart's emergence is one of the clearer signals that sellers are increasingly looking to have a presence across multiple marketplaces. Increasingly, ecommerce platforms are marketing to sellers, just as they are to consumers.
Trending in Economy
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.