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Welcome to Data File. In this weekly feature, The Current shares key findings shaping the ecommerce landscape. At The Current, we comb industry, analyst and economic sources for the data that matters to ecommerce professionals, and include it throughout our work. This feature is one of the ways we’re sharing what we find.
This week, a report from ecommerce platform Jungle Scout has new data that fills in the profile of ecommerce sellers using Walmart Marketplace. Here's a quick breakdown of the takeaways:
Walmart's third-party marketplace is adding thousands of sellers.
Combining its massive scale with digital capabilities, Walmart’s ecommerce business grew 90% over the two years of the pandemic, the company said in February. During that time, it also emerged as the retailer with the second-largest share of ecommerce sales in the US, per eMarketer.
Alongside selling items directly, a growing piece of Walmart's ecommerce business is its third-party marketplace, where the company expects to add 40,000 new sellers in 2022. After launching in 2009, Walmart Marketplace was opened up to a new wave of sellers in 2020. With free two-day shipping in place, the retailer also launched Walmart Fulfillment Services in 2020, providing marketplace sellers and others with access to the company’s supply chain and logistics network.
Walmart Marketplace sellers run profitable businesses.
In the wider picture of ecommerce, Walmart Marketplace is an emerging force, states Jungle Scout’s State of the Walmart Seller 2022 report. Walmart’s shopper-to-seller ratio is 1,918-to-1. Compare that to Amazon, where it is 48-to-1. This offers opportunity for brands.
“With relatively fewer sellers than other popular ecommerce platforms, fewer fees, and access to Walmart’s global supply chain logistics, Walmart’s third-party platform offers convenience and a large, loyal customer base with less congestion or competition than other ecommerce channels,” the report states.
Most of the sellers opting for the channel aren't on Walmart Marketplace alone. In its report, titled State of the Walmart Seller 2022, Jungle Scout shares that 97% of Walmart Marketplace sellers are on at least one other platform.
Where Walmart Marketplace is involved, profitable businesses typically follow. The study found that 95% of small-and-medium-sized sellers on the marketplace have profitable ecommerce businesses, while 73% of sellers have profit margins above 20%.
Beauty and crafts are the most popular categories.
When considering selling on any new channel, it’s important to evaluate what categories perform well on a given platform. In the case of Walmart’s ecommerce channel overall, the study found that automotive parts and accessories, electronics and fitness supplies were especially strong when comparing the most popular categories for online and in-store purchases.
Among small-and-medium-sized sellers on Walmart Marketplace, the top categories are beauty and personal care and arts, crafts and sewing, with apparel and home goods not far behind.
The report indicates that Walmart Marketplace can play a key role in a multichannel strategy.
"Walmart's online business is becoming a more significant player, even alongside more established platforms. Walmart's massive online growth presents an attractive proposition for ecommerce sellers looking to diversify their strategies," said Greg Mercer, Founder and CEO of Jungle Scout, in a statement.
Take a look at the visualization below for more data:
(Handout image by Jungle Scout)
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Walmart's third-party marketplace is reducing commission rates for 90 days.
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.