As Walmart looks to grow its ecommerce business, the retailer is making a push to attract more sellers to its third-party marketplace by making it easier to get started, providing access to more advertising tools and reaching out beyond US borders.
This comes at a time when Walmart Marketplace is gaining importance for the world’s largest retailer. Alongside the goods from first-party suppliers that are sold directly by Walmart, the retailer’s ecommerce platform contains products from brands that list their own goods, and are responsible for pricing and fulfilling the orders. This third-party marketplace was initially launched in 2009, but Walmart has made a series of increasingly visible moves to grow it following the ecommerce boom that accompanied the pandemic. While it's often one of several marketplaces where sellers list their items, Marketplace can be part of a lucrative equation: Jungle Scout found earlier this year that 95% of Marketplace sellers had a profitable business.
Against this backdrop, Walmart voiced an expectation that 40,000 sellers would join the Marketplace in 2022. On a company earnings call in February, CEO Doug McMillon talked about how third-party growth was among first-order priorities.
“Growing our marketplace expands choice for our customers, helps our sellers grow, and enhances our profit margins,” he said. “Our plan for this year includes strengthening the experience for sellers and adding fulfillment capacity so customers have access to more items faster.”
Working in concert with the membership program Walmart+, the company’s wider ecommerce business and the advertising business Walmart Connect, the Marketplace helps create a flywheel for the company’s digital business: Boosting the number of Marketplace sellers grows the assortment available on the platform, which adds to the appeal of tapping into advertising to stand out in order to reach a growing number of Walmart+ subscribers, who will in turn seek out more products from the growing assortment through repeat visits.
The company’s executives routinely stress the importance of growing this digital business to the company’s future. Walmart’s ecommerce business grew rapidly during the pandemic – posting two-year growth of 90% in 2020-21 – and continued to be a bright spot for the company even as comps moderated when compared to the early quarantine quarters of 2020. In the second quarter of 2022, the company said its ecommerce business outpaced the company's overall sales by growing 12% year-over-year, while advertising was up 30%.
Alongside demand, the supply of items and brands that Walmart has available through online channels is also an important indicator of growth. On Walmart’s recent second quarter earnings call, CFO John David Rainey said the company has over 240 million items in its US ecommerce assortment, and had increased its Marketplace seller count 60% year-over-year.
A new seller experience
As it heads into the busy holiday shopping season, Walmart is making a new push to grow the number of sellers on the Marketplace, and deepen the access they have to advertising tools through Walmart Connect.
In one step, Walmart made it easier to join the Marketplace as a seller. According to Marketplace Pulse, Walmart in August replaced a “Request to sell” button that required the company to grant approval to sellers with a “Join Marketplace” button and streamlined registration form that required only key identification and contact info before selling could begin. The move had an immediate impact, as the number of new sellers joining on that week alone was four-times the number of the prior week.
“Previously, Walmart appeared to operate the marketplace as a traditional retailer, trying to control the number of sellers providing assortment in the same niche,” Marketplace Pulse founder Juozas Kaziukėnas wrote. “It doesn’t seem to want to do that anymore, leaving it up to the competition of sellers to surface the best products.”
It’s fitting, then, that Walmart this week announced plans to make it easier for marketplace sellers to access tools that help them stand out.
The company revamped the onboarding process for its Ad Center, where sellers can set up Sponsored Products campaigns to increase visibility during search and browsing on Walmart’s platforms. New sellers are now automatically onboarded to the self-serve ad platform, while existing sellers have had the process to join reduced from three days to “a few seconds,” according to the company.
This comes as Walmart is getting set to roll out a revamped version of the Ad Center later this month. It will include a new look and step-by-step instructions to launch search campaigns.
In October, Walmart said third-party sellers will get access to a tool called the Search Brand Amplifier. This tool boosts products that are being advertised to the top of search results. Previously, this tool was only open to a smaller number of managed sellers and suppliers, but now it will be open to all Marketplace sellers, and managed through the Ad Center.
Walmart's Search Brand Amplifier in Action. (Courtesy photo)
Walmart Connect Head of Marketplace Mike Greenberg wrote in an announcement that this is especially beneficial to “smaller brands, new brands and brands with new products that may not yet have high organic search rankings at Walmart.”
Walmart’s bid to grow the marketplace also includes a campaign to reach out to sellers internationally. In March 2021, it reversed a longtime policy that required sellers to have a US business registration, and opened up the Marketplace to all international sellers. This move was viewed in part as a way to expand into China, but it is open to sellers beyond that country and India, where Walmart owns Flipkart.
This month, Walmart launched a recruiting drive to sign Canadian ecommerce companies up on the platform.
“The drive to attract Canadian companies builds on decades of Walmart’s engagement with retailing and ecommerce in Canada,” Walmart wrote in an announcement. “Giving sellers on the thriving Walmart.ca marketplace an opportunity for international expansion, it also comes as local businesses, especially small- and medium-sized enterprises, are looking to reap the benefits of the Canada-United States-Mexico free trade agreement (CUSMA).”
Now, Walmart is looking to make the backend of its marketplace more internationally friendly, as well. The retailer said it will add more API partners to its platform that offer global support before the end of the third quarter. It will focus on partners from countries where sellers are congregated, like China.
Walmart also made the following resources available for third-party sellers:
Perks for everyone
The work to attract Marketplace sellers isn’t happening by itself. Other pieces of the flywheel are moving into place.
It can add more offerings for sellers. Earlier this year, Walmart sought to incentivize sellers to join Walmart Fulfillment Services (WFS), which offers access to Walmart’s growing logistics network for businesses outside the retailer. While advertising to attract customers, this creates an additional business line for Walmart in the process of sending packages to customers.
For consumers, Walmart is also moving additional pieces into place.
This week, it rolled out holiday season upgrades to its ecommerce experience on web and mobile, including online styling using visual outfitting, a revamped registry and Spanish language search.
It has also beefed up Walmart+ with a host of new perks over this year, including an expanded fuel discount, access to the Paramount+ streaming service, and the opportunity to upgrade to InHome, the company’s “direct-to-fridge” grocery delivery service. In recent weeks, Walmart+ launched a new rewards program that offers CPGs additional opportunities to reach customers through the advertising business.
And alongside ecommerce and advertising, financial services are set to become a third piece of the equation. According to a Bloomberg report on Wednesday, the Walmart-backed fintech company One is set to start introducing checking accounts for employees and a small number ecommerce customers. It’s described as a beta that the company hopes to eventually expand to more consumers, and additional services including loans and investment.
From third-party sellers to members to bank account holders to employees to suppliers, Walmart is creating a digital ecosystem with a variety of constituencies. With barriers to entry being lowered, the key will be watching how they are connected as they scale.
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Drop it in The Cart
Walmart will offer a Bob Ross lithograph. (Courtesy photo)
After a period of study and testing, large platforms and retailers are beginning to move ahead with putting new tools to facilitate these transactions into wide release.
The area of digital collectibles is emerging as one of particular interest. Limited edition, collectors’ items have long commanded their own markets. Think of trading cards, action figures, limited-run pressings or the art market as a whole. Now, these are taking digital form. The emergence of tools such as nonfungible tokens (NFTs), which store harness blockchain technology to allow individual versions of digital creations to be available for buying and trading via cryptocurrency, are enabling the beginnings of a new kind of market.
Of the large platforms where ecommerce takes place, eBay has been among the earliest movers in this area. Given that the marketplace is already a place where physical collectibles are exchanged, the extension into digital collectibles makes sense in theory.
eBay has taken steps to put it into practice. The marketplace began allowing buying and selling of NFTs on its platform in 2021. The stated ideas behind the launch made it clear that it saw digital collectibles fitting into the platform.
“eBay has always been the world’s destination for buying and selling the most unique and hard-to-find items - and we’ll continue to be the destination for collectors of all kinds, physical or digital,” said Jordan Sweetnam, SVP and general manager of the Americas for eBay, wrote in an announcement at the time of the NFT expansion in 2021. “This opportunity unlocks new assets for collecting, new ways for people to fuel their passion, and expands eBay’s appeal to a new generation of collectors.”
The marketplace has picked up activity in this area this year. In May 2022, it launched an initial collection of NFTs on the web3 platform OneOf, which were new interpretations of iconic athletes featured on Sports Illustrated covers. In June, the marketplace took another step toward facilitating transactions when it acquired NFT marketplace KnownOrigin, which allows artists and creators to showcase and exchange digital works for collectors.
The eBay vault. (Courtesy photo)
For eBay, this is part of a wider strategy to provide space for the digital exchange of collectibles as a whole. It is also making big investments in physical collectibles, including a new vault for trading cards that provides storage and a digital marketplace, and the $295 million acquisition of TCGPlayer, a marketplace for collectible trading cards like Magic the Gathering and Pokemon. Those goods will require specific tools to solve their own set of challenges, including authentication to ensure items are what they say they are, and ensure they are truly limited in quantity. Yet it is emerging alongside the digital collectibles, and it’s clear that eBay sees the two sides fitting under its tent.
“One reason that we're excited to launch the Vault is because it can enable real-time transactions for physical or digital goods,” eBay CEO Jamie Ianone said on the company’s recent second quarter earnings call. “This intersection is nascent, the one that collectible enthusiasts are increasingly exploring. This is part of the rationale behind our second quarter acquisition of KnownOrigin.”
A potential connecting point was made more clear on Monday, when Walmart entered the fray. The retailer announced a new partnership with the National Entertainment Collectibles Association that will result in a new platform, called AutoT, that enables digital collectibles.
AutoT will have a series of rare variants of collectibles and figures that are signed by stars and creators.
Here's how it works: To access the platform, customers will be able to purchase a box from Walmart that is tied to a specific pop culture property. Upon purchase, they enter the digital code found on their Walmart receipt into a personal account at AutoTVault.com. This reveals which collectible item they’ve received. Collectors will be able to store a digital collectible for up to two years free of charge in the NECA’s Vault, or have a physical item shipped to them.
Launching on Oct. 6 at Walmart’s website, the platform will debut with collectible figures from Teenage Mutant Ninja Turtles, featuring Shredder, Renet and Foot Soldier, with potential for fans to receive versions of the digital figures signed by co-creator Kevin Eastman. Exclusive lithographs from the TV icon and artist Bob Ross will also be available at launch. New products are set to drop at regular intervals, Walmart said.
A Shredder action figure. (Courtesy photo)
For Walmart, this is an extension into a new form of commerce as it looks toward the future of retail, which has long been built around physical goods. Coupled with last week’s announcement that it is building a large experience in Roblox, it’s clear the world’s largest retailer wants to have a presence wherever goods are being bought and sold. The throughline here is that digital collectibles can usher in an evolution of shopping.
“At Walmart, we are always finding new ways to bring innovation and one-of-a-kind offerings to our customers,” said Laura Rush, SVP of electronics, toys and seasonal at Walmart US, in a statement. “NECA’s unique collectibles and inventive AutoT platform offer a new type of shopping experience to shoppers, ensuring that Walmart is bringing the best in tech and entertainment to customers nationwide.”
This may be a test not only of the tools and shopping functions, but also where value is shown. Will a person find value in a digital work that can be linked to its creator in the same they would a physical work that has touched the artist's hands? In other words, can Bob Ross' resurgence courtesy of memes and YouTube translate to people wanting to own a piece of his work?
NFTs on Instagram. (Photo via Meta)
Given that art is involved, it's also worth considering what will happen when the gallery wall is removed. The ability to display and share collectibles in common spaces may also be valuable. One avenue arrived last week. Meta opened up the capability for users to share digital collectibles that they have purchased or bought on Facebook and Instagram to everyone. These collectibles can also be shared between the two platforms. Making good on an announcement it made in May, Meta said users can now connect a digital wallet and display NFTs from those wallets on the platform, The NFTs will have a shimmer effect, and public information like a description of the NFT can be displayed. The work can be attributed to both the creator and collector.
As Ianone referenced, these are nascent launches. They may not be the versions that last, but they are important steps toward pushing this form of collectibles into wide release. Provide the tools, figure out what people find valuable and new markets can take root.
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