Best Practices

Why Ecommerce Businesses Should Sell on WalMart Instead of Amazon – our advice featured on Home Business Magazine

Originally posted on Home Business Magazine

Small business owners are faced with a difficult decision when it comes to reaching a larger audience online: either they can invest valuable resources in marketing in order to drive customers to their ecommerce store, or they can opt to sell on marketplaces where customers go already.

There are several marketplaces that retailers can utilize in order to reach new customers and increase their online sales. These range from targeted niche platforms such as Jane or Etsy, to all-encompassing behemoths such as Amazon, Walmart and even Ebay. While most of us are aware of Amazon and Walmart’s online presence, Amazon undeniably dominates ecommerce. However, Walmart has been investing millions to improve it’s online marketplace and is the most likely outlet to compete for Amazon’s clients. Still, many retailers default to using the Amazon marketplace without considering Walmart as a viable option to sell their goods.

However, there are several downsides to going this route. Amazon not only charges the retailer to list the items (unless the seller plans to post fewer than 40 listings), but they also take a percentage from every sale made. These costs can quickly add up, especially if a seller lists a large number of products on the site.

Another drawback is the issue of returns. Amazon makes a profit just from the items being listed and sold, so if a customer returns an item, it is at no cost or loss to Amazon. Amazon has built an experience aimed at the customer, not the seller, making it difficult for sellers to manage customer expectations, even when it comes to a returns policy that favors the customer. This means that customers are able to return items months after they purchased them – sometimes for no discernible reason – at the expense of the seller.

Many retailers have also encountered cutthroat competitors on Amazon, who often resort to a myriad of unscrupulous practices in order to derail others successfully selling similar products. These range from posting bogus negative reviews to undercutting a competitor on price by offering counterfeit items. These practices run rampant largely because Amazon has such a low barrier to entry into it’s marketplace. Sellers don’t go through any kind of screening process in order to participate, needing merely to sign up prior to listing their products.

These are just a few reasons that many retailers have started to look elsewhere to post their listings – and one viable platform is the revamped Walmart.com. Walmart.com is the third largest internet retailer and it’s ecommerce sales are projected to surge 40% this year. The retailing giant has also spent billions on ecommerce fulfillment centers and boasts over 110 million unique visits a month. And, many retailers will find that the Walmart marketplace is simply a better place to sell their products. Here’s why:

  • Walmart doesn’t charge a listing fee. Amazon charges $39.99 a month just for retailers to list items (individual seller listing less than 4 items accrue this charge, however) Both marketplaces do charge ” referral fees” for each item sold, averaging around 15% depending on the item.
  • Less competition. Walmart has a drastically smaller product selection compared to the “Everything Store,” which also means that sellers can enjoy a less crowded marketplace with fewer competitors. In fact, retailers with products in less popular categories find that they sometimes have the room to themselves – a luxury tat.
  • Their screening process ensures reputable sellers. While it is infinitely easier to sign up and sell on Amazon’s marketplace, Walmart’s more involved admission process also helps weed out any of those cutthroat sellers who resort to unethical practices in order to derail their competition. Admittedly, the screening process takes time and effort, but the payoff is worth it for those who want to sell alongside creditable retailers.
  • Retailers have more control over returns. While Amazon favors the customer and requires sellers to adhere to certain guidelines when handling returns, Walmart allows retailers to determine how they want to deal with product returns. This allows sellers the opportunity to resolve the issue and to reduce the number of returns resulting from fickle or unnecessary customer whims. While Amazon will require retailers to issue a full refund without gathering any information from the customer and doesn’t require the buyer to return the item, Walmart allows sellers to ask the customer to return the product prior to offering a refund, or to resolve the issue in other ways.

Admittedly, the Walmart audience doesn’t entirely overlap with Amazon’s. Depending on your product, this can be the determining factor for whether or not you use Amazon’s marketplace to sell your items or opt for affiliating with Walmart. However, retailers whose products are buried under thousands of competing products will find the newcomer’s space amenable to increased sales and reduced competition.

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