Walmart vs. Amazon: Where Should You Sell?

Jordan McGee

August 16, 2021

Amazon. Walmart. eBay. Target. Tmall. Mercado Libre. Rakuten. Zalando.

Each one of these ecommerce marketplaces comes with its own benefits, drawbacks, and business models that affect how sellers do business on the platform. Learning the ins and outs of so many platforms, and learning how to best scale your brand on each of them, can be a daunting task for even the most experienced ecommerce teams.

Below, we’ll take a look at two of the most prolific ecommerce marketplaces in the U.S.—Amazon and Walmart—and tell you everything you need to know to either establish or maintain your brand’s presence on the platform.

A brief history of Walmart vs. Amazon

While the first brick-and-mortar Walmart opened in the 1960s, Walmart didn’t step up as a strong competitor online until 2016 when it acquired Jet.com for $3.3 billion. With the Jet acquisition, Walmart suddenly had the resources and framework it needed to focus and expand its ecommerce efforts.

Walmart has seen consistent ecommerce growth since then, acquiring several more ecommerce businesses and building its ecommerce presence. In 2020, Walmart hit a milestone as it surpassed eBay for the No. 2 share of U.S. retail ecommerce sales. Walmart ecommerce grew 79% in the 2021 fiscal year, and year-over-year from 2020 to 2021, the Walmart marketplace saw triple-digit growth.

Despite Walmart’s rapid growth, the retail giant still trails behind Amazon. Jeff Bezos incorporated Amazon in 1994 and initially began its rise to ecommerce prominence by selling books. By the turn of the century, Amazon expanded its inventory to sell a wider variety of products, more closely resembling what consumers know as Amazon today.

Although Amazon didn’t turn a profit until 2001, Bezos spent years laying a solid foundation for the future of the company by convincing investors of the potential of Amazon’s model. Investors believed their investments in Amazon would pay off, and they were right. Amazon has revolutionized and dominated ecommerce sales and become the second-ever trillion-dollar company. In the last decade especially, Amazon has become increasingly profitable and pursued its goals even more aggressively.

How do Amazon and Walmart’s business models compare?

Despite Walmart’s efforts to focus on ecommerce, it’s still a brick-and-mortar first company. Walmart follows an everyday low prices model, meaning product costs are consistently low without sales or discounts. The mega-corporation scales volume as much as possible to translate lower costs into lower prices for consumers.

This model means that vendors in a 1P relationship with Walmart need to show up to negotiations with the lowest possible price. Walmart will end relationships with vendors holding unnecessary profit.

Amazon relies on a model that Bezos has referred to as the “flywheel” model. The goal is to build the best platform possible, and with that platform, attract the largest number of products, which will then attract more consumers, which in turn attract even more sellers and products. The flywheel naturally reinforces itself over time.

As opposed to Walmart, Amazon has a more diversified business model, thanks to Amazon Web Services and Amazon’s digital advertising services. Amazon’s technology and software infrastructure businesses have high margins that make their ecommerce business possible and profitable. While Walmart is growing its ecommerce operations from a perspective of scale to achieve profitability, Amazon has additional businesses that fund and support their ecommerce that make it possible for Amazon to compete on price.

Amazon and Walmart also slightly differ in the selling options they offer their vendors. Amazon essentially offers three options: 1P selling, 2P selling, or 3P selling. In a 1P model, vendors sell their products wholesale directly to Amazon and Amazon handles the rest. In the 2P model, also known as Fulfilled by Amazon (FBA), sellers own their products and sell them directly to consumers, but Amazon houses the products in its warehouses and fulfills orders. In a 3P model, sellers simply use Amazon as a platform to reach more customers and directly handle their own product fulfillment, pricing, and listings. Choosing between options like dropshipping and FBA is a decision each brand should make based on its products and shipping capabilities.

For the most part, Walmart’s selling models closely mirror Amazon’s, with Walmart Fulfillment Services directly competing with FBA. However, Walmart also offers an additional dropshipping option, in which Walmart handles the product listings, content, and pricing, but sellers hold and ship their own inventory. Giving sellers the convenience of a 1P model and control of a 3P model is unique to dropshipping from Walmart.

Walmart and Amazon’s audiences

Although brick-and-mortar Walmart stores tend to attract low-income shoppers, that trend doesn’t translate to ecommerce. Walmart.com and Amazon have similar customer bases—in fact, a 2020 survey found that 45% of Walmart+ subscribers also have an Amazon Prime account, and 19% of shoppers switched from Amazon Prime to Walmart+.

Amazon customers may tend to be slightly higher-income than Walmart customers simply because not all shoppers can afford Amazon Prime, which costs about $119 a year. While Walmart Plus also charges a monthly fee that comes out to about $98 a year, Walmart offers free 2-day delivery on many items even without Walmart Plus, making it more accessible for shoppers who don’t want to pay a monthly or annual fee.

Benefits and challenges of selling on Walmart vs. Amazon

Amazon’s popularity

Ultimately, Amazon is the most important ecommerce marketplace in the U.S. If you want your brand to succeed in ecommerce—and even in retail stores—you need to sell on Amazon. Amazon has become central to consumers’ lives, and selling on Amazon is critical for brands to stay relevant and profitable.

In part, this is because many consumers now use Amazon as a research platform. Even when consumers are shopping in a brick-and-mortar store, they use their smartphones to compare product listings and reviews on Amazon to better understand the options on the physical shelf in front of them. Amazon also offers options like Enhanced Brand Content and Amazon Renewed to make selling as simple and cost-efficient as possible.

Amazon’s control

Even though selling on Amazon is a good idea for virtually every brand, there are still some platform drawbacks for sellers. Amazon has worked hard to automate everything it can, which sometimes leaves sellers without support.

Amazon also forces you to equalize pricing across your channels, which can be a challenge if you can’t control what’s happening on all channels. If you’re in a 1P relationship with Amazon, for example, and want to sell your product on Amazon for $50 when it’s sold for $45 elsewhere on the web, Amazon will then lower the product’s price to $45 without your permission and make you pay the difference. If you’re in a 3P relationship with Amazon, Amazon can’t change your pricing, but it may turn off the Buy Box if your product is priced lower on other websites, still affecting your sales and profits.

Walmart’s growth

With the rate of Walmart’s ecommerce growth, it’s becoming a necessity for brands to also establish a presence on Walmart.com. It’s almost universally a good idea to sell on Walmart’s marketplace. The one exception may be if you own a premium brand whose image may be tarnished by selling on Walmart, but even luxury brands should consider Walmart.com to grow their consumer base. If you already have a presence on Walmart, nurturing that presence will help you ride the wave of Walmart’s growth.

Another relevant benefit to selling on Walmart.com is protecting your brand from channel conflict. Having price parity and content parity across many marketplaces instills consumer trust in your brand. In an increasingly competitive ecommerce landscape, selling on Walmart.com also equips brands to better compete—if your item isn’t available on Walmart.com, you can bet that a competitor’s item will be available in its place. Considering the rate of Walmart’s ecommerce growth, these sales will quickly add up.

Data also shows that if a product is unavailable on Amazon, many consumers then search for the same product on Walmart.com. If your product is available on both platforms, your brand can still land the sale on one platform even if it’s out of stock on the other.

Walmart’s barriers to entry

While the benefits of selling on Walmart certainly outweigh the costs, brands should be aware that it’s a bit more complicated to start selling on Walmart compared to Amazon. Walmart’s seller application process is a bit more rigorous, and Walmart is picky with which brands it takes on as sellers. Since Walmart’s Seller Center is a new platform, it’s more complicated to use than Amazon’s Seller Central, and Walmart is still in the process of working out inconvenient bugs and quirks. Another upfront cost to consider is that Walmart, unlike Amazon, requires each product to have a UPC.

Once your brand is established on Walmart’s website, though, it’s fairly straightforward to maintain. Walmart lives up to its motto “by sellers, for sellers” and makes seller support fast and easily accessible. Unlike Amazon, Walmart gives its sellers same-day responses and any issues with the platform can typically be resolved within 24 hours. Additionally, unlike the costs of selling on Amazon, Walmart does not charge sellers any setup or monthly fees.

Where should your brand focus–Amazon or Walmart?

In light of all this information about Walmart vs. Amazon, where should your brand focus its efforts? The answer is both. Amazon is the most important ecommerce platform in the U.S. Walmart may generate a smaller portion of your revenue, but you can expect a higher percentage growth rate over the next several years since the platform is growing so rapidly.

There may be some products and brands that are better suited for one platform than another, but you can’t go wrong with selling on both the largest and fastest-growing ecommerce platforms on the web.

Need help establishing and maintaining your brand’s presence on Amazon and Walmart? Interested in what your unique brand strategy should look like? We’re here to help. Download our eBook: Selling on Walmart: Why You Should & Where to Start or get a custom demo to learn how we can grow your brand on ecommerce at no additional cost to you.

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Sept 27, 2022

Global Ecommerce Weekly News: 27th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon drives renewable energy push with 71 new projects Amazon is planning to add 2.7 gigawatts of clean energy capacity through a couple of new projects as the company attempts to use 100% renewable energy by 2025. The ecommerce business will soon have a total of 329 renewable energy projects, generating 50,000 gigawatt hours of clean energy, which is equivalent to powering 4.6 million US homes every year. [Read more on Reuters](https://www.reuters.com/business/sustainable-business/amazon-drives-renewable-energy-push-with-71-new-projects-2022-09-21/) Amazon launches Prime Early Access Sale Amazon is launching a new 2-day shopping event for its Prime members only, beginning on the 11th of October. Across 15 countries, Prime customers will have access to the shopping event, with thousands of deals on offer globall, ranging from fashion to electronics to essentials. The event has the purpose of giving Prime users the chance to spread the cost of items over the winter months, 6 weeks ahead of Black Friday. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/26/prime-early-access-sale/) --- Other Marketplace News --- Shopify unveils new localisation tool Shopify is launching a new localisation tool, called Translate & Adapt, which works with Shopify Markets to offer localisation for sellers who are looking to expand into new markets. The tool translates a user’s online store into different languages, including product pages and information pages. Merchants are also able to create different shipping terms for each market using the new tool, which allows international expansion and offers a more localised consumer experience, unveiling new potential. [Read more on Ecommerce News](https://ecommercenews.eu/shopify-launches-new-localisation-tool/) Etsy is set to invest hundreds of millions into its marketing platform Etsy CEO claims that the company is on route to spend more than $570 million USD on marketing this year. Even during a time of macroeconomic pressure, inflation and rising interest rates, the company is preparing itself and its sellers for the upcoming holiday season and is focused on retaining interest from buyers. [Read more on Yahoo News](https://uk.news.yahoo.com/etsy-600-million-on-marketing-ceo-154054219.html) --- Other Ecommerce News --- Meta looks to cut costs by 10% in the coming months Meta employees are facing job redundancies as the company plans to cut its costs by 10% over the next few months. Meta reported a 22% YoY increase in costs and expenses, totalling over $20 billion USD. The cuts are expected to come in the form of job redundancies as a result of department reorganisations rather than formal layoffs. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/22/meta-to-slash-costs-by-10-over-coming-months/) DHL teams up with Quadient to offer smart locker deliveries in the UK DHL and tech company, Quadient, have partnered to offer smart lockers parcel pick-up throughout the UK. The new contactless, secure locker stations will give recipients more choice and flexibility to receive their parcels at a time and location best suited to them. The partnership plans to install 500 locker stations across the country by the end of 2022. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/21/dhl-partners-with-quadient-to-offer-smart-locker-delivery/) The online fashion market is set to be worth nearly $170 billion USD in 2025 The European online fashion retail market is set to grow 50% by 2025, with an online turnover of $170 billion USD, which is 33% of the retail branch’s total. Cross-border marketplaces prove to be the largest drivers of this growth, with online websites and apps like Vinted largely pushing the market’s online growth. Zalando recently became the largest cross-border fashion retailer/marketplace, responsible for 11.7% of the online market’s share. [Read more on Ecommerce News](https://ecommercenews.eu/online-fashion-market-worth-e175-billion-in-2025/)
Sept 26, 2022

Top 5 Ways to Prepare for Peak with Google Ads

Peak season is almost upon us and with all signs pointing to it starting earlier than ever, with Christmas gifting searches now ramping up in August and September, it’s time to start preparing for peak. In this article, we’re sharing our top five tips for planning and preparing for peak season with Google Ads and the strategies required to get your Paid Search ready so you can drive success over this crucial period.

1. Go Early

In 2021, gifting search terms started increasing in popularity in August. The general trend is that people are looking, researching and weighing their options early, so it’s best to start your Paid activity early to ensure that you’re capturing that early research traffic. This will help drive revenue alongside aiding those consumers who are in their research phase.

From 2020 to 2021, spend during Cyber Week actually only rose 2% but in the weeks leading up to it, it increased by 16%. However, Cyber Week is still the biggest period during the latter half of the year, accounting for 23% of all online spend by consumers over peak. Being prepared and starting early will help you to maximise your time during this period.

2. Get Ready for Privacy Changes

 According to Google, 48% of global consumers have stopped buying or using a service due to privacy concerns. Privacy is front of mind when consumers are shopping online and we know that Google is phasing out 3rd party cookies in 2023. This is going to make it much harder to track users online and it’s something that brands need to think about this now – waiting isn’t an option.

From a Google Ads point of view, you want to ensure you have set up the Google Ads tag across your site and have enabled ‘Enhanced Conversions’, which ensures all conversions are tracked and allows you to monitor other actions such as ‘Add to Cart.’ This is relatively easy to set up, especially if you use ‘Google Tag Manager’.

It’s also vitally important that you build up your first-party data during this time as this is data you own and it can be used when targeting consumers that have provided your brand with their email address. Pattern’s own experience shows that by segmenting and using first-party data, you can see a 10% improvement in revenue and ROI.

3. Ensure Consumers Can Discover your Brand

A full-funnel approach is now more important than ever as consumers become more discerning and have more choices than ever of where to shop.

Pattern has seen success with Google Ads’ ‘Discovery Campaigns’ (image-based ads that appear on Google platforms such as Gmail and the Google app), which have driven success both from a traffic and revenue perspective.

The performance of these campaigns is significantly enhanced by adopting a segmented and nuanced approach to first-party data and incorporating these into your campaigns. Other options for a full-funnel approach include YouTube and testing bidding on keywords that are more representative of the research phase. (e.g. ‘best baby clothes’ for a baby clothes brand)

4. Get Moving with Performance Max

Earlier this year, Google announced that they were moving away from Smart Shopping and launched Performance Max. This is a new campaign type that incorporates features and placements from Smart Shopping but expands them onto other platforms such as Gmail but also alternative creative options, such as images and videos.

Since Google has already started automatically upgrading Smart Shopping campaigns to Performance Max, expect to see some fluctuations in the first 2 weeks following the switch over but results generally seem positive. We recommend upgrading sooner rather than later to limit any potential impact to peak period.

5. Flight Budgets Accordingly

Peak period will be even more competitive than in 2021 and you’ll need your budgets to support this period, we recommend boosting budgets in October to start capturing that early peak traffic. As we enter November and the Cyber Period, start early and make sure you are capturing those consumers looking for early bargains, ensuring you are being nimble in your optimisations and reacting to the data that you are seeing.

Overall, peak period is vital to help drive your sales and by preparing early, you will see strong results and drive success for your brand. If you want to discuss how your brand can navigate this next peak period, contact us to discuss your options with our performance team now.

Sept 20, 2022

4 Ecommerce Marketplace Consultant Must-Haves

Entering the ecommerce landscape is a huge undertaking for any brand—it usually requires a large investment in resources and expertise to really be successful. Any brand can quickly get in over their heads trying to navigate the nuances of SEO, fulfillment and logistics, distribution control, listing optimization, and meeting the numerous other requirements and administrative tasks to show up well on marketplaces. 

Unfortunately, because it’s so easy for third party, gray market, and unauthorized sellers to obtain and sell products online, many brands find themselves pressured to execute an ecommerce plan without the right resources to succeed on marketplaces and their other channels.

So, for brands looking to enter the ecommerce space or improve their current and future performance, it makes sense to partner with an ecommerce consultant.

Pattern’s global presence and proven success with hundreds of brands has allowed us to develop highly effective ecommerce consulting services. We can guide your brand to navigate issues both large and small in marketplaces worldwide. To maximize your ecommerce efforts, you’ll need to understand what an ecommerce consultant does and how to select one who drives the right value for your brand and products. 

What is an Ecommerce Consultant?

An ecommerce consultant is a specialist in the ecommerce space who can give you personalized guidance on how to market your products and grow their presence on digital marketplaces.

An ecommerce consultant should be able to analyze your brand, audience, category, opportunity, and current roadblocks and help you understand how to utilize your resources (or what resources are missing) to be most effective in capturing your opportunities in the ecommerce space.

Not sure how to evaluate a consultant? Here are 4 key attributes to look for as you make your choice.

1. Brand Obsession/Specialization/Passion

At Pattern, we prioritize brand obsession for a reason—we know that a brand-centered mindset makes a crucial difference in the outcomes and results our partners achieve. So in our experience, when you begin your search for an ecommerce consultant, it’s important to look for a partner who is specialized in ecommerce, invested in the product, and passionate about helping brands build and improve their strategies. Typically, this means finding someone that consults exclusively for ecommerce marketplaces, rather than choosing a consultant who offers many different services. 

2. Proven Results

It’s also important to avoid choosing a consulting partner who can’t deliver the right experience for your brand. The best indication of whether your potential consultant can do that is to review their history, data, and results with other brands. Ask if they’ve helped others in your selling category, if they’ve solved specific issues your brand is facing, and why they feel you are a good fit. The key is to leave the conversation feeling confident that you understand your consultants’ capabilities and whether or not they match up with your needs.

3. Wide Range of Marketplace Expertise

It’s best to pick a consultant who knows how to guide a brand onto and through multiple marketplaces worldwide. You’ll want to take a look at your long-term strategy and think about the regions and platforms you’re currently on and where you might want to take your brand in the future. If your consultant is truly great at what they do, they’ll be able to help you perform well enough with your current product roadmap that it’ll be a no-brainer to expand your presence at the right time.

4. Network of Resources

The most effective partnership with an ecommerce consultant will be able to give you both recommendations and point you to solutions for making those changes in your planning, processes, and execution. Your time and money is valuable, so you want to make sure that you’re spending it as efficiently as possible as you follow your consultant’s advice. So, before you commit to an ecommerce consultant, ask about the resources and concrete solutions they typically recommend to the brands they work with.

Achieve Your Ecommerce Goals With Pattern

Finding an ecommerce consultant that checks the boxes can be a difficult task. At Pattern, our entire focus and drive centers around giving brands the tools and resources they need to succeed on domestic and international ecommerce marketplaces. 

With over 100 global ecommerce consultants across 10 global offices, we have the right tools to partner with brands across the world to achieve better ecommerce success. We give specialized advice, then make sure our partners have all the adequate SEO, social media, CRM, Amazon multi-channel fulfillment services, and ecommerce outsourcing services they need.

Interested in ecommerce consulting services? Set up a call here to learn what Pattern can do for your brand on global marketplaces.