Amazon may be the biggest shark in the ecommerce ocean, but it’s by no means the only one biting.
Walmart has proven itself to be a rapidly-growing competitor in the ecommerce industry, increasing its online sales by 79% in the 2021 fiscal year. As Walmart continues its dramatic growth, brands are quickly realizing the importance of selling on Walmart.com and many are joining Walmart’s ranks through the Walmart Drop Ship Vendor program.
We’re here to answer all your questions about Walmart dropshipping and help you decide which selling model is best for your brand to start (or continue) selling on Walmart.com.
To better understand Walmart dropshipping, it may be helpful to first explore the various selling options available to brands who sell on Walmart.com.
The first option is Walmart 1P. As is the case with 1P selling on Amazon, Walmart 1P simply requires you to ship your product to a Walmart Fulfillment Center, and Walmart takes care of the rest. As a first-party seller, Walmart controls everything about your product—your listing, pricing, shipping, returns, and customer service—making things easier for your ecommerce team and winning your product the instant credibility that comes with the Walmart name. Walmart also calls these sellers Warehouse Suppliers.
Walmart 3P sellers, on the other hand, sell their products on Walmart’s site as a third party and control their own Walmart listings and inventory. Both 3P models require more work on your end but in return give you significantly more control over your listing and brand.
Some 3P vendors sell on the Walmart marketplace, which means they’re completely in charge of content optimization, advertising, marketing, and customer service. This model is ideal for businesses with abundant resources that place a high value on how their brand is portrayed and priced across platforms. In this case, Walmart is a useful platform for brands to reach more customers but plays a minimal role in the promotion and fulfillment of the products.
Other 3P vendors sell with the help of Walmart Fulfillment Services (WFS). These vendors control their own listings and pricing but aren’t responsible for fulfilling orders. Instead, they ship their products to Walmart, which then stores inventory and fulfills orders. While these vendors still have the increased control that comes with a 3P model, their products also boast a badge on their listing that states “Fulfilled by Walmart,” immediately boosting listing credibility. Additionally, sellers benefit from Walmart 2-shipping nationwide.
Walmart dropshipping is a hybrid between the 1P and 3P models of selling. Walmart purchases your product from you at wholesale price and lists the product on its website. Walmart then handles the listing optimization, pricing, and anything else customers see on Walmart.com, just like it does for 1P sellers. But unlike the 1P model, you as the seller hold all your own inventory and are responsible for shipping orders made on Walmart.com, either directly to the customer or to a Walmart store.
Even though you’re responsible for shipping your products, Walmart will pay for all product shipping, including two-day shipping. You are simply responsible for getting the item out the door and Walmart handles the rest. Becoming a Walmart drop ship vendor—also known as a Walmart DSV—gives your brand both the increased control that typically accompanies a 3P model and the convenience that is the hallmark of a 1P model.
As with every selling model, there are pros and cons to Walmart dropshipping. It’s important for each brand to weigh these considerations to decide which avenue will be the most profitable for their products. It’s worth noting that a vendor can sell some products through dropshipping and others as a marketplace seller, so you may need to evaluate whether specific products are better suited for one model over the other.
Let’s start by discussing the benefits of dropshipping. Selling your product under Walmart’s name instills consumer trust in your listings. Shoppers are more likely to buy a product shipped and sold by Walmart over a product sold by an unfamiliar brand.
Since Walmart handles the listing optimization, Walmart teams also take care of the listing content and ensure the listing is getting the highest organic search traffic possible. Products that Walmart sells and ships get an automatic boost on Walmart.com. Walmart handles all product marketing, which further boosts dropshipping products to the highest rank possible, and makes it easier for your product to win the Buy Box.
Another perk of dropshipping is that Walmart pays to ship products to the consumers. This relieves a significant price burden for brands, especially because Walmart pays for 2-day shipping most of the time. If your product is expensive to ship, this benefit alone may be enough to make Walmart dropshipping worth it for your brand.
Even with all the benefits, dropshipping also comes with a few drawbacks. When you become a Walmart drop ship vendor, you sell your products at wholesale prices, so your margins aren’t as high as they would be if you cut out the middleman and sold your products directly on Walmart’s marketplace. You also can’t make sales in bulk—unlike a 1P model, in which Walmart buys your product in bulk from you, Walmart drop ship vendors sell their products only as quickly as consumers buy them.
The basic idea of Walmart dropshipping mirrors the dropshipping we see on other sites, like Amazon—as a drop ship vendor, it’s up to you to directly ship your product to your consumers once an order has been placed online.
But there are a few distinctions unique to Walmart dropshipping that we don’t see elsewhere. For one, Walmart handles all listing optimization for its dropshipping vendors. Additionally, like we mentioned earlier, Walmart completely covers shipping costs for its drop ship vendors to ship items quickly. Other ecommerce sites, like Amazon, may offer discounted shipping rates for its dropshipping vendors, but it’s ultimately up to the brand to cover shipping prices. This makes the cost of selling on Amazon higher when selling through the dropshipping model.
Another benefit unique to Walmart dropshipping is that customers can choose to pick up the product from one of Walmart’s almost 5,000 U.S. stores. In this case, the vendor ships the product to the Walmart store instead of directly to the consumer’s home or mailbox. This option leverages Walmart’s extensive brick-and-mortar network and offers another convenient and appealing option that may improve customer experience.
If you’ve decided that the Walmart dropshipping program is the best choice for your brand moving forward, you must first meet the DSV program requirements and apply online to get started. Walmart’s website has detailed, step-by-step instructions to help make the onboarding process as smooth as possible.
Need help deciding how to choose the best Walmart selling model for your brand? Struggling to maximize your profits while selling on Walmart.com? Pattern is here to help. Contact us for more information or set up a free consultation today!
Find relevant content to accelerate your ecommerce business. Stay on top of industry trends and best practices.