Luxury Brands Should Consider Walmart.com to Grow Their Consumer Base

George Hatch

March 9, 2020

When people think of Walmart, certain associations spring to mind, mostly stemming from the discount retailer’s dedication to “everyday low prices,” serving middle- and lower-income consumers. Yet in recent years, Walmart has made attempts to capture the attention of more affluent consumers as well.

Luxury brands on Walmart

Walmart’s changing demographic

Since September 2016, Walmart has spent big bucks purchasing higher-end ecommerce platforms like ModCloth, Bonobos, Moosejaw, and, most notably, Jet.com. “Since, it has allowed Walmart to tap into a younger, more urban, and wealthier customer base. Each acquisition has also taught the 56-year-old big-box retailer new skills,” Retail Dive reported

Walmart recently launched Walmart Fulfillment Services, as well as a plan to launch Walmart+, a subscription service to rival Amazon Prime.

Many high-end brands and items such as Rolex watches, Louis Vuitton handbags, Chanel perfume, Alex and Ani jewelry, Gucci, Prada, and Tiffany & Co. are sold on the ecommerce platform through third-party sellers. As of November 2019, it was reported Walmart.com hosted more than 32,000 sellers, with more than 41 million products for sale online, the majority of which are not sold directly by Walmart. 

Not only is this good news for customers who still are looking for the best price on items by visiting Walmart.com, it means high-end brands that traditionally might not appeal to customers who choose to shop at Walmart can grow their customer base because, on average, Walmart.com customers have higher incomes than in-store customers. John Furner, president and CEO of Walmart U.S.  said the convenience of the service “aligns well with someone who is time-starved and has higher income levels.”

All brands are expanding on Walmart, not just luxury

Experts say this is an important move for Walmart in order for the store to capture more of a market share in ecommerce, which at the end of last year was a $601.75 billion industry, and to stay competitive with Amazon, which has captured nearly 50% of the ecommerce market share.

“Efforts to expand assortment have not just been limited to luxury brands, but all brands that are not on Walmart.com,” said Senior Brand Manager Cody Parrott of Pattern. “It just so happens that the majority of these ‘go-gets’ are luxury brands who decline partnerships with Walmart on the basis of a false perception that their brand image will suffer being associated with a retailer built around everyday low price. The reality is the premium customer does shop on Walmart.com, and luxury brands can find great success on the re-branded platform.”

Challenges on Walmart

For the most part it’s worked—Walmart saw an increase of 41% in ecommerce sales in Q3 2019—but only a 35% increase during the holiday season, leading to 2019 Q4 earnings that were lower than expected. Not all of its luxury brand acquisitions have paid off either. Walmart ended up selling off ModCloth last year, Bonobos laid off staff and Jet.com’s city grocery business and experimental shopping service also came to an end.

luxury brand selling on Walmart.com

Currently, although Walmart continues to offer more competitive prices than Amazon, Amazon customers are loyal due to perks like Prime and same-day shipping.

“I find it hard to believe Walmart will ultimately be able to pull loyal customers from Amazon without a market-shaking action,” Parrott. “I think the answer here is for Walmart to acquire the proper assortment, which would allow for new customer acquisition through everyday low price strategies employed by Walmart.”

Luxury brands can take advantage of the emerging marketplace

But unless Walmart introduces some “wildly innovative, new service” to their platform, Parrott doubts the company can take a huge bite out of customer loyalty to Amazon, which offers perks like Prime and same-day shipping. However, Parrott suggests this is actually good news for luxury brands when it comes to testing new business practices.

“Luxury brands can test products, pricing strategies, segmentation, etc., with relatively low risk due to the lower revenue generated on Walmart.com,” Parrott said.

It might be a while before Walmart.com truly becomes a tough competitor for Amazon, and it may never happen—but that’s exactly why luxury and high-end brands should sell on Walmart.com. Not only can they test out new business strategies, like Parrott said, but these brands can grow a customer base among the people who aren’t married to Amazon, who don’t have a Prime subscription, or feel unsatisfied with prices offered. 

Maybe Walmart.com won’t become the next Amazon—but there’s no reason Walmart.com customers can’t provide incremental revenue and sales for more luxury and high-end brands looking to diversify their sales and expand their brand footprint.

Interested in selling on Walmart.com or other marketplaces? Contact Pattern’s Walmart experts below.

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Global Ecommerce: Weekly News (6th September 2022)
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Global Ecommerce Weekly News: 6th September 2022

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Global Ecommerce: Weekly News (30th August 2022)
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Global Ecommerce Weekly News: 30th August 2022

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Global Ecommerce: Weekly News (23rd August 2022)
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Global Ecommerce Weekly News: 23rd August 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon to add mental health support to primary-care service Amazon is set to move into mental health therapy with its primary-care division, following its recent acquisition deal of One Medical. The plan is to partner with virtual behavioural therapy service, Ginger, to offer its Amazon Care users with on-demand access to mental health services, licensed therapists and psychiatrists. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/11/amazon-plans-to-add-mental-health-support-to-primary-care-service/) GMB union calls for £15 an hour minimum pay at UK Amazon warehouses Amazon recently offered its warehouse workers a 3% pay rise, which in comparison to the June inflation rate of 9.4% left employees disappointed. Following this, hundreds of Amazon warehouse workers stopped work last week, protesting against the minimal pay increase, seeking a minimum of £15 an hour. Recent protests consisting of employee walkouts and sit-ins aim to get a better offer out of Amazon. [Read more on The Guardian](https://www.theguardian.com/technology/2022/aug/09/gmb-calls-for-15-an-hour-minimum-pay-at-amazon-warehouses-in-uk) Amazon third-party sellers have received their first-ever holiday fee hike Amazon’s third-party marketplaces account for close to half of the company’s online sales. The company introduced a 5% fuel and inflation charge to its third-party sellers earlier this year, and has now implemented another inflation increase charge. Commencing 14 October, any seller who uses Amazon’s fulfilment service is subject to the price hike, which is set to be an additional 35 cents per item for products sold in the US and Canada. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/17/amazon-third-party-sellers-have-received-their-first-ever-holiday-fee-hike/) Amazon puts a pause on UK grocery shop roll-out as the cost of living increases Amazon has slowed down on its UK roll-out of till-free Amazon Fresh grocery stores following disappointing sales and the rise in cost of living. Allegedly, the company is no longer looking for potential sites to expand and if more stores are opened, they will likely no longer use a till-free system, as consumers become more cautious about spending. [Read more on The Telegraph](https://www.telegraph.co.uk/business/2022/08/21/amazon-pauses-uk-grocery-shop-roll-out-following-disappointing/) --- Other Marketplace News --- Shopee overtakes Alibaba across international markets Shopee has surpassed Alibaba and taken the top spot for sales outside of China. Singapore-based marketplace saw a year-on-year increase of 51.4% at the end of Q2 of this year, while Alibaba saw a 3% drop during the same time period. This can be seen as a promising development for start-ups and their ability to compete with some of the largest ecommerce giants in the market. [Read more on Exchange Wire](https://www.exchangewire.com/blog/2022/08/18/shopee-surpasses-alibaba-in-international-sales-amazon-searches-for-entertainment-exec/) H&M reopens its official store to Alibaba’s Tmall ecommerce platform It has been nearly 18 months since Alibaba removed H&M from its Tmall platform, following H&M’s criticism of human rights abuses in Xinjiang. It is estimated that over a million people, predominantly minorities in the area, have been unlawfully detained in camps across the city. Brands including Nike, Adidas, Burberry and Converse were swept up in the controversy, however H&M was one of the first to be targeted for speaking out about the issue. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/16/hm-returns-to-alibabas-tmall-platform-16-months-after-xinjiang-controversy/) Klarna launches new feature allowing UK consumers to view full online order history Buy-now-pay-later company, Klarna, has launched a new feature on its shopping app, which allows UK consumers to view their full online order history, regardless of whether they purchased the product using Klarna. The feature also shows delivery tracking and aids consumers in managing their online purchases more conveniently. [Read more on The Industry](https://www.theindustry.fashion/klarna-launches-new-feature-allowing-uk-consumers-to-view-full-online-order-history/) --- Other Ecommerce News --- Online marketplaces responsible for £280 billion business turnover in the UK Nearly 900,000 UK businesses are currently selling on online marketplaces, generating an estimated £282 billion worth of sales each year. This figure represents 6% of the UK’s annual business turnover, highlighting the notable contribution that marketplaces make to the UK economy, along with the potential for further growth in this area. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/09/online-marketplaces-responsible-for-280-billion-business-turnover-in-uk/)