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.
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.
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.”
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.”
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.
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.”
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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If you’re in the global ecommerce space, you are most likely aware of Amazon, and probably selling your products on the marketplace. With over $470 billion in sales in 2021 alone, Amazon stands as the third largest company in the world based on revenue. The ecommerce giant is a household name in the U.S. and working hard to grow its market share across five continents worldwide.
Having your products available on Amazon and being competitive there, though, are definitely two different things. If you want to really succeed on Amazon, you’ll need specialized insight into how Amazon works and how to make it work for you. So, for many brands, it’s a great idea to work with an Amazon Search Engine Optimization (SEO) agency.
At Pattern, Amazon SEO optimization service is one of our key competencies. We understand that technology, data-driven insights and expertise are the most important tools brands can leverage to win top listing spots on digital marketplaces. With expert teams and years of experience, we help brands conquer the Profitability Death Spiral as they compete with other products and sellers online. We offer Amazon SEO agency services as a core solution to brands that need more resources to get ahead.
An Amazon SEO agency serves brands by improving their products’ rank and listing performance on Amazon. They make strategic decisions about ad spending and placement that lead to higher traffic, conversions, and revenue for ecommerce brands.
A great Amazon SEO Agency partner will:
Unfortunately, many Amazon SEO agencies profit in unfair ways from your brands’ perceived success based on the ROAS numbers they provide. This is done through including branded search terms in ROAS reports, which naturally skew listing performance.
Let’s say, for instance, your brand is called “Annie’s” and you sell lollipops. Your brand has a very high likelihood of winning the top listing spots on Amazon for lollipop search terms that are paired with “Annie’s,” your brand name. So, SEO agencies will spend your ad money on those terms and report a very high ROAS.
To avoid scenarios like these, it’s best to look for an agency that either calculates their profits on metrics other than your ROAS scores or weighs branded search terms differently in the performance metrics reports. Regardless of your Amazon SEO agency’s cost structure, you should align onbranded search terms before committing to a scope of work.
A great indicator of a high-quality Amazon SEO agency is the level of insight they can provide into your competitors’ listing positioning and how it compares to yours. Data fanaticism is so important at Pattern that we’ve developed proprietary technology to display this exact information with precise detail for every brand we work with. In fact, you can find our free version here to see how you compare to some of your top competitors based on ASIN.
It’s certainly possible to improve your Amazon search performance with blind spending strategies. But a truly great solution will help you to know where your dollars are at their most powerful and competitive.
Amazon’s A10 algorithm prioritizes customer satisfaction—it wants to show consumers the best products that align with their search intent to improve conversions and sales. So, the best way to gain momentum on Amazon is to work on incremental wins.
Improving your performance on more obscure search terms that align with your customers’ search intent is a great way to increase ROAS for the long term. A10 will reward your success with better rankings on higher-volume search terms and the virtuous cycle can help you conquer your most-coveted listing spots. And the best part? This process of gaining momentum, if done right, will naturally decrease your ad spend over time as Amazon recognizes your value and works with you to keep your products at the top of consumers’ search results.
As an Amazon SEO specialist, Pattern knows how to help your brand win better success for long-term profitability on Amazon. With our data-driven tools and brilliant teams of ecommerce experts, we help brands with listing management, content optimization, Amazon ad strategies, and more.
Contact us to learn more about our SEO optimization services.