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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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.
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.
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.
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.
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.
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.
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.