As Chinese sellers leave Amazon, has Walmart become a popular target?

During the epidemic, cross-border e-commerce has experienced explosive growth, and more and more people want to join this industry to share a piece of the pie. Amazon, a cross-border e-commerce giant, has become the preferred platform for many new sellers due to its high market share, mature platform mechanism, and large user base.

However, after a series of events such as the "account blocking wave" and the increase in platform fees, the number of Chinese sellers on the Amazon platform is declining. Some of these cross-border sellers who have withdrawn from the Amazon platform have flowed to other cross-border e-commerce platforms such as Walmart, eBay, and AliExpress.

Amazon loses a large number of Chinese sellers

Although Amazon is the main channel for Chinese brands and sellers to reach consumers in Western markets, recent studies have shown that Chinese sellers are reducing their dependence on the Amazon platform and starting to move towards a multi-platform layout.

Data from e-commerce research firm Marketplace Pulse shows that the share of sales by Chinese sellers on Amazon has dropped from about 48% at the end of 2020 to about 42 % in May 2022. This trend is particularly evident in 2021. In December 2020, the number of Chinese sellers accounted for about 42% of Amazon's top brands. By the end of 2021, this proportion was only about 36%.

The decrease in the number of Chinese sellers on the Amazon platform has a lot to do with the "account blocking wave" in 2021. In this storm, a large number of big-selling stores were affected, and small and medium-sized sellers were not spared. Many of these sellers whose accounts were blocked had to announce layoffs or even bankruptcy.

In addition to the large-scale account blocking, the continuous increase in Amazon's operating costs has also become an important reason for sellers to "escape" from Amazon. Advertising fees, storage fees, logistics costs, etc. have become several huge mountains weighing on Amazon sellers.

It is reported that at the end of 2021, the price per click of ads on Amazon reached US$1.33, a 43% increase from US$0.93 at the beginning of the year, and a 37% increase compared to 2020. In addition, the cost of Amazon FBA has also increased several times this year.

As Amazon's regulatory policies tightened and operating costs increased, the living environment for sellers became worse, and voices criticizing Amazon began to emerge. According to public data, Amazon's share of the cross-border e-commerce business of top sellers is also declining.

Anker Innovations revealed in its annual report that sales on the Amazon platform accounted for 54.66% of its total revenue in 2021, a decrease of 7.08% compared with last year; Zebo's sales on the Amazon platform accounted for 93.40% of its total revenue in 2020. By 2021, this proportion had dropped to 76.54%, a drop of nearly 17%.

Source: Xinghui Shares 2021 Annual Report

While reducing their Amazon business, these big sellers are beginning to pay more attention to multi-platform layout, and the business share of channels such as Walmart, eBay, and independent websites is increasing.

95% of sellers are profitable. Is Walmart Marketplace attractive?

While Chinese sellers are constantly leaving platforms such as Amazon and Wish, Walmart's platform has continuously welcomed an influx of new sellers. For e-commerce sellers and brands who want to launch new businesses or expand existing businesses, Walmart Marketplace is currently a good choice .

At present, there are relatively few sellers in Walmart , the platform fee is low , and sellers can enjoy the convenience brought by Walmart's global supply chain logistics . At the same time, Walmart's third-party platform provides sellers with a large and loyal customer base, and seller competition is relatively small compared with other e-commerce platforms .

According to the editor, currently on the Amazon platform, an average seller can connect with 48 customers, while on the Walmart platform, the average number of customers a seller can connect with is 1,918 . The difference in data is still very obvious.

In addition, for Amazon Professional Plan, sellers need to pay $39.99 per month, while Walmart Marketplace currently does not charge any fees. Walmart estimates that the platform will welcome 40,000 new sellers in 2022.

The 2022 Walmart Seller Status Report released by Jungle Scout shows that 95% of small and medium-sized sellers are profitable on the Walmart market, of which 54% have annual income exceeding six figures, and 33% of small and medium-sized sellers have profit margins of more than 20%.

For enterprise-level sellers, 57% reported annual revenues between $2 million and $10 million, and 19% reported annual revenues of more than $50 million. Of these sellers, 29% are supplier sellers (1P sellers), 79% are third-party sellers (3P sellers), and 8% are a mix of 1P and 3P sellers.

In terms of seller experience, small and medium-sized sellers currently selling in the Walmart market are generally more experienced, with approximately 50% of sellers having more than three years of online sales experience, and 28% of sellers having more than five years of sales experience.

Another significant advantage of Walmart is its recognition as a major retailer. For decades, Walmart has had a huge loyal customer base in the United States with its low prices, wide range of products and convenience .

According to a Jungle Scout report , 59% of American consumers shop at Walmart stores , and 34% shop at Walmart.com. In addition, 90 % of Americans live within 10 miles of a Walmart store , and its convenient pickup and return services are unmatched by most other e-commerce platforms .

In terms of advertising expenses, which have a greater impact on profits, sellers currently invest more in advertising on the Amazon platform. 79% of Amazon sellers spend more than $500 on advertising per month, while 53% of sellers on Walmart Marketplace spend $500 or more on advertising per month.

Currently, Walmart's e-commerce penetration rate in the United States is 13%. In 2020, 2021 and 2022, the e-commerce channel contributed net sales of US$24.1 billion, US$43 billion and US$47.8 billion to Walmart in the United States, respectively, with a year-on-year growth of 98% in the past two years.

Although Walmart currently has obvious advantages over other platforms in some aspects, and many sellers on the platform have improved their traditional sales methods to adapt to the platform, as a relatively new and rapidly changing platform, Walmart's sellers also face challenges in operations and logistics.

In the past year, almost all companies have encountered difficulties and challenges brought about by the epidemic and global supply chain disruptions , and Walmart market sellers are no exception. 82 % of platform sellers said that they were affected by supply chain issues in 2021.

Although the competition among sellers on Walmart Marketplace is not as fierce as on Amazon, sellers who use Walmart Marketplace as part of their omnichannel sales strategy have the following concerns:

1. Increased commodity costs ;

2. Price declines due to increased competition ;

3. The time for goods to enter warehouse and order delivery becomes longer;

4. Increased freight costs ;

5. Keep learning to sell normally on the platform.

The current policy of the Walmart platform is very friendly to Chinese sellers, but when sellers are planning to deploy on multiple platforms, they still need to carefully consider their actual business conditions and choose the business strategy that best suits them.

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