Hundreds of orders a day! Is it profitable for sellers to sell on Walmart?

The cross-border e-commerce industry is constantly changing, and the resulting anxiety is pushing sellers to build more business fulcrums.

Recently, there have been several waves of account blocking in the independent station field; the previous wave of account blocking by Amazon also defeated a group of mid-level sellers, and the top sellers who survived are facing a significant decline in business, and it may take three to five years to recover.

Once an account is blocked, it is not easy for a company to recover. Last year, Youkeshu's cross-border e-commerce revenue fell by about 60%, and its parent company Tianze Information lost nearly 2.7 billion yuan; from January to March this year, Tianze Information's revenue fell by more than 70% year-on-year, and the company still lost 27 million yuan.

With the warning of these cases, sellers set "compliance" as the first safety operation principle. At the same time, they began to touch more platforms to increase business support, so that even if one business is damaged in the future, the tragic collapse of the building can be avoided.

For many platform sellers, if they can get a ticket, Walmart will be their first stop to expand into new platforms.

In recent months, Walmart has changed its aloof attitude and lowered the entry threshold of "annual sales of $1 million" to "$300,000" on the US site . It has begun to issue passes and actively recruit merchants. Many sellers are eager to try, but they are also curious: How are the sellers who settled in Walmart earlier doing now? How are the sales operations on Walmart different from those on other platforms? In order to understand these, we talked to the sellers who settled in first.

Women's clothing sellers receive hundreds of orders a day

A Guangzhou technology company mainly sells adult women's clothing. It started out as an Amazon and eBay platform. In 2017, when only American companies could enter Walmart, the company entered the market and became one of the first Walmart sellers in China, a true pioneer.

Now, the company has registered multiple Walmart stores. Last year, each of its stores sold dozens to hundreds of orders per day, which is a satisfactory result.

When the company first entered Walmart, operations were not smooth. A relevant business person said: "It was a brand new platform at the time, and we could only rely on our experience at Amazon and eBay to slowly explore. Operational talent was also relatively scarce at the time, so the company could only transfer people from other platform business departments to try one by one to see if operations could adapt to this new platform."

At this time, the most troublesome problem for sellers is that there are too many bugs in the platform system . For example, the link suddenly disappears a few days after the product is put on the shelves, and the price changes for no reason. This common strange situation has caused considerable losses to the sellers.

In addition, the platform's customer service communication was not smooth. The customer service staff had limited knowledge of the platform and operational issues, and could not effectively answer many of the questions reported by sellers. Sellers could only repeat the test themselves to find feasible solutions, and those that could not be solved had to be put on hold temporarily. This was a major problem for many sellers at the time.

Product selection and advertising are also a major difficulty. The entire market does not have a lot of effective data and reviews, so it is difficult to quickly evaluate potential products. Although advertising is similar to Amazon, there are no negative words, so it requires more skills in the strategy.

Under such circumstances, the company encountered difficulties in its first year after its establishment and the operating results were not good.

After a one-year transition period, it has accumulated some experience, and the clothing category has gradually improved from 2018 to 2021. In one platform activity, the daily sales of 2-3 products increased by 20 times.

In terms of business categories, the company not only sells clothing, but has also tried many categories on Walmart. They don't want to rely on just one category to dominate, so they have been trying to develop new products in other categories.

Currently, the company has an independent Walmart department, but there is a shortage of Walmart operations in the industry, so many sellers can only transfer people directly from Amazon and other business departments. According to the company's analysis, there are still obvious differences between the two platforms in terms of operational details.

1. Advertising costs. Walmart started late, and the traffic gap between it and Amazon is not small. If sellers want to achieve better performance, the only way is to promote their products to the top. On Amazon, the advertising cost per click for red ocean categories has reached several US dollars; on Walmart, the advertising cost of promoting products to the top is only a few tenths of a US dollar per click, which is lower.

(Image source : Jungle Scout)

" The way to make big money on Walmart now is that the product must be at the top of the big word search page. For example, for the keyword ' women's swimwear ' , you put the product at the top, so that the average daily order volume will be considerable , about 1/4 of the volume on Amazon . "

2. Price. Walmart’s consumer group determines its preference for low prices. “The products sold on Walmart are basically the lowest prices on the market. When you list your products, the platform does not allow prices to be higher than Amazon. If they are higher than Amazon, it may match the prices of similar products and ask you to lower the price. So if you have a product with a particularly high value, it may not be easy to sell on it.” Fake promotions that increase prices first and then reduce them will not work. Of course, if your product is at the top, there will still be a certain premium space.

3. Profit. The company believes that there is not much difference in this aspect. Its company can maintain a gross profit margin of 20%-30% in the clothing category , which is quite considerable.

4. Delivery fee. The larger the seller's shipment, the lower the shipping fee will be when using Walmart Logistics WFS. "If you have large shipments, such as large furniture such as monitors , Walmart's shipping fee is much cheaper than Amazon's. The difference for one package may be only 20 or 30 US dollars. " But if it is a small shipment, the cost of using WFS may be higher than FBA.

5. Logistics timeliness. Both FBA and WFS have relatively fast timeliness. According to sellers’ feedback, WFS has a higher “two-day delivery” reach rate due to the widespread offline stores of Walmart. On Walmart, according to its “one-week delivery” store performance assessment requirements, sellers’ self-delivery from domestic warehouses takes a long time, and only 50-70% can meet the timeliness requirements. About 90% of sellers using overseas warehouses can meet the requirements; similar to FBA, WFS is more recommended by the platform.

The two also have unexpected crossovers in logistics. Recently, some sellers have had their accounts suspended for violating Walmart’s policy of using Amazon’s multi-channel delivery, which is also a minefield for new sellers.

Under the current situation, sellers on both Amazon and Walmart are having a hard time. The impact of high freight costs and geopolitical conflicts has radiated to multiple platforms indiscriminately. "In the past few months, we feel that sales are not as good as before. The current plan can only be said to be to stabilize the status of last year. The specific situation depends on the peak season this year. We will also prepare stocks normally." The company said.

In the industry, as the platform relaxes entry requirements, more and more sellers have come to Walmart. Although some sellers have not yet entered, they also said they would consider entering the market in the future when the market matures.

Walmart becomes a popular destination for sellers

Marketplace Pulse data shows that amid the Amazon ban, Chinese sellers have been losing market share on Amazon for most of 2021. After years of increasing market share, this trend has unexpectedly reversed.

Compared with the previous five years, 2021 is an abnormal year. Previously, the market share of Chinese sellers in Amazon's best-selling products increased year by year, from 16% to 22% in 2017, from 23% to 26% in 2018, from 26% to 33% in 2019, and from 35% to 42% in 2019. It began to decline in 2020, and by the end of 2021, the figure had dropped to 33%. This figure analyzes more than 90% of the top sellers and is taken from the average of Amazon's four core markets (the United States, the United Kingdom, Germany and Japan). Among the four markets, the largest decline was seen on Amazon in the United States.

At the same time, Walmart opened its doors to international sellers in March and added more than 6,000 Chinese sellers. By the end of 2021, new sellers accounted for more than 20% per month.

Walmart Marketplace had 148,458 sellers as of May 10. So far this year, 18,705 new sellers have joined the marketplace, 5,497 of which joined in the last month.

(Image from Marketplace Pulse )

This year, Walmart has stepped up its efforts to attract investors and has appropriately relaxed the threshold for attracting investors. For many sellers seeking to operate in multiple channels, it is undoubtedly a popular choice. Some sellers do not have enough qualifications to apply on their own, so they want to buy a Walmart account, and the service provider quotes 35,000 yuan.

The Guangzhou company mentioned above said that the number of Walmart sellers is still relatively small, so the platform also wants to attract Chinese sellers. In the case of an unsaturated market, this platform still has room for profit. Compared with the Amazon platform, Walmart is more friendly to sellers in that there is no monthly or annual fee for opening a store, which is equivalent to saving a lot of costs.

According to official news from Walmart, the current conditions for sellers to join Walmart's US site include the following: 1. Chinese companies that operate legally and in compliance with regulations; 2. Rich experience in operating cross-border e-commerce platforms; 3. Fast and reliable order fulfillment capabilities; 4. Annual sales of a single account on the cross-border e-commerce platform in the past year is greater than or equal to US$300,000.

Regarding the last question about sales volume, Walmart also made a special note: sales volume is only a reference standard. For sellers with high-quality production capabilities, rich supply chain resources and brand advantages, Walmart will comprehensively judge whether your application is approved based on business development needs.

According to people familiar with the matter, Walmart’s previous entry threshold was an annual sales volume of one million US dollars. At that time, the platform wanted to recruit some qualified sellers to join. Although the sellers were enthusiastic, the reality was that it was difficult to get a ticket. Now, perhaps the platform wants to obtain higher traffic and further expand the categories of consumer demand, and suddenly relaxes the entry threshold to annual sales of 300,000 US dollars, which is a sales volume that many domestic sellers can achieve. Therefore, it is obvious that Walmart has increased its investment promotion efforts this year. As a platform, Walmart has a corresponding investment promotion target in China this year, and this target is not small, so Walmart is also continuing to make efforts.

At the end of April, Walmart also held a global e-commerce seller summit in Shenzhen, one of its main purposes was to attract more Chinese sellers to join.

Walmart has also introduced some preferential policies for new sellers. From the beginning of sales on Walmart.com, sellers can enjoy a 50% commission discount in the first 90 days. If you apply to join WFS and send at least one item to Walmart's logistics center before June 30, you can enjoy free storage and WFS delivery discounts in the first 90 days.

In terms of platform commissions, there is not much difference between Walmart and Amazon. Basically, the platform will charge sellers about 8%-15% for each order . The specific commission depends on the category. Now the commission for new sellers in the first 90 days is reduced by half, which is a significant move.

It is understood that the commission rate for many categories on Walmart US is 15%, including home furnishings, maternal and child care, furniture decoration, pets, beauty products, etc. The commission rate for automotive products is 12%, consumer electronics is 8%, and the lower commission rate for personal computers is 6%.

(Photo from Walmart)

According to the official statement, the above categories are also popular categories with strong competitiveness. The above-mentioned Guangzhou company employee believes that some of the categories mentioned by the official are indeed popular in Walmart.

First of all, in reality, Walmart has done well in many categories related to home furnishing. For example, many Americans have single-family homes, most of which have gardens, so lawn mowers and other garden products sell particularly well.

Secondly, 3C products and clothing products meet the needs of most consumers and have good sales;

Furthermore, pet products are also very popular. Many Americans keep pets, so there is a natural demand for pet-related products. In terms of specific products, some relatively unique pet tombstones and urns will also have a certain market.

How far apart are Walmart and Amazon?

With the support of popular categories and the platform's preferential policies to relax the threshold, a group of sellers may be accelerated to enter the market.

For sellers who want to try to settle in Walmart, Walmart’s veteran sellers gave several suggestions:

1. Walmart is a new track and also a safe haven. Some sellers have a single sales channel. For example, some sellers who only sell on the Amazon platform face high risks after being blocked by the platform. If there are unsalable stocks, the capital turnover pressure will be very high. Moreover, with the fierce competition on the platform, price involution has already occurred, which may be unsustainable in the long run. Walmart is a channel that can disperse high risks;

2. Currently, Walmart is actively attracting sellers and will also provide some benefits to new sellers. The platform fees have been reduced, which is a real benefit to sellers;

3. Walmart itself has certain advantages. It has offline supermarkets and has always been one of the Fortune 500 companies. It has certain financial guarantees, relatively stable payment returns, and sellers will also be more secure.

In addition, the above-mentioned Guangzhou company admitted that if sellers have the conditions and ideas, they can enter the market early and take advantage of the fact that the overall number of sellers is small. After entering the platform, the advantageous categories on other platforms can be directly transferred to Walmart. If there are no advantageous categories, they can start directly with high-quality products. Now Walmart is not a suitable platform for distribution.

However, after some sellers have been in the market for a while, they found that the orders are not so strong, but overall it is still worth operating. "To be honest, there are not many orders in normal times, just a few dozen orders a day, and even with the advertising costs, the overall sales are probably still a loss. But the sales are really impressive during the peak season at the end of the year. It is still possible to maintain the number and staff during the off-season, and focus on the peak season." said a seller.

In terms of the most critical sales scale, Amazon is still a big step ahead of Walmart.

According to the 2022 fiscal year report data released by Walmart , Walmart's e-commerce net sales were US$73.2 billion, an increase of 11% year-on-year and an increase of 90% compared to two years ago, almost doubling.

Coincidentally, Walmart's fiscal year 2020 ended less than two weeks after the first confirmed case of COVID-19 in the U.S. Based on this timeline, Walmart's e-commerce business really took off after the pandemic.

The epidemic also boosted the performance of the Amazon platform. In 2021, Amazon surpassed Walmart for the first time and became the retail king in the United States.

According to PYMNTS data, nearly 60% of online retail purchases in the United States were completed on Amazon in 2021, and its share of the US retail market reached 56.7% in 2021. In contrast, Walmart's market share in domestic digital retail sales in the United States was only 6.2% at the end of 2021. Amazon is nearly 10 times ahead of Walmart.

However, Walmart's online channels are growing rapidly, which has also attracted many sellers.

A 2022 Walmart Seller Status Report shows that Walmart will have 100 million unique visitors per month in 2022; 31% of buyers search on Walmart first when shopping; 20,000 sellers entered the Walmart US site in 2021, and it is expected that another 40,000 will be added in 2022.

Because the number of sellers is limited, Walmart sellers can get more traffic. According to the current traffic situation and the number of sellers, an Amazon store can get 48 customers on average , while a Walmart store can get 1,918 customers.

The report also shows that 95% of Walmart sellers have profitable businesses; 73% of Walmart sellers have a profit margin of more than 20%, and more than half of the sellers have an annual income of more than $100,000; 57% of corporate sellers have an annual income between $2 million and $10 million; 54% of small and medium-sized brands have an annual income of more than six figures, and 33% have a profit margin of more than 20%.

As Walmart's seller base gradually expands, the feedback from the industry on the platform is also increasing. Some sellers said that Walmart's refund rate is too high, and the platform tends to protect buyers, and high turnover does not mean high gross profit. The return rate issue was mentioned by many sellers.

On the other hand, although the Walmart platform has been gradually improved and new functions have been continuously introduced since its opening , it obviously still needs further optimization.

For example, when sellers upload products using a form, upload errors often occur due to system problems; if sellers want to upload multiple products at once, they may have to upload multiple times before they can succeed, or they can only open a case to find customer service to resolve the issue. Today, Walmart is equipped with both English and Chinese customer service, but Chinese customer service still has limitations. In comparison, although Amazon's system occasionally has bugs, it is generally much more reliable than Walmart.

In addition, Walmart may also need to synchronize some functions on other platforms, especially in terms of advertising, such as ad negatives, first bidding and second bidding principles, which many sellers are concerned about.

Overall, as Walmart's e-commerce business continues to grow, more cross-border sellers have high hopes for it, hoping that it will become a platform that can compete with Amazon.

An industry insider said that looking at several competitors, it seems that only Walmart has the strength to compete with Amazon. Its biggest advantage is offline pickup, which can help it accumulate consumer groups over the long term. This huge offline group is entirely likely to be transformed into online consumer power.

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