As the eCommerce landscape continues to evolve, two key players have emerged, each offering its unique solution for online sellers - Walmart Fulfillment Services (WFS) and Fulfillment by Amazon (FBA). WFS, a relatively new entrant, has been strategically positioned by Walmart to rival Amazon’s dominant FBA service.
Amazon, the trailblazer of the online marketplace, launched its FBA service in 2006, a decade after its inception in 1995. Walmart, a titan of the retail industry, ventured into the eCommerce arena with WFS much later in 2020. Amazon’s early foray into the online market conferred the first-mover advantage, setting a high bar for competitors. On the other hand, Walmart’s decades of retail experience and vast physical store network give it a unique competitive edge.
But the critical question for sellers remains: which service comes out on top? To answer this, we must delve into the core features, benefits, and strategies of each.
What’s an online marketplace without its customers? Not much, I assure you. The heart and soul of Amazon FBA and Walmart WFS lie in their potential customer reach. That’s where the essence of eCommerce resides - in the vast number of individuals who browse, click, and buy.
With its unmatched customer base, Amazon mirrors a lively global marketplace, pulsating with millions of shoppers from across the globe. Claiming an impressive 39.5% share of the U.S. eCommerce market in 2022, Amazon stands as an eCommerce titan with an influence that’s difficult to rival.
Once a brick-and-mortar titan, Walmart has plunged into eCommerce enthusiastically, with an eCommerce sales growth of an impressive 74% in the first quarter of 2020 alone. But how do these facts translate to a business owner looking to take a slice of this vast eCommerce pie?
Here’s a surprising fact: Walmart only has about 30,000 sellers compared to Amazon’s staggering 3 million. What does this mean for you? A golden opportunity to stand out from the crowd, potentially. With Walmart’s robust infrastructure enabling fast two-day shipping, and a more straightforward, fixed fee structure, WFS may be the less-trodden path to your business success.
It’s also vital to comprehend the nature of these eCommerce titans’ customer bases. Amazon, with its diverse consumer reach, poses both opportunities and challenges. Imagine an array of customer preferences, needs, and habits - a vast playing field that demands a well-rounded understanding of varying market segments.
In contrast, Walmart, with its robust presence in the grocery sector, might present a more homogeneous customer base. If your products resonate with this market segment, Walmart WFS might be the targeted platform you seek.
Understanding the composition of selling fees is crucial to make a well-informed decision between Amazon FBA and Walmart WFS.
Walmart WFS adopts a simplified fee structure, consisting mainly of the monthly storage fee, referral, and fulfillment fee. This straightforward pricing makes it easy to estimate ROI for sellers. Conversely, Amazon’s FBA program employs a more complex system, with prices based on product dimensions and weight, including additional charges such as long-term storage fees.
Amazon’s referral fees range from 6% to 45% per item, while Walmart charges a 6% fee for Personal Computers and 15% for Music items. Regarding storage fees, Walmart’s charges are comparable to Amazon’s from Q1 through Q3 and lower during Q4. However, Walmart’s fees increase if products are stored for over 30 days during the Q4 holiday season. Therefore, for short-term storage during the holidays, Walmart might be more economical, but Amazon may provide a better deal for more extended storage periods.
How do both these platforms handle customer returns? Amazon FBA takes the reins here, handling customer service, processing returns, and restocking eligible items into the seller’s inventory. WFS also deals with returns, bringing Walmart’s extensive physical store network into the mix and enabling customers to return items at any Walmart location. That’s convenience redefined.
Choosing between Walmart WFS and Amazon FBA is like deciding between a Swiss Army knife and a specialized tool. Both have merits and potential drawbacks, and your choice heavily depends on your business model, product, target market, and growth strategy.
Do you run a small business eyeing domestic growth and favor a more straightforward fee structure? Then WFS might be your ideal choice. On the other hand, if your ambitions soar towards global expansion and you can decipher the complex fee structure, then FBA might be your ladder to eCommerce success.
In conclusion, the choice between WFS and FBA isn’t black or white, good or bad. Finding the right fit, the perfect shoe that matches your unique footprints in the eCommerce landscape, is a matter of finding the right fit. So, will you walk the path of the tried and tested or venture into the emerging and promising? The choice is yours, and the world of eCommerce awaits your decision.
