In 2020, Walmart became the world's biggest company by revenue by generating $559 billion in sales, compared to Amazon with $386 billion. In the same year, Walmart also released Walmart Fulfillment Services, a program that gives its sellers access to their world-class supply chain. It’s also a direct competitor to Amazon’s FBA program.
While it has long been known for its brick and mortar locations, Walmart’s online presence traditionally lagged behind. But after years of heavy investment and focus, Walmart.com has become the biggest competitor to Amazon in the ecommerce space. This has led to many sellers either switching over to the platform or opening a secondary account there. Of course, this wouldn’t be possible if Walmart’s services could not compete with Amazon’s, and few areas have more impact on a seller’s ability to do business than fulfillment.
Amazon's FBA has been a popular choice for years but ever since Walmart Fulfillment Services launched, more and more sellers are now starting to pay attention to this program because of its benefits. Since it launched in February 2020, WFS has been receiving praise from sellers who've adopted it.
But what really is the difference between the two? What are the advantages? And how do you know which one is better for your business? We’ll go over each so you can make an informed decision.
The Advantages of Using Walmart Fulfillment Services
As of August 2021, Walmart Marketplace has reached over 100,000 sellers on its platform. According to an article by Modern Retail, even if WFS had a rough start for several months when it started with just 150 enrollees, it had a sharp jump on the number of sellers enrolled in the program just after a few months. This just means that Walmart is placing a priority on the growth of its fulfilment program.
1. Faster Shipping
WFS enables sellers to offer nationwide 2-day shipping on their products, which has been proven to lead to a 30% higher conversion rate compared to longer shipping windows. This not only improves searchability but also increases the likelihood of winning the Buy Box, driving more sales for sellers.
2. Better Reporting
Walmart collaborates closely with sellers to create comprehensive dashboards that provide valuable insights into product performance and overall metrics. This enables sellers to make data-driven decisions, identify underperforming products, and improve their overall performance on the platform.
3. Convenient Return Policy
Walmart's return policy is easy and free. Walmart will manage all returns on the seller’s behalf, and because Walmart has over 5000 stores nationwide, customers can choose to return their items at any nearest stores or they can return their items by mail. Buyers can choose which option best fits their circumstances. This lowers the barrier to purchasing, leading to more sales.
4. Excellent Customer Service
With WFS, Walmart takes responsibility for post-sale processes, including customer service. They have dedicated customer service lines for WFS, prioritizing support tickets and ensuring a faster response rate. This allows sellers to focus more on growing their sales on Walmart, rather than dealing with customer inquiries and returns.
5. Individual Inventories
One of the notable drawbacks associated with Amazon FBA is the concern surrounding the commingled inventory system and its potential impact on brand authenticity. This issue arises when genuine brands unintentionally find themselves accused of selling counterfeit products due to the mingling of inventory within the FBA system. However, this concern is effectively addressed by Walmart Fulfillment Services (WFS) through their dedicated inventory pool approach, providing sellers with peace of mind. With WFS, each seller receives their own separate and exclusive inventory pool, ensuring that their products remain distinct and untangled with other sellers' items.
6. Beginner Friendly
Walmart Fulfillment Services stands out as an excellent option for newcomers venturing into the realm of ecommerce or entrepreneurs who may be unsure about their approach. The platform's user-friendly interface, coupled with Walmart's commitment to supporting sellers, makes it an ideal choice for those starting their online business journey. Walmart also provides dedicated WFS call center associates who are readily available to address any questions or concerns that sellers may have. These associates possess a deep understanding of the platform's intricacies and can offer valuable guidance, ensuring sellers are equipped with the necessary information to navigate the WFS ecosystem successfully.
7. Lower Fulfillment Costs
Leveraging Walmart's large-scale supply chain, sellers can offload some of their logistical costs in exchange for a monthly fee. The savings achieved can be reinvested in product improvement, expanding the assortment, or offering customer discounts. This cost efficiency contributes to the impressive growth in Gross Merchandise Value (GMV) experienced by brands utilizing WFS.
The Advantages of Using Amazon’s FBA
Based on Jungle Scout's report, there are nearly 3 million active sellers on Amazon and almost 92% sell using Amazon FBA. Nearly all Amazon sellers (92%) sell using Amazon FBA, and two out of five (43%) use Amazon FBM. Here are some of the advantages of using its fulfilment services.
1. Size & Weight Restrictions One advantage of using Amazon FBA is that most product types and sizes are accounted for. They don’t have any size and weight restrictions so they accommodate more sellers. For WFS, the maximum product weight is 30 lb and the maximum product dimension is 25″ x 20″ x 14″. Amazon’s FBA accepts oversize items up to 151 lbs with max. dimension 108" on the longest side.
2. Multi-Channel Fulfillment
Right now there is only one Walmart fulfillment center designated for the WFS program. But for Amazon’s FBA, sellers can ship through multiple fulfillment centers. Amazon can fulfill orders both on and off the Amazon marketplace. Some of their fulfillment houses also invest in technology and automation which makes them more efficient.
3. Access to Prime audience Access to Prime audience - By utilizing Amazon FBA, brands gain the advantage of tapping into Amazon Prime's extensive audience. With over 100 million Prime members worldwide, businesses can significantly enhance their brand awareness and exposure to a vast customer base. Being eligible for inclusion in Amazon Prime deals not only increases the visibility of products but also instils a sense of trust and credibility among Prime members, leading to increased sales and customer loyalty.
4. Customer Trust
One of the significant advantages of utilizing Amazon FBA is the established and well-earned trust that customers have developed towards the Amazon brand and the Amazon Prime program. Amazon's long-standing presence in the ecommerce industry, coupled with its focus on customer satisfaction and reliable fulfillment services, has fostered a strong sense of trust among consumers. The recognizable Amazon logo and the assurance of Prime membership evoke a sense of reliability, efficiency, and high-quality service. Customers are more likely to have confidence in brands that display the Amazon Prime logo, knowing that their orders will be handled with care, shipped promptly, and delivered reliably.
5. Return Methods
There are more ways to return an item in FBA compared to WFS. Here are the different ways:
Using drop off services at locations that are convenient for you (Whole Foods, Kohls)
Using pickup options
Using Heavy-Bulky return options, handled by a specialty carrier team
Using Locker, Locker+, and Amazon Hub Counter locations for small packages
Using a scanned QR code at designated returns locations to make label-free and package-free returns
Conclusion
Signing up for Amazon FBA (Fulfillment by Amazon) and Walmart WFS (Walmart Fulfillment Services) can provide several advantages for businesses looking to expand their online sales channels. These services offer convenience, reach, and logistical support.
Nothing prevents sellers from using both services if they think it's best for their brand. In fact, if you’re selling on both platforms, this is what we’d recommend to the vast majority of sellers. While Walmart Fulfillment Services and Fulfillment By Amazon both cut into your margins, the competitive value they give in return far outstrips the cost. Whether it’s in terms of peace of mind or additional sales, taking advantage of the website’s fulfillment service is an easy choice.
However, it's important to recognize that they alone aren't sufficient for running a successful business.
Brand Building: While FBA and WFS offer convenience, they primarily focus on fulfilling orders rather than brand building. Businesses should invest in marketing efforts, social media presence, content creation, and customer engagement strategies to develop a strong brand identity and foster customer loyalty.
Competitive Pricing and Product Differentiation: FBA and WFS do not dictate product pricing or differentiation strategies. Businesses must conduct market research, analyze competitors, and offer compelling pricing and unique value propositions to stand out in the crowded marketplace.
Account Metrics - Even if the service handles shipping and basic customer service, maintaining your other account metrics is essential to thrive in the competitive marketplace. This involves ensuring high seller ratings, positive customer feedback, and low order defect rates. By consistently meeting and exceeding these performance metrics, sellers can enhance their visibility, build trust with customers, and increase their chances of achieving long-term success on these platforms.
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