If you're thinking about expanding your e-commerce operation to Walmart's online marketplace, one of the first things you'll want to get a handle on is their fee structure for sellers. Fees can put a dent in your profits if you're not careful, so it's crucial to understand what you're getting into upfront. Let's dive into the details on Walmart's fees and what they mean for your bottom line.
No Annual Seller Fee - A Welcome Relief
Unlike some of the other e-commerce players out there, Walmart doesn't require sellers to pay an annual subscription fee or monthly account charges just to list and sell on their marketplace. That's a nice little perk right off the bat. No more coughing up $39.99 per month like you'd have to for an Amazon Professional Seller account.
While Walmart doesn't charge you just for being on their platform, they do take a cut of whatever sales you make through their site. But we'll get to that in a minute.
The Referral Fee Model
Walmart uses what's called a referral fee model. This means you only get charged commissions on the items you actually sell through their marketplace. No sales, no fees.Â
Walmart's referral fees are calculated as a percentage of the total sales price for each item/order. The percentage varies depending on what product category the item falls under.
For example, if you sell books or kitchen products, you'll pay a 15% referral fee to Walmart on those sales. But consumer electronics like TVs and mobile phones have a lower 8% fee. Here's a look at the complete list of fees per category.
Product Category | Referral Fee Percentage |
Apparel & Accessories | 5% for items with a total sales price of $15 or less 10% for items with a total sales price between $15 – $20 15% for items with a total sales price greater than $20 15% for backpacks |
Automotive & Powersports | 12% |
Automotive Electronics | 8% for categories including Dash & Backup Cameras, Car Speakers, Power Inverters, Vehicle Tracking Systems, Car Video Monitors, Radar Detectors, Automotive Remote Starters, Anti-Theft Devices & Car Speakerphones |
Baby | 8% for items with a total sales price of $10 or less 15% for items with a total sales price greater than $10 |
Beauty | 8% for items with a total sales price of $10 or less 15% for items with a total sales price greater than $10 |
Books | 15% |
Camera & Photo | 8% |
Cell Phones | 8% |
Consumer Electronics | 8% |
Electronics Accessories | 15% for the portion of the total sales price up to $100 8% for the portion of the total sales price greater than $100 |
Decor | 15% |
Gourmet Food | 15% |
Grocery | 8% for items with a total sales price of $10 or less 15% for items with a total sales price greater than $10 |
Health & Personal Care | 8% for items with a total sales price of $10 or less 15% for items with a total sales price greater than $10 |
Home & Garden | 15% |
Indoor & Outdoor Furniture | 15% on the first $200 / 10% on amounts over $200 |
Industrial & Scientific | 12% |
Jewelry | 20% for the portion of the total sales price up to $250 5% for the portion of the total sales price greater than $250 |
Kitchen | 15% |
Luggage & Travel Accessories | 15% |
Major Appliances | 8% |
Music | 15% |
Musical Instruments | 12% |
Office Products | 15%, except 8% for Calculators |
Outdoor Power Tools | 15% for items with a total sales price ≤ $500 8% for items with a total sales price > $500 |
Outdoors | 15% except 8% for Hunting Trail Monitors, Binoculars, Telescopes, Spotting Scopes, and Night Vision Goggles |
Personal Computers | 6% |
Pet Supplies | 15% |
Plumbing, Heating, Cooling & Ventilation | 10% |
Shoes, Handbags & Sunglasses | 15% |
Software & Computer Video Games | 15% |
Sporting Goods | 15% |
Tires & Wheels | 10% |
Tools & Home Improvement | 15%, except 12% for Base Power Tools |
Toys & Games | 15% |
Video & DVD | 15% |
Video Game Consoles | 8% |
Video Games | 15% |
Watches | 15% for the portion of the total sales price up to $1,500 3% for the portion of the total sales price greater than $1,500 |
Everything Else | 15% |
As you can see, the fees tend to be higher for things like apparel, home goods, and beauty products, while charging lower rates for electronics. Which leads us to the next thing that sellers should keep in mind.
Do the Math on Your Margins
While not having to pay any upfront fees to be on Walmart's marketplace is enticing, you'll still want to crunch the numbers on your expected margins after their referral fees are deducted. Those fees can add up quickly depending on your product mix.
Factor in your full costs of goods, labor, shipping, returns, customer service, and any other overhead expenses. Make sure you'll still be clearing enough profit after Walmart takes their cut. If the math doesn't work out favorably, Walmart may not be the right sales channel for your products.
You also need to account for sales tax compliance, which we'll cover later. Sellers are on the hook for properly calculating, collecting, and remitting sales tax - not something to be taken lightly. The last thing you want is to deal with an unexpected tax bill.Â
How Walmart Pays Sellers
When you make sales through Walmart's marketplace, the money gets deposited into your Payoneer account. Payoneer is the company that Walmart has partnered with to handle all payment processing for marketplace sellers.
You'll need to sign up for a Payoneer account if you don't have one already. The good news is there are no fees from Payoneer when you get paid from Walmart if you register your account during the onboarding process from Walmart's Seller Center. If you had an existing Payoneer account first, there can sometimes be fees that you'd have to request refunds for.
Don't overlook the importance of setting up admin permissions properly on your Payoneer account. Only designated admins should be able to view and adjust financial settings.
Dealing with Sales Tax
We mentioned this earlier, but sellers can't ignore the need to deal with collecting and remitting the proper sales tax amounts for Walmart marketplace orders. Technically, as the seller you are responsible for understanding and handling sales tax appropriately based on tax laws across all of the locations you are shipping orders.
Walmart does provide some resources for sellers around sales tax, including the ability to set up tax calculations at the product level based on ship-to location. There are also tax services and software platforms that can help simplify tax compliance if you sell across multiple states or channels.
Don't take sales tax obligations lightly, as failure to properly comply can lead to audits, fines, and other penalties down the road. Get set up correctly from the start.
Pricing Strategies for Walmart
When it comes to setting the prices for your products on Walmart's marketplace, there are some unique strategies and policies to be aware of beyond just accounting for their referral fees.
Walmart has an intense focus on providing customers with low prices and actively enforces pricing rules to maintain that across their marketplace. If they detect situations where your items are priced higher on Walmart compared to other sites, they can actually unpublish or suspend your listings.
The two main pricing policies to understand are:
Price Parity Rule - If Walmart finds you offering lower prices for the same items on other sites, your Walmart listings can get unpublished.
Price Leadership Rule - Even if your prices match on other sites, if Walmart finds significantly lower prices from other sellers for those same items, your listings can get removed.
The bottom line is, strive to offer highly competitive pricing on Walmart that undercuts the market as much as reasonably possible. Winning the Buy Box is heavily influenced by having the lowest price.
It's also wise to closely monitor all of your costs and variables that go into your pricing like shipping fees, returns, overhead, etc. That will allow you to keep prices as low as viable to maximize sales through Walmart.
The Walmart Opportunity
While making sure the fee economics work out is important, the opportunity of getting your products visible on Walmart's highly trafficked online marketplace is massive. Millions of shoppers visit the site each month looking for great deals.
By removing prohibitive upfront fees and using a commission model, Walmart has lowered the barrier to entry for sellers - both small and large. With some intelligent pricing and cost management strategies, selling on Walmart can be a profitable stream of added revenue.
Just be sure to thoroughly understand their fee policies, comply with the rules of operating on their marketplace, and continually review your profitability metrics. Do that, and you'll be well-positioned to make the most of the Walmart selling opportunity.