Walmart is investing more in its online marketplace as the company takes steps toward closing the gap between Amazon as a leading online retailer.
Online sales for Walmart increased more than other retailers like Macy’s and Target, both reporting e-commerce revenue declines this quarter. Walmart is enlisting the help of its third-party online marketplace selling clothing, shoes, groceries, and big-ticket items like furniture to boost sales this holiday season as it strives to chip away at Amazon’s lead.
It’s still a wide gap with online market leader Amazon, which makes up 37.6% of the total market share of online sales in the U.S., compared to Walmart’s 5.9%, according to CNBC.
Walmart remains the largest overall retailer, totaling $611.29 billion in revenue over Amazon’s $538 billion, according to Macrotrends, but its move to grow its marketplace follows the Amazon playbook. Walmart is keen to take share from Amazon in the digital arena, since consumers are increasingly shopping online. The marketplace helps bolster the lineup of products it can offer on its site.
More than half of Walmart’s U.S. online sales come from third-party sellers like Disney, New Balance, and Reebok. E-commerce sales increased to 16% at the end of this year’s third fiscal quarter and rose 24% year-over-year. In terms of app popularity, Walmart has 26.7 million active daily users, whereas Amazon averages 18.17 million, according to CNBC.
“It really shows that the value proposition for Walmart is much more than just low prices or value. It’s convenience today,” Walmart’s Chief Financial Officer John David Rainey told CNBC. “And so we’re leaning heavily into that and really both aspects of this part of our business.”
In July, Walmart Plus Week matched dates with Amazon Prime Day. About 70% of merchandise Walmart featured were marketplace items. Walmart said more sellers are participating in these annual sales compared to prior years, according to CNBC.
While Walmart is growing its online presence with a new look and hosts about 100,000 sellers, it still trails behind Amazon, which hosts more than one million, according to Marketplace Pulse, a third-party data analytics firm.
Walmart has transformed underperforming stores into 100 international fulfillment centers to complete deliveries faster. Amazon has 175 warehouses around the world. More centers mean merchandise can be stored, packaged, and shipped closer to its destination. At Walmart’s seller summit in Los Vegas last July, the company waived extra fees for storing merchandise during the upcoming holiday season.
Both retailers are also implementing more automation into their operations to reduce the time it takes to complete an order, and the amount of work warehouse employees need to complete tasks personally.
Walmart is seeing more sellers willing to try Walmart+ to sell goods, many CNBC said are having good results. Some businesses were concerned about their brand being considered low quality due to an affiliation with Walmart. But sellers are noting Walmart has a more supportive retail environment than Amazon. The Federal Trade Commission filed an antitrust lawsuit against the retail giant for allegedly fining third-party sellers for marking merchandise cheaper at other online stores, which Amazon denies.