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Is Walmart Dropshipping Profitable? Why Walmart Dropshippers are Quitting in 2024

January 23, 2023

Ecommerce has experienced incredible growth over the last few years. That trend is expected to continue, as according to GlobalNewswire, it’s estimated that Ecommerce sales will expand from just $14.3 trillion in 2021 to a mindboggling $58.74 trillion by 2028. Although there are many opportunities in the world of Ecommerce, like becoming an Amazon seller in the Amazon FBA program or dropshipping from a Shopify store, dropshipping from the Walmart Marketplace is becoming an especially hot topic, just like local lead generation

The Walmart Marketplace has been open to third-party sellers since 2009, but did not see nearly the same level of seller growth as other platforms like eBay or Amazon. However, the platform has become a point of interest for dropshippers looking for a less competitive alternative, but is Walmart dropshipping profitable even? For some, that answer is a resounding yes, but for many others, not so much. In the following article, we’ll take a closer look at Walmart dropshipping, break down the pros and cons of the business model, discuss the major reason Walmart dropshippers are quitting, and outline the actionable steps and tips you can use for the best chance of success when dropshipping on Walmart to avoid wasting time and losing money.

What is Walmart dropshipping?

Walmart is a multinational retail corporation and is the largest company in the entire world in terms of revenue. According to the retail giant itself, around 220 million shoppers head to the Walmart Marketplace to make purchases every week. Data from research firm Renolon highlights that there are currently around 152,000 third-party Walmart Marketplace sellers. Of those sellers, many are using one of these 3 Walmart dropshipping methods. 

3 Ways to dropship with Walmart

1. Resell Walmart products onto other platforms

Reselling products from Walmart onto other platforms like Facebook Marketplace is prohibited according to the Walmart Terms of Use. However, there is a way around this rule and many sellers get away with it. Instead of using the classic dropship model where you ship directly from the product’s source to your customer, you can ship from Walmart to your address and then to your customer. This is also known as retail arbitrage. You could also hire a third-party logistics service to receive the products and outsource responsibility for forwarding them to your customer. Although this provides a workaround, it cuts more into your already slim drop shipping profit margins and requires additional work on your end. 

2. Become a Walmart Drop Ship Vendor (DSV)

A Walmart Dropship Vendor is a Walmart supplier that ships the goods they sell directly from their own place of business to Walmart’s customer. Although a DSV is responsible for the entire fulfillment process, goods are still sold under the Walmart brand name. Despite the opportunity, the Walmart DSV program isn’t possible for everyone. 

The program is by invite only for reputable, high-volume sellers who have been selling as a 3P seller on Walmart. Therefore, if you want to sell as a Walmart Dropship Vendor, you’ll have to become a 3P seller first. 

3. Dropship as a third-party (3P) Walmart seller

As a third-party seller on Walmart, you own your product, listing, and brand, and leverage Walmart as your sales channel. Customers can see that the item is from you, not Walmart, and you’re completely in charge of setting your own prices and fulfilling orders. Dropshipping as a third-party seller is the best and easiest way to get started dropshipping on Walmart and so is the focus of this article. 

Pros of Walmart dropshipping

Lower competition than alternatives like Amazon

According to FitSmallBusiness, there are nearly 2 million active third-party sellers on the Amazon marketplace. That’s over 13x more than Walmart! However, even when comparing Walmart and Amazon dropshipping vs eBay, eBay is by far the most competitive with upwards of 19 million seller accounts! Selling online at Walmart hasn’t been popular for nearly as long, so it’s less saturated than the other common dropshipping marketplaces. 

No upfront costs

Unlike Amazon, where most dropshippers pay a monthly $39.99 seller fee, Walmart does not require sellers to pay any upfront fees to sell on the platform. The only fee you’ll need to pay as a Walmart dropshipper is an 8% - 15% (in most cases) referral fee. The referral fee is a fee Walmart charges to allow you to use their platform for your business.

Large range of products and categories

As a Walmart dropshipper, you can choose to sell in 24 product categories. Each Walmart product category also has many sub-categories for your products, so you can be very specific in what you are selling. Walmart even provides handy “Include” and “Exclude” attributes for each sub-category so you can ensure your dropshipping product is optimized for discoverability on the platform.

Walmart is a household brand name

Considering Walmart’s status as the company people around the world spend the most money with of any brand, it’s clear Walmart is a recognized and trusted household name. Although Walmart doesn’t have the best reputation, as according to SiteJabber they have a consumer rating of 3.31 out of 5 stars, most people are comfortable purchasing from the brand because of its competitive pricing and free shipping.

Bulk listing upload

Instead of having to manually setup a new listing for each dropshipping item on Walmart, you can just use Walmart’s Full Item Spec to bulk upload everything at once. This can save a tremendous amount of time on a meticulous task, leaving you more time for other things.

Cons of Walmart dropshipping

Extended application process and strict requirements

Although the application process only takes about 15 minutes, getting approved to sell on the Walmart Marketplace can take up to four weeks. Furthermore, in order to apply, you need to have:

  • US Business address
  • US Business Tax ID (SSN not accepted)
  • Address or place of physical operations
  • W9 or W8 and EIN Verification Letter from the Department of Treasury to verify your US business address (or place of physical operations)

  • Planned integration method for your product catalog (bulk upload, API, solution provider)

  • Primary product categories, catalog size and related information

Strict and complicated seller rules

Along with strict seller requirements, Walmart also has more strict seller rules because it has a reputation to uphold. For example, Walmart recently updated the requirements to qualify for the eye-catching strike-through pricing and reduced pricing or clearance pricing tags. The price now needs to be marked down 10% or more from the 90-day median average price paid by Walmart customers or the median price offered by Walmart for at least 28 out of the last 90 days.

New platform still working out the technical kinks

The Walmart platform has really only started taking off with sellers for the last few years, and as a result, there are many issues with the user interface. According to eCom Tom, a dropshipping expert and YouTuber with 37.5K subscribers, the seller side of the Walmart Marketplace is incredibly hard to navigate, with things changing themselves or not working a good portion of the time. You can’t even delete old items you’re no longer selling and get them out of view permanently. You can only put them in retired status.

Low profit margins

Dropshipping is the Ecommerce business model with the lowest average profit margins because dropshippers can’t take advantage of buying in bulk to lower unit costs. Dropshipping on the platform of the world’s “Every Day Low Price” retailer? Your margins are going to be slim...

Why Walmart dropshippers are quitting in 2024

According to Noah Mincis, an Ecommerce seller and YouTuber with 25.7k subscribers, dropshipping on Walmart was better before. Walmart was trying hard to attract sellers, so they treated both customers and sellers equally. However, now that the platform is gaining popularity among Ecommerce professionals, Walmart is reverting to its “customer first” approach. Walmart made a change to its refund policy towards the end of 2021 that has made it nearly impossible for dropshippers to be successful since. In fact, it forced Noah to quit Walmart dropshipping completely after losing $1,000/month in sales because of bad claims. 

Walmart has always required sellers to provide refunds. Before, if a Walmart customer made a fraudulent claim or chose an adequate reason for wanting to return an item, Walmart would refund BOTH the buyer and seller by covering the costs itself. However, after the policy change, Walmart made it much more difficult for sellers to refute buyer refund claims.

Walmart outlined 3 ways a seller could refute a claim against a buyer asking for a refund, which are: 

  1. Get signature confirmation from the buyer
  2. Photo evidence of delivery
  3. Proof of admission from buyer they received item

Clearly, paying the delivery service an extra fee to get a signature from the buyer cuts into profit margins but is the easiest option to get consistent proof, which is why many dropshippers started doing this to protect themselves. However, in the experience of Noah and other Walmart dropshippers, Walmart would often ask for additional proof or deny claims outright, even if the signature matched the name on the order. Noah was tired of seeing his order status as “lost in transit” or “lost after delivery” and moved onto Walmart Fulfillment Service (WFS) instead because then Walmart takes responsibility for order fulfillment and related refunds. 

Control your business’s operations with local lead gen

By running your dropshipping business through Walmart, you’ll always have to put up with Walmart’s rules. Relying so heavily on a third-party just to operate your business is risky. Walmart could change its rules to make dropshipping harder than it already is. They could even ban the dropshipping model completely and suspend your seller account if you don’t cooperate. On the other hand, with a local lead generation business, you own all your websites and so have complete control over your business. 

Local lead generation is a business model where you choose a business niche in a local market, get a website to rank on the first page of Google for that market so interested customers go to your site and leave their contact information, and then sell the valuable leads the website generates to actual local businesses who do that work for hundreds to thousands of dollars every month. Unlike dropshipping, where you’d have to sell thousands of products to make a decent profit, with local lead generation, you could have a six-figure business with just a handful of clients. Learn more about local lead gen here

How to do Walmart dropshipping

Step 1: Find a dropshipping supplier and do product research

The first step you’ll need to take if you want to make money dropshipping on Walmart is to find products to sell and a source for those products. You can quickly sort through various products and dropshipping suppliers by visiting supplier directories like SaleHoo, AliExpress Dropshipping Center, or Doba. For example, SaleHoo has over 8,000 pre-vetted suppliers selling over 2.5 million products! When researching suppliers, take note of certain details, like:

  • Location - Many dropshippers source products from faraway places with lower production costs like China. However, Walmart rewards fast shipping with more Marketplace exposure, so it's preferable to find suppliers that can deliver within a week or less. Walmart itself offers free 2-day shipping on many products. 
  • Reviews - Supplier directories make it pretty easy to judge a supplier with past buyer reviews. Choosing a dropshipping supplier with a history of solid performance can improve your chances of avoiding refunds. 
  • Communication - A good indicator of a quality supplier is one that communicates well. Make sure the supplier responds in a reasonable amount of time and is willing and able to answer any product questions you have. 

Walmart has strict Seller Performance Standards, so it’s essential to find suppliers that are reputable and provide high-quality products. If customers aren’t satisfied with your products, your seller account could be suspended or even terminated. You could also face a penalty from Walmart if you sell products that aren’t allowed, or require pre-approval without getting it. Make sure you check the Walmart Prohibited Products page before moving forward with a product idea. 

Step 2: Apply for your Walmart seller account

Now that you have some products to sell, you can sign up as a seller on the Walmart Marketplace. You should have your US business details ready, like your tax ID number and legal business address. Unfortunately, approval for the Walmart Marketplace is not a guarantee. 

Pro Tip: Take advantage of the “Why would you be a good fit for Walmart Marketplace” brief note at the end of the application to sell Walmart on your business. Highlight your past success in Ecommerce if you have any, and don’t make it obvious that you’re a dropshipper.

Step 3: Walmart Marketplace onboarding: Account setup

If you’re lucky enough to be accepted as a Walmart seller, you’ll receive an email with a registration link between 24 hours and four weeks after submitting your application. The registration link will take you to the Walmart Marketplace onboarding process, which is three parts in total. 

Part 1: Verify your business

Verify your business details as they appear on your IRS records. Here you’ll have to provide Walmart your Taxpayer Identification Number (TIN), business address, customer service email, and phone number. Business verification takes approximately two weeks. 

Part 2: Set up payment

After your business has been verified, set up your payment processor so you can receive your earnings from Walmart. New Walmart Marketplace sellers are required to create a Hyperwallet account. However, Payoneer and PingPong are other payment processor options you can set up and use. 

New Walmart sellers are also subject to a payment hold on their account. The payment hold period length depends on the specifics of the seller and the country of business. You can verify your payment hold period by visiting Walmart’s Payment Periods, Reports, & Adjustment Requests page

Part 3: Shipping

Finally, set up shipping. You’ll need to configure your shipping templates, which enable you to set your delivery regions, prices, and shipping speeds for items based on product price or weight. You’ll also need to accept the Marketplace Returns Policy and provide the address for your return center.

Step 4: Walmart Marketplace onboarding: Add inventory

After completing your Walmart seller account setup, you need to set up your product listings, choose how you will fulfill orders, and add inventory. Walmart’s Item Setup Methods page outlines how to set up a single item, bulk upload multiple items, and even set up an API integration. In terms of fulfilling orders, you can’t take advantage of WFS as a dropshipper, so you’ll have to set up the seller fulfillment method. The last step before publishing your product and selling on Walmart is to add the number of units you have available to sell. As a dropshipper, you don’t have a set number of items in your possession, so you can just put down a reasonable inventory amount between 10 and 100, unless your supplier notifies you they only have a limited quantity of the dropshipping product available.

Step 5: Start selling and fulfilling orders

With everything set up, it’s time to fulfill orders and make some money! It’s essential to move quickly and provide your dropship supplier with your customer’s shipping details when an order is made to ensure the item gets shipped as quickly as possible. Walmart dropshippers are already at a disadvantage to other sellers on Walmart who can participate in Walmart’s Two Day shipping program because they have better control of their supply and fulfillment activities. 

It’s also important to keep track of your performance in Walmart’s seller dashboard. Here you can track your sales data and keep track of your seller rating to make adjustments if it gets below acceptable standards.

Bonus Step: Expand your business into Amazon and/or eBay

Dropshipping is a low-risk business model, but that also comes at a cost. Most dropshippers aren’t likely to generate massive revenues just from selling on one platform because there are usually other sellers who can sell the product for cheaper and faster than a dropshipper. That’s why it’s a good idea to expand a dropshipping business model beyond just one platform.

Dropshipping on multiple platforms can improve your selling opportunities substantially because you reach more customers. Furthermore, a product may not do well on one platform, but give you explosive sales on another. However, you never know unless you test adding your dropshipping products to multiple platforms. Amazon dropshipping and eBay dropshipping are great options for expanding a Walmart dropshipping business into other marketplaces.

4 Tips for Walmart dropshipping 

1. Optimize your product listings

Using Walmart SEO in your product listings can increase the discoverability of your products on the Walmart Marketplace. According to Walmart’s fulfillment partner Deliverr, Walmart determines the listing quality and decides where a listing should rank in search using an “optimization triangle”. The three core elements include: 

  • Content: product category, images, title, descriptions and attributes
  • Performance: customer response time, order defect rate, policy adherence, and other performance metrics
  • Offer: pricing, shipping fees, shipping speed, and in-stock rate

As you can see, your product listing has a major influence where your products rank on Walmart. You should:

  • Use concise listing titles - Keep your titles simple and easy to understand. An effective listing title formula you can follow is “Brand + Item Name/Model + Features + Style”
  • High-quality product images - Your product images should be high quality and crystal clear to reflect the value of your product. Because your customer won’t be able to touch the item with their own hands, your images need to show them enough of the product to be comfortable buying it. 
  • Include keywords - Write your product descriptions for your shoppers first, but be mindful of including as many target and secondary keywords as you can.  

2. Sell the right products

Although there isn't really any effective third-party product research tool yet for Walmart dropshipping like Amazon has in JungleScout, you can still use some tactics to determine if selling a product is a good opportunity. First, you can type your product’s keyword into Google Trends to see the current interest level on Google. You can also use a paid keyword research tool like ahrefs to see how many people are searching the product's keyword on Amazon and Google every month. Besides tools, you can manually type your product’s main keyword and other related keywords into Walmart and see what kind of competition there is. If you find an item with a lot of search interest on other major search engines like Amazon and very few products listed on Walmart to meet that need, it’s likely an opportunity.

3. Follow customer service expectations

It’s important to meet customer expectations, so be upfront that your shipping times will be longer to avoid customer dissatisfaction. Walmart also has their own performance expectations you’ll want to follow if you want to avoid being suspended or terminated from the platform. 

4. Try Walmart dropshipping automation

A Walmart automation service can handle many of the meticulous tasks of dropshipping for you. If you’re getting a lot of sales, imagine the hassle and headache of having to go back and forth with your supplier for each individual order with customer shipping details and then tracking fulfillment to make sure it gets to your customer. For that reason and many more, Walmart dropshippers leverage a Walmart automation dropshipping service.


Walmart dropshipping can be a good opportunity if you have little startup money or already dropship on other marketplaces and want to test out Walmart. However, dropshipping on a competitive marketplace really isn’t a good long-term business model and there are many superior alternatives online business models to choose from, like local lead gen. There is so much money floating around on the internet. Getting started in online business now is an incredible opportunity that’s only growing. Whether you choose Walmart dropshipping or another online business model, it’s most important to believe in yourself and the opportunity if you want to make it happen.

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Ippei Kanehara

$52K per month providing lead generation services to small businesses is for digital hustlers, industry leaders and online business owners.

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