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Selling on Amazon vs Walmart

July 21, 2022

What are the differences between selling on Amazon vs Walmart? This is one of the most common questions for new sellers looking to get started in Ecommerce. 

Walmart Inc is by far the world’s largest company by revenue. However, Amazon is not far behind in second place, finishing 2021 with $469 billion as opposed to Walmart’s $573 billion. 

When speaking in terms of strictly Ecommerce revenue, Amazon is the clear leader and continues to see consistent growth each year. 

However, Walmart’s share of the Ecommerce market is growing rapidly. According to Forbes, Walmart is growing 5 times faster than Amazon and could overtake the Ecommerce giant in just four years. 

Although that’s highly unlikely, Walmart’s growing success in Ecommerce should have new sellers thinking twice about which platform to sell on. 

Before you can make your decision, you’ll need to know what the differences are between selling on Amazon vs Walmart.

Platform Overview

The Amazon Marketplace

According to Statista, between 2 - 3 billion people around the world shop on Amazon each month. Furthermore, Amazon contributes to exactly half of all sales made online in the United States. 

If you decide to go the Amazon route, you have two options for operating your business. You can either fulfill your own orders when a customer purchases through Amazon or can outsource fulfillment to Amazon in their FBA program. 

The majority 73% of third-party sellers choose the latter according to SellerApp, showing how accessible Amazon’s FBA program is. 

EDesk notes that approximately half of Amazon’s sales come from third-party sellers. The other half come from Amazon itself through its various programs, like Amazon Basics or the Amazon Vendor program.

The Walmart Marketplace

Visitors are also starting to flock onto Walmart's marketplace, with around 120 million visitors per month.

Of its regular shoppers, Walmart provides data that 99% make at least one online purchase each month.

Like Amazon, sellers can either package and ship their own products or use the Walmart fulfilment service (WFS). 

Only 25% of sellers use the Walmart Fulfillment Service. However, the program was just introduced in 2020. 

Walmart does not explicitly disclose its third party seller numbers, but estimates from Marketplace Pulse indicate there are around 140,000 as of April 2022. 

Market Opportunity

Selling Opportunity on Amazon

The Amazon Marketplace has been allowing third-party sellers for over 20 years now and currently has 1.9 million active sellers each month. 

Data from research firm Finbold found that last year in 2021, 3,700 new sellers joined Amazon every day. 

Based on these figures, it’s apparent that competition on the Amazon marketplace is fierce and many sellers wonder if selling on Amazon is even worth it in 2022

Profit Potential

50% of Amazon’s $469 billion revenue in 2021 is attributed to third-party sellers, or $234.5 billion!

A quick crunching of the numbers then shows that, on average, Amazon sellers can expect to make around $123,000 in revenue each month. 

Using data from Jungle Scout, most sellers make between 16 - 50% profit margin. 

Using the median of this data to estimate a profit margin of 33%, average Amazon sellers can expect around $40,590 in yearly profits.

Selling Opportunity on Walmart

Accepting third-party sellers for half the time as Amazon, Walmart Marketplace launched in 2009 and is expected to eclipse 150,000 sellers this year.

To continue attracting new sellers, Walmart is running a cost savings promotion to join their platform by mid-2022. This shows they are willing to support new sellers to grow their online presence. 

Walmart has a fraction of the competition that Amazon does and is continuing to see increased buyer interest as proven by ballooning sales. 

Profit Potential

Digital Commerce 360 lists Walmart's 2021 Ecommerce revenue at $73.2 billion, ending the year with approximately 130,000 third-party sellers.

Using 2019 data from Marketplace Pulse, third party sellers contributed the majority 92.5% to Walmart’s online inventory. 

Assuming third-party seller contribution has remained stable, we can estimate that the average seller on Walmarts marketplace made $520,846 in 2021. 

Using the same 33% profit margin as Amazon to estimate because there isn’t sufficient data for Walmart sellers yet, sellers can expect around $171,879 in yearly profits. 

In Walmart Marketplace, there is still an enormous piece of Ecommerce pie yet substantially fewer sellers to share it with, for the time being. 

Sign-Up Process

Getting Approved to Sell Through Amazon

The registration process on Amazon Seller Central is simple and you will typically be approved within 1- 2 weeks.  

The process starts by choosing which type of Amazon seller you want to be: individual or professional. 

Then you create and verify login details for your new seller account before providing Amazon your business location and type. 

Note: You can sell as an individual on Amazon and do not have to have a formal business registered. 

After entering your personal and billing details, you set up your Amazon store and add your product information, including:

  • Amazon store name
  • Whether you have UPC codes for your product(s)
  • If you are the manufacturer and/or brand owner of the product(s) you’re selling. If yes, do you own a government-registered trademark for the branded products
  • If you have any diversity certifications (Ex: Women, Veteran, LGBT-owned)

With those details complete, you next need to verify your identity with an ID (license or passport) and a bank statement. 

Finally, the last and longest step in the process is to verify your business address. Amazon will send a postcard with a verification code through the mail, which you will enter to complete verification. 

The postcard typically takes 5-8 business days to arrive.

You don’t have to worry about sourcing and setting up your product listings until your account approval is complete. 

Getting Approved to Sell Through Walmart

The first step in becoming a Walmart Marketplace seller is to apply with a 10 minute application.

You are required to have a legitimate registered business to sell on the Walmart Marketplace. Therefore, you will need to have your product and business details readily available, including: 

  • Address or physical place of operations
  • Business address
  • Business Tax ID (SSN not accepted)
  • W9 or W8
  • EIN Verification Letter from the Department of Treasury to verify your business address
  • Product categories, size of catalog and related information
  • Integration method planned for product catalog (Ex: bulk upload, API)

SellerApp notes the application approval decision takes between 2 - 4 weeks. If approved, you will receive an email link to complete registration and set up your Partner Profile. 

The Partner Profile is a public facing page where customers can find your business information like your logo and company tax information. 

Once that’s complete, the next step is the most time-consuming section of your account creation, which is to create the listings for the products you want to sell. 

After testing that everything has been set up and is functioning correctly to sell, mark done in Walmart Seller Central and they will complete one last review. 

This final approval usually occurs within 24 hours, after which time your products are live on the Walmart Marketplace. 

Not every seller gets approved to sell. Walmart even outlines that you should already have a history of Ecommerce success before applying on their platform. 

Selling Fees

What Fees Can You Expect as an Amazon Seller?

As mentioned, there are two types of sellers on Amazon and the fees associated with each break down as:

  • Individual: $0.99 per unit sold
  • Professional: $39.99 flat rate

You must be a Professional seller if you want to use Amazon PPC advertising for your products and be eligible for the Buy Box. 

Amazon also charges a referral fee of between 8 - 15% (depending on the product category) for each unit sold. 

If you are electing to use Amazon FBA for your fulfillment and customer service needs, you will incur additional fees. These depend on the details of your product. 

With the Amazon FBA program, there are also monthly inventory storage fees to consider. Potentially, you could incur additional fees like long-term monthly storage or removal order fees, too. Therefore, it’s important to review Amazon fees

What Fees Can You Expect as a Walmart Seller?

Unlike Amazon, Walmart does not charge a general monthly fee. Unless you are using their fulfillment service, Walmart only charges a referral fee on each item sold of 6 - 15%. 

If you decide to use the Walmart Fulfillment Service, you can expect a weight-based fulfillment fee, and a fixed monthly storage fee. 

If your products sit in the Walmart warehouse for over a year, you will incur expensive long term storage fees. 

Fee Comparison Examples

Let’s compare the selling fees of these two platforms with a few example scenarios.

Scenario 1:

Category: Toys and Games

Units: 100

Price: $40 ($4,000 revenue)

Weight: 3 lb

Dimension: 18” x 14” x 8” (1.1667 cubic foot, or 117 of cubic feet for 100 products of this dimension)

Storage Length: 1 month in September

Amazon

  • $600 in referral fees (15%)
  • $613 in fulfillment fees ($6.13 per item)
  • $97 in storage fees (117 cubic feet of product x $0.83 = $97)
  • $40 Professional seller plan

Amount after Amazon fees: $2,650

Walmart

  • $600 in referral fees (15%)
  • $545 in fulfillment fees ($5.45 per item)
  • $73 in storage fees (117 cubic feet of product x $0.75)


Amount after Walmart fees: $2,782

In the above example, fees on Walmart are 4.75% cheaper than fees on Amazon. 

Scenario 2:

Category: Industrial and Scientific

Units: 500

Price: $120 ($60,000 revenue)

Weight: 5 lb

Dimension: 13” x 9” x 6” (0.4063 cubic foot, or 203 cubic feet for 500 products of this dimension)

Storage Length: 3 months, October - December 

Amazon

  • $7,200 in referral fees (12%)
  • $3,365 in fulfillment fees ($6.73 per item)
  • $1,461 (203 cubic feet of product x $2.40 per cubic foot during Oct - Dec x 3 months)
  • $120 Professional seller plan for 3 months

Amount after Amazon fees: $47,854

Walmart

  • $7,200 in referral fees (12%)
  • $3,075 in fulfillment fees ($6.15 per item)
  • $1066 (203 x $.75 = $152 first month, 203 x $2.25 = $457 each for the following 2 months)

Amount after Walmart fees: $48,659

In the above example, fees on Walmart are 1.65% cheaper than fees on Amazon.

Customer Base

Who Shops on Amazon?

Amazon ships to customers in over 100 countries and has nearly 200 million people just in the United States shopping for products on its marketplace each month, according to BigCommerce. 

Needless to say, Amazon’s customer base is enormous. Data taken from JungleScout shows that Amazon excels in selling all kinds of products, but especially has an advantage over Walmart in:

  • Electronics
  • Books
  • Arts, Crafts and Sewing
  • Office Supplies

According to a study by Kantar, Amazon shoppers have an average household income of around $84,000. 

Of those Amazon shoppers, a majority 70% pays for Amazon Prime membership to enjoy free, express delivery. 

Who Shops on Walmart?

According to Walmart, their online store receives 120 million unique visitors each month. The platform only handles shipping to the United States and its territories. 

Like Amazon, Walmart sells in many product categories but has a sizeable advantage over Amazon in:

  • Groceries
  • Cleaning Supplies
  • Over the Counter Medicine

At an average annual income of about $76,000, Walmartcom shoppers have slightly less income to shop with than Amazon shoppers. 

Therefore, it’s no surprise that Walmart Plus participation isn’t as popular as Amazon Prime. Only 38% of Walmart shoppers pay for a Walmart Plus subscription to receive express delivery. 

Product Visibility

Online marketplace sellers don’t have the same ability as storefront sellers to show products physically. 

Instead, you make your value proposition to potential customers through product listings and extend visibility by running ads. 

How Do Customers Discover Your Products on Amazon?

An Amazon product listing has two purposes: showing your product to potential customers and helping Amazon’s A9 algorithm put it in front of the right audience. 

Amazon sellers can easily edit their product listing on seller central and changes usually reflect within five minutes. 

Amazon product listings have both a front and backend. The front end is customer facing while the backend can include additional keywords for the algorithm that customers don’t see. 

Sellers on Amazon can promote their product listing to reach more potential customers by using Amazon advertising. 

Amazon PPC, or Sponsored Ads, are advertisements shown to shoppers on the Amazon marketplace. They are prompted to show based on predetermined campaign constraints set by you. 

With a catalogue of over 12 million products, Amazon sellers need to optimize their product listings and implement an Amazon PPC strategy for any chance of product visibility. 

How Do Customers Discover Your Products on Walmart?

Although Walmart is more strict in the ways you can edit it, your product is also shown through a product page similar to Amazon. 

To edit your Walmart product page, you must submit an appeal through seller center to have the item updated and wait for a decision by Walmart. 

Not all product page attributes are editable, and pricing is especially strict as Walmart’s brand is based on low pricing. Non-competitive pricing is one of the most common reasons Walmart delists items from its platform. 

However, Walmart naturally drives prices down by including sellers with the same product on same listing. Therefore, to win the Walmart buy box, you must price competitively against the competition. 

Walmart is more selective than Amazon about who is eligible to run ads through their Walmart Sponsored Products program. 

However, like Amazon, they also charge on a cost-per-click scheme so it can be a highly efficient means to promote your product. 

For sellers looking for additional support in running ad campaigns, Walmart provides access to high-quality advertising partners to assist you in campaign optimization.

Grocery Delivery

Online grocery shopping is projected to explode from now through 2025 at over 25% compound annual growth internationally, or a staggering $800 billion according to PRNewswire. 

As two of the premier players in the Ecommerce marketplace, this article would be incomplete without mentioning the potential in the online grocery delivery market for sellers on Walmart and Amazon. 

Online Grocery Delivery With Amazon

The Grocery and Gourmet Foods category is a gated category on Amazon, meaning you will first have to request access. 

Once you receive access to sell in this category, you can take advantage of the growing popularity in Amazon’s online grocery delivery program. 

To grow its market share in this segment, Amazon is running a new online grocery delivery program called Amazon Fresh

With Amazon Fresh, shoppers can buy all the fresh and packaged products they would typically find in a grocery store online. Amazon Prime members even get free same day shipping in select areas. 

Online Grocery Delivery With Walmart

In a recent study of US adults by Chicory, Walmart has a substantial lead in consumer choice as the preference for online grocery shopping at 35% of the market. 

While some grocery items are restricted or prohibited for a third party seller on Walmart, many are open for sale. 

Walmart excels here because of the convenience that most Americans live within a commutable distance of a Walmart store. Due to this, Walmart Plus members even enjoy free, same day grocery delivery.

Although Walmart appears to be the better option for selling groceries online, a third party seller probably can’t go wrong on either platform according to the expectations in this market going forward.

Conclusion

Whether to sell on Walmart vs Amazon really comes down to your business circumstances. 

If you have a registered business with Ecommerce results, selling on Walmart could be a great option to increase your income. 

However, if you are a new seller without a branded product and are looking to dip your toe into the Ecommerce ocean for the first time, taking an Amazon FBA course and starting your journey on that platform is probably your best choice.

There is unlimited potential to create wealth and an outstanding lifestyle with Ecommerce and online business in general. 

Whether you choose Ecommerce or another online business model, it’s important to study and learn from mentors with proven success. 

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