As Shoppers Lose Interest In Amazon, Brands Shift To Selling On Walmart

Forbes Finance 0 month ago

Shopper enthusiasm for Amazon appears to be waning, with Prime membership regressing and buying frequency slowing, according to a survey by First Insight

And it is their old foe Walmart that appears to be pipping Amazon to the post, with a majority of shoppers now saying they prefer to shop at Walmart over Amazon. The percentage of people who favor Amazon has dropped to 45% from about 53% in 2018, First Insight also found.

First Insight analysis shows that Walmart is attracting Amazon shoppers.
First Insight analysis shows that Walmart is attracting Amazon shoppers.

As with any change in shopper preferences, consumer brands are preparing to make changes. That includes setting up shop on the Walmart marketplace. 

One company that has recently set up on the Walmart marketplace is Equinox International Brands, which sells products in the home & kitchen category. 

Hamza Ramzan, the company’s Sales and Marketing Manager, says that Walmart sales represent about 5% of their Amazon sales, but this is projected to reach 8-10% by the end of 2020 as the company launches more products on the Walmart.com platform. 

The company initially only uploaded a portion of their catalog to Walmart, those products which they knew would be profitable to sell on the marketplace. “But we're now in the process of launching Walmart-exclusive products by measuring demand,” says Ramzan.

Pregmate is another company that has recently starting selling on Walmart. The company, which produces pregnancy and other diagnostic tests, had been selling on Amazon since 2014. Within 12 months of launching on Walmart, the company was generating about 10% of their Amazon sales on the Walmart marketplace. 

The challenges of a newer marketplace

While Amazon has been in the online marketplace game for 20 years, Walmart has only stepped up as a serious contender relatively recently. This means there’s less tools in the Walmart seller’s toolkit compared to Amazon, which has a robust and growing suite of native marketing tools and reporting inside their Seller Central platform. 

Amazon has also allowed a rich ecosystem of third-party software tools to flourish that support marketplace sellers. For example, Amazon’s ‘Best Seller Rank’ metric has been published on every products page for many years, allowing software developers like Jungle Scout to provide detailed sales volume information in most categories, which in turn allows sellers to identify the most attractive products to sell. But Walmart only started publishing its best seller rank within the past week. 

Amazon has further fostered development by software providers through its third party software app directory and network of vetted Amazon agencies and solution providers, while Walmart has far fewer third-party applications designed to help sellers automate routine tasks and grow sales.

That said, the essential marketplace marketing tools are available to Walmart sellers. Equinox International Brands says that they were able to boost visibility on the marketplace and gain ground quickly through the use of several tools that are offered natively: the Walmart ‘Spark Reviews’ program to boost product reviews, Walmart’s native PPC (pay per click) advertising program, and optimized content on product detail pages. 

The company also found that a key aspect of being successful on Walmart was enabling free 2-day shipping, which is the standard that Amazon set for online shopping. Ramzan says that the company’s sales grew 900% as soon as they activated Walmart 2-day delivery. 

The onus is on sellers to provide fast, free delivery

But unlike Amazon which offers marketplace sellers easy access to reliable logistics and two-day ‘Prime’ eligibility through their “Fulfillment By Amazon” program, Walmart sellers need to do their own logistics legwork. 

Both Equinox and Pregmate turned to Deliverr, a logistics company that gives its clients immediate access to Walmart’s otherwise-elusive 2-day shipping badge. Deliverr can provide 95% of Walmart customers with 2-day shipping, by distributing inventory across multiple warehouse locations. A seller with a single shipping location would only be able to provide 2-day shipping to 30% of Walmart shoppers. 

Deliverr’s founder, Michael Krakaris, says that brands selling on Walmart need to offer their items at the same shipping speed as what a shopper can find on Amazon. “One of the key deciding factors for shoppers is the landed cost - the item price plus shipping cost. They also want their order fast, so offering free 2-day shipping is critical.” 

The owner of Pregmate, Victor Marozau, agrees. Once the company was able to active 2-day delivery through its partnership with Deliverr, sales jumped 40%. Marozau believes that the availability of 2-day free shipping appeared to be one of the main factors in making a purchase decision by customers.

While shoppers slowly start to explore non-Amazon channels, many brands have been eagerly awaiting a viable competitor to Amazon. A survey by retail publication Modern Retail found that 41% of brands and retailers say Amazon isn’t a trustworthy partner. 

Tags: Business

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