Walmart Plans to Grow By Helping Small Businesses Scale

Why it matters:

• Adding third-party sellers to its online platform has helped Walmart, the nation’s biggest retailer, boost its e-commerce sales by double-digit amounts this year.
• Walmart has added five new features designed to attract more sellers and products to its marketplace, including brand shops on its website and new delivery and fulfillment services.
• Third-party sellers have expanded the number of items Walmart sells online to over 400 million.

The world’s biggest retailer, Walmart, has decided that a key way to fuel its own growth is to help small businesses get bigger.

The mass merchant recently announced ways it’s expanding the scope and services of its Walmart Marketplace, which allows third-party sellers to connect with Walmart’s millions of online customers.

Walmart is ramping up efforts to recruit new sellers to its online marketplace after seeing how earlier efforts to expand the platform have driven sales gains for Walmart.

The retailer has enjoyed strong e-commerce growth this year. Its online sales rose 27% in Walmart’s fiscal first quarter and 24% in the fiscal second quarter, outpacing competitors.

The number of customers buying items on Walmart’s Marketplace was up 14% in the second quarter of this year, the company reported.

Adding third-party sellers to its e-commerce platform enabled Walmart to increase the number of items it sells online to more than 400 million, with more than 200 million apparel items and nearly 60 million home items, Walmart executives told investors in April.

In August, Walmart held its first Walmart Marketplace Seller Summit, a conference for Walmart Marketplace third-party sellers, and announced five ways it’s improving its Marketplace offerings to attract new sellers and retain existing ones.

Manish Joneja, Senior Vice President of Walmart Marketplace and Walmart Fulfillment Services, describes the marketplace as “a platform to enable third party sellers of all sizes to reach the millions of customers we have, and provide an endless aisle for our customers.”

It also, Joneja told CO—, provides “a range of opportunities for small businesses to grow with us.”

“Our marketplace is a home for sellers of all sizes and types, from one-person business solopreneurs to household name brands like Dyson,” Joneja said.

“The sellers are in control of the business and can scale at their own pace, however they choose,” he said.

The new services announced at the sellers’ meeting reflects feedback from Marketplace vendors about features that would help them grow. “We launch, we learn, we adapt so we can scale our products to meet what our sellers want,” Joneja said.

Newly expanded features of Walmart Marketplace, aimed to help businesses of all sizes

The five major leaps Marketplace announced recently are:

1. Brand shops and brand shelves for third-party sellers.

Sellers can set up dedicated digital storefronts on the platform to showcase products. “They can create a more discoverable assortment to drive and convert sales, while they offer the immersive shopping experience customers want,” Joneja said.

2. Local pickup and delivery.

Sellers with physical stores can give customers in-store pickup options, while selling on the Walmart Marketplace platform. Walmart’s network of fulfillment centers and stores makes this possible.

“It helps sellers lower fulfillment costs, as we are scaled in that space,” Joneja said.

3. Fulfillment services for big and bulky multi-box items.

Walmart is now offering fulfillment and delivery services for items that are over 150 pounds, or oddly shaped, such as canoes or trampolines. Multi-box fulfillment enables delivery of items that are sold as a set but are packaged separately, such as patio furniture.

“It also means that a customer can return a part of a shipment,” Joneja said. “If a small part is missing or damaged, you don’t have to return the whole thing. Our sellers can work with the customer to partially return the order and make it right.”

This service will help sellers offer a greater variety of products on Walmart.com “and create a better experience for sellers and customers alike,” he said.

[Read: How Walmart Is Building a New Shopping Channel for Small Businesses]

4. New ‘Walmart Connect’ advertising options to boost sales.

Walmart Connect, Walmart’s advertising network, for the first time is offering sponsored videos on its website and app.

Later this year, Walmart sellers will also have access to additional self-serve display ads they can use to promote their products to Walmart customers on Walmart.com.

“They’re eye-catching ads that sellers can use to build a brand,” Joneja said.

5. Expansion to Chile.

Beginning next year, eligible Marketplace cross-border sellers will be able to sell in Chile, as Walmart expands the global reach of its platform beyond its existing markets of Canada, Mexico, and the United States.

Storage fees waived for the holiday season

In addition to those five new enhancements, Walmart announced at the summit that it was waiving holiday peak season storage fees for qualifying sellers using Walmart fulfillment services.

“That was a crowd favorite at the summit,” Joneja said. “Our goal is to help sellers offer [business] customers fast, reliable delivery on more items during the holidays without burdening them with additional operating costs,” he said.

[Read: How Artificial Intelligence (AI) Is Changing How Marketers Sell Everything From Food to Fashion]

Walmart’s online selling advantage: A vast network of stores to fulfill orders

The two-day seller summit, held in Las Vegas, drew more than 1,500 people who currently are selling merchandise on Walmart’s website.

Walmart thus far has not disclosed how many third-party sellers are on the platform. A report by e-commerce research firm Marketplace Pulse in September put that number at 100,000, and said that for the past year, some 10,000 to 20,000 new sellers have joined the marketplace each month.

Walmart is following in the path laid out by one of its top competitors, Amazon, which now sees most of its online sales coming through third-party sellers. Walmart executives, however, believe they have a crucial advantage over Amazon – its vast network of stores around the country, and around the world, that allow it to deliver online orders within the day and often within the hour.

Walmart also can offer its marketplace sellers an enticement not available to Amazon. Sellers who demonstrate on the Walmart Marketplace that they have top-selling products could end up winning shelf space for those products in Walmart stores.

Joneja, at the seller summit, spoke about how Walmart wants to create the marketplace model of the future.

The marketplace of the future, Joneja said, is centered on customers’ and sellers’ needs in an omnichannel world. “And it keeps pace as retail evolves,” he said. “One thing that won’t stop is change.”

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