Walmart Fulfillment Services (WFS) Has a Strong Debut and Bright Future for E-Commerce Sellers

FBA’s well-publicized struggles to keep pace with demand during the early months of the COVID-19 pandemic taught important lessons about the value of marketplace diversification1. As product limits and fulfillment delays throttled Amazon’s ability to meet spiking demand, sellers who were heavily reliant upon the convenience and sales volume of FBA found themselves scrambling to reroute their fulfillment strategies through other channels. Conversely, online sellers with diversified, omnichannel strategies proved to be especially resilient. Contrary to sellers hamstrung by FBA delays, sellers utilizing multiple fulfillment methods were able to get products out to customers and profit from record-setting consumer demand. It proved to be one of the clearest cautionary tales against overcommitting to a single channel. When all was said and done, 2020 saw an unprecedented boom in e-commerce sales volume - worldwide retail e-commerce sales topped 4.2 trillion USD with over 2 billion people purchasing goods or services online.2 While FBA may have stumbled out of the gate, channels and marketplaces of all sizes - FBA included - experienced massive year-over-year GMV growth.3 By year’s end, the online retail industry as a whole shattered growth projections. One of the particularly successful third-party sales channels that emerged out of this period has been Walmart Marketplace. As customers’ shopping habits began to expand and include more comparison shopping focusing on metrics like price and delivery speed, Walmart was prepared with two new initiatives to help its marketplace compete:Walmart+ - Walmart’s Amazon Prime-adjacent membership service offering fast, free shipping as well as additional grocery, fuel, and brick-and-mortar retail benefits, has given shoppers a new option for speedy and reliable online purchases. Walmart Fulfillment Services (WFS) - Walmart’s merchant-fulfillment service is its answer to FBA. Merchants ship their products to a Walmart logistics center where everything from picking and packing to shipping, returns, and customer service are handled by Walmart. The program rolled out in 2020 following an invite-only trial in 2019.

While much was made about Walmart+, WFS could turn out to be the game-changing engine that makes Walmart+ successful in the long run. Much the way FBA allows e-commerce merchants of all sizes to advertise fast and free Prime shipping, WFS opens the door to more Walmart+-ready listings. Third-party sellers without the logistical capacity to satisfy Walmart+ fulfillment times now have a practicable pathway to get their products in the Walmart+ ecosystem. What’s more, WFS has already passed one of its first major hurdles to being seen as a worthwhile investment: throughout the pandemic, Walmart Fulfillment Services suffered no downtime or any of FBA’s pandemic-induced logistical constraints. Instead, WFS was able to establish itself as a convenient and reliable fulfillment partner in otherwise uncertain times. This strong initial showing is paving the way for Walmart’s continued growth in the e-commerce space.

Walmart Fulfillment Services (WFS) Is About Walmart’s Commitment to E-Commerce More Than Its Competition with Amazon

The Walmart versus Amazon e-commerce battle has never quite been a fair fight. Walmart is a brick-and-mortar empire that has branched out into online retail. Conversely, Amazon has always been positioned as an e-commerce-first company that has expanded into both brick-and-mortar and service industries. This discrepancy is what makes comparisons between the two inevitably wade into apples and oranges territory. Nevertheless, the pair do account for nearly half of all online retail sales in the US. As such, comparisons are inevitable. By the end of 2020, Walmart remained firmly in its position as the number 2 US retail e-commerce company in terms of both gross sales ($64.2 billion) and percentage of total e-commerce sales (7.1%). Walmart was still a far cry from Amazon’s $367 billion and 40.4% market share, but it also maintained a comfortable lead on eBay - Walmart’s closest competitor with $38.67 billion in gross sales and a 4.3% market share.4All that being said, coming out of 2020, Walmart’s commitment to online retail has never been stronger. WFS is a key component of that commitment - both now and moving forward. According to Walmart’s Q1 2021 Earnings Report, online sales increased by 37% and online sales have increased over 200% over the past two years.5Sellercloud users have seen substantial upticks in their Walmart sales performances, as well - including 2019-2020 YOY increases of 211% in orders and 205% in GMV.6With the rollout of WFS, Walmart Marketplace sellers have been given a pathway to merchant-fulfilled orders on par with Amazon’s long-successful FBA program. Moreover, as Walmart+ continues to gain traction, WFS gives third-party sellers a practical way to reach customers searching for products that can be delivered quickly and reliably - a metric shoppers self-identify as crucial when comparison shopping online.7Early reporting from both industry sources and our Sellercloud data offers an optimistic view that the strong debut of WFS is only the beginning for Walmart’s potentially lucrative fulfillment evolution.8

Walmart Fulfillment Services (WFS) Is Quickly Proving Itself to Be a Viable Fulfillment Partner

As a newer service, WFS has ground to make up before it challenges the sheer size and volume of FBA. FBA sellers gain access to billions of desktop and mobile website visitors per month from over 100 countries. FBA sellers also gain access to over 70 million Amazon Prime subscribers who, on average, spend 233% more than non-Prime Amazon shoppers.9 In reality, this is likely an insurmountable lead for Amazon. But again, as the e-commerce industry continues to trend toward omnichannel marketing as a cornerstone for success, picking the winners between dueling corporations doesn’t matter. The key is to find reliable and profitable channels that yield positive returns. WFS is proving to be one of those partners.

While WFS is still in its relative infancy compared to FBA, Sellercloud data shows how its adoption has already started producing growth results mirroring the industry leader. Of particular interest is the relative growth of each of these platforms. While FBA remains dominant in terms of overall order volume and sales, WMS is far outpacing FBA in average month-over-month growth. For all Sellercloud sellers selling on both WFS and FBA, WFS’s month-over-month growth rates from October to November 2020 eclipsed those of FBA in both total orders and total sales. Both fulfillment services yielded similar month-over-month growth percentages for Sellercloud users through December. This 2020 holiday performance was a strong showing for WFS. Walmart’s upstart fulfillment service was able to meet demands throughout one of the highest-grossing online shopping seasons of all time. What’s more, Sellercloud data demonstrates how most sellers were able to build on that success with additional order and sales growth into the next quarter. Growth for both fulfillment services experienced a lull in January and February 2021, but WFS was able to end the quarter by again posting solid month-over-month percentage gains for Sellercloud users in March - exceeding those of FBA over the same period. On a per-seller basis, these numbers become even more noteworthy. Focusing on Sellercloud customers who sold products using both WFS and FBA over the course of November 2020 through March 2021:

Total Orders - The total number of WFS orders per seller increased by an average of 548% month-over-month. FBA total orders over that same span increased by an average of 5.7% month-over-month.Total GMV - WFS total sales increased by an average of 398% month-over-month. FBA total sales increased by an average of 2% month-over-month.It is worth noting that scale plays a role here. FBA is an established fulfillment provider that launched 15 years ago, whereas Walmart Fulfillment Services has only been in full operation since 2020. For high-volume sellers, a single digit month-over-month percentage increase likely amounts to substantial profit boosts. That said, for WFS to be delivering this type of rapid growth this quickly shows it is an excellent option for e-commerce sellers looking to broaden their marketplace-fulfilled sales channels. Isolating subsets of these figures based on order volume further highlights the opportunity to scale provided by the WFS sales channel. Focusing first on sellers from the aforementioned dataset that averaged more than 2,000 WFS orders per month, the growth numbers bear out:

Total OrdersThe total number of WFS orders per seller increased by an average of 155% month-over-month.FBA total orders over that same span decreased by an average of 8.2% month-over-month.Total GMVWFS total sales increased by an average of 181% month-over-month.FBA total sales decreased by an average of 6.4% month-over-month.Even as the post-holiday numbers dragged down FBA’s average month-over-month average growth figures, WFS maintained a net positive trajectory. This is yet another example of how omnichannel diversification is a crucial component of a balanced e-commerce strategy. The more places products and listings are visible, the higher the odds that an e-commerce business can continue to grow on some marketplaces, even when facing slowdown on others. Once again focusing on the sellers from the aforementioned dataset, but this time highlighting sellers that averaged fewer than 750 WFS orders per month, the growth numbers are impressive:

Total OrdersThe total number of WFS orders per seller increased by an average of 968% month-over-month.FBA total orders over that same span increased by an average of 18% month-over-month.Total GMVWFS total sales increased by an average of 647% month-over-month.FBA total sales increased by an average of 11% month-over-month.Even at lower volumes, WFS is presenting Sellercloud sellers with an opportunity to scale month-to-month at a significant pace. No matter the size of the e-commerce business, WFS has proven to be a viable channel for growth. Early adopters have continued to see increased month-over month order volume and sales through Q1 2021 and into Q2.

Key Takeaway: The Time Is Now to Get In on the Ground Floor With WFS

In the modern e-commerce landscape, diversifying fulfillment partnerships matters. While FBA continues to drive billions of dollars in annual GMV for Sellercloud customers, over-relying on a single (albeit profitable) fulfillment channel has its risks. This is especially true when it comes to partnerships like FBA that take on so much of the end-to-end order logistics. One of the key takeaways from 2020 must be that businesses that broaden their stables of marketplaces and fulfillment channels are better safeguarded against issues beyond their control. Establishing partnerships with reliable and scalable partners is essential. Walmart’s fulfillment offerings currently present one of the best opportunities to expand into a marketplace-fulfilled sales channel. With WFS, sellers get the benefit of increased exposure on the second largest e-commerce marketplace in the US with minimal logistical overhead. At the same time, Walmart’s stricter seller-application criteria means less competition than less restrictive marketplaces like Amazon. This means that sellers have a higher chance of their listings appearing in front of Walmart.com’s nearly 140 million unique visitors per month. WFS also opens the door to reliably reaching Walmart+ subscribers and leapfrogging other sellers in the search rankings who cannot meet the program’s 2-day fulfillment requirements. For existing FBA sellers, selling via WFS should be an immediate priority. The channel has already proven in its infancy that it has the potential to make a big splash in the e-commerce industry and rise to become the closest competitor to FBA yet. If the growth figures from early adopters are any indication, WFS is poised to play a major role in online retail for a long time to come.

Expand your omnichannel e-commerce presence with Sellercloud

As a truly omnichannel management platform, Sellercloud ensures that all of the channels where you sell can coexist within the same inventory, warehousing, shipping, and tracking workflows. What’s more, adding new marketplaces and channels into existing workflows is made simpler by both a host of over 120+ API- and EDI-level integrations with leading e-commerce partners, as well as a responsive and agile support team ready to help you onboard new ones. Sellercloud is truly an all-in-one, end-to-end e-commerce solution offering a multitude of convenient and dependable features:

  • Fully-synced inventory management – Low-stock notifications, automated reordering, dynamic warehouse management, and end-to-end inventory tracking give you peace of mind knowing that your merchandise is always where it is supposed to be.
  • Integrations with numerous major channels, business systems, and logistics providers – Rapidly expand your online presence across multiple marketplaces (both 1P and 3P) and distribution channels, while also gaining complete visibility into metrics that matter.
  • Streamlined fulfillment and warehouse management tools – The Sellercloud family of products includes patented technologies designed to help you fulfill orders quickly and accurately - whether from your own warehouses or with the help of a third-party fulfillment partner.
  • Multi-channel catalog tools – Create, adjust, and optimize your listings from one convenient database that seamlessly integrates across an extensive list of integrated channels.

Glossary

1 https://sellercloud.com/white-papers/white-paper-fulfillment-by-amazon-fba-impacted-by-covid19-mid-year-2020-sellercloud-report
2 https://www.statista.com/topics/871/online-shopping/
3 https://sellercloud.com/white-papers/white-paper-sellercloud-2020-year-over-year-e-commerce-growth-report
4 https://www.emarketer.com/content/amazon-dominates-us-ecommerce-though-its-market-share-varies-by-category
5 https://corporate.walmart.com/newsroom/2021/05/18/walmart-releases-q1-fy22-earnings
6 https://sellercloud.com/white-papers/white-paper-sellercloud-2020-year-over-year-e-commerce-growth-report
7 https://www.retailwire.com/discussion/survey-says-consumers-want-online-orders-shipped-fast-and-free/
8 https://www.forbes.com/sites/sharonedelson/2021/01/27/want-your-order-even-faster-check-out-walmarts-new-tech-powered-options/
9 https://financesonline.com/amazon-statistics/