In eCommerce, the old saying holds: The enemy of my enemy is my friend.
News came Monday (June 15) that Walmart has joined with eCommerce company Shopify in a bid to boost its online marketplace presence.
Under the terms of the pact, as noted by Reuters, Walmart will add as many as 1,200 Shopify sellers to its marketplace this year, with particular focus on adding small and medium-sized businesses (SMBs) to the Walmart.com roster.
And in comments reported by Bloomberg, Shopify CEO Tobias Lutke has classified his company as “the rebel army to Amazon’s web empire.” For Shopify, the impact is immediate and broad: The eCommerce platform gains access to hundreds of millions of Walmart customers.
For Walmart, adding Shopify sellers to its online operations helps give a bit of scale, and third-party sales do not carry the same costs as seen in other marketplace models. That’s because third-party sellers pay a fee to list their wares on Walmart and Amazon, and also, should they choose, are responsible for shipment and logistics (which can otherwise eat into margins). Walmart does indeed offer shipping services through its logistics network.
As with pretty much all eCommerce players, the pandemic has offered a bit of tailwind, as consumers conduct all aspects of financial life online. Walmart, for example, saw its eCommerce sales leap by 74 percent in the latest quarter, which ended on May 1, to a total $21.5 billion.
Along the way, as estimated by Marketplace Pulse last month, as much as 90 percent of Walmart’s assortment offered online comes from the retail behemoth’s online marketplace. And as of the middle of June, there were just under 45,000 sellers on Walmart’s site, up from roughly 23,800 sellers a year ago. Incremental additions from Shopify would of course move the needle quite a bit — but, then again, Amazon has more than 2.5 million sellers on its platform.
For the third-party sellers, of course, the joint efforts of Walmart and Shopify represent an attempt to offer a lure away from Amazon.
It may be the case that Walmart and Shopify are striking while the iron is hot, helping to build at least some critical mass while Amazon remains in regulators’ crosshairs. As reported at the end of last week, two states, Washington and California, are looking into business practices across the Amazon platform — and whether the firm has been favoring its own products over those that are being sold by third parties.
Similarly, and outside the U.S., Amazon also could be on the receiving end of antitrust charges by the European Union (EU). The EU has charged Amazon with gathering information tied to its third-party sellers and then ramping up competition by launching its own private label brands.