Throughout the COVID-19 pandemic, Amazon has captured the largest share of online shoppers out of all the leading online retailers serving the U.S. market. Now, there’s growing interest in Walmart’s ecommerce platform, Walmart.com.
From mid-century discount store to retail behemoth, Walmart continues to grow as it strengthens its ecommerce presence. In answer to Amazon’s vast product catalog and audience reach, Walmart.com is gaining consumer favor and attracting ecommerce brands looking to leverage its growing fulfillment network, Walmart Fulfillment Services (WFS).
Walmart’s path to ecommerce success
In 2021, Amazon leads Walmart.com in U.S. customer reach. 73% of American shoppers made purchases on Amazon in Q1, versus 40% who made purchases on Walmart.com. Whereas Amazon began as an online retailer and acquired brick-and-mortar retail space decades later, the much older Walmart followed an inverse path.
Founded in 1962, Walmart had grown to become one of the most prominent U.S. brands by the late 1980s. By 2002, it reached the number-one spot on the Fortune 500 list, where it has hovered since.
It wasn’t until 2016 that Walmart broke into ecommerce with its $3 billion acquisition of online retail site Jet. The move was widely considered a direct effort to compete with Amazon, which by then had surpassed Walmart as the U.S.’s biggest retailer.
In May of 2020, due to “continued strength of the Walmart brand” and what analysts attributed to financial losses and operations issues amid the escalating COVID-19 pandemic, Walmart discontinued Jet and refocused its ecommerce development on Walmart.com.
At the time of the announcement, there was uncertainty over whether Walmart could compete in the ecommerce field. Today, it seems much more likely that it will become a go-to destination for online shoppers.
Here’s some promising evidence: while Walmart’s in-store customer base (53% of U.S. consumers) still leads that of its online store, the latter has risen 13% since 2020. Overall, Walmart.com is now the third-most-shopped retailer in the U.S., beating out other industry giants like Target, eBay, and Costco.
Furthermore, Walmart saw high year-over-year growth during the 2020 holiday season, with its Black Friday and Cyber Monday events boosting Q4 sales 124% from 2019. Toys and Electronics were Walmart’s strongest categories, earning a combined $85 million in sales between November 26 and November 30, 2020.
Walmart’s ecommerce division emerged more than twenty years after Amazon, but is rapidly making up ground with online shoppers.
Walmart.com shoppers are price-conscious
Like most U.S. consumers, Walmart’s online shoppers are changing their behaviors in response to prolonged economic strain. They’re cutting their overall spending, shopping online rather than in-store, and are buying more essential products like groceries and cleaning supplies, and fewer non-essentials such as clothing, home goods, and electronics.
In line with its reputation as an affordable retailer, Walmart serves shoppers that are experiencing the COVID-19 economy differently than the average consumer. For instance, nearly a quarter report losing income since 2020, and over half have experienced financial setbacks in the past year (54% versus 48% of U.S. consumers overall). They’re adopting money-saving strategies at higher-than-average rates, including researching products before buying them and contributing to their savings each month instead of spending.
|Money-saving method||Walmart.com shoppers||All U.S. consumers|
|Looking for ways to save money when shopping (e.g., coupons, promotions, deals)||83%||75%|
|Becoming more conscientious of spending money||82%||73%|
|Typically research products before buying||78%||69%|
|Typically spend time planning or making lists in preparing for shopping trips||77%||69%|
|Always look for less expensive products to save money||72%||70%|
|Set aside savings each month||50%||46%|
There’s room for both Amazon and Walmart in ecommerce
As large, inclusive retailers known for convenience and low prices, Amazon and Walmart appeal to similar American audiences, and their mutual popularity indicates that online shopping is big enough that consumers will shop on both platforms.
By and large, Walmart.com shoppers are also Amazon shoppers; 77% of Americans who shop online at Walmart hold Amazon Prime memberships, and 60% make purchases on Amazon at least weekly. By contrast, exactly half of online Walmart shoppers are members of Walmart+ (Walmart’s equivalent to Prime) — though 23% would consider joining in the future.
But Walmart shoppers are more price-sensitive than the average customer, a characteristic that leads them away from both Amazon and online purchases in general. When asked why they haven’t shopped on Amazon recently, Walmart shoppers say they haven’t needed anything (31%), they’ve been trying to spend less money (27%), and that Amazon’s prices are too high (15%). Another 9% admit that they just don’t like Amazon.
Walmart Marketplace customers also tend to broaden their search efforts when shopping online. They’re 40% more likely than average to bypass Google, Amazon, and other search engines to look directly on a brand or retailer’s site for what they want to buy. They’re also more willing to use social media channels like Facebook, Youtube, Instagram, and Tik Tok to search for products.
|Where consumers start product searches||Walmart.com shoppers||U.S. consumers|
|Search engine (e.g., Google, Bing)||75%||65%|
|Brand or retailer’s website||53%||38%|
|Other social media platform||7%||6%|
That’s not to say Walmart shoppers take pains to avoid Amazon. In fact, the majority look to Amazon for products from specific brands (74%) and when they need fast shipping (71%). Of course, as Walmart’s online catalog and WFS grow, Walmart shoppers’ preference for Amazon in these cases may change.
Established ecommerce sellers are expanding to Walmart
Currently, 7% of existing Amazon sellers also list products on Walmart Marketplace, and another 39% are considering joining the platform this year. WFS is a big draw for ecommerce entrepreneurs, so much so that 33% of Amazon sellers believe Walmart Marketplace will compete strongly with Amazon in 2021.
But selling on Walmart won’t be an option for everyone, particularly younger brands without a proven performance record. Unlike Amazon, Walmart Marketplace limits seller eligibility to brands with at least a year of operating experience and good standing among customers — another plus for successful ecommerce sellers, who may face fewer competitors through Walmart than they would on Amazon.
That said, Walmart Marketplace has opened its eligibility to global brands, meaning U.S. sellers will soon compete with large ecommerce brands from around the world, including manufacturing giants in China.
Walmart’s standards are reflected in the types of Amazon sellers that currently also sell on Walmart Marketplace or are looking to expand there in 2021. The majority are profitable ecommerce brand owners that fit the following profile:
- Private label business model (72%) with over 10 active product listings (70%; 29% currently sell over 100 products)
- 3 or more years of selling experience (60%)
- Self-employed or exclusively earn income through their ecommerce businesses (57%)
- Profit margins over 15% (60%)
- Lifetime sales over $100,000 (59%)
Walmart’s restrictions on who can sell on their online platform may ultimately result in a very different marketplace than Amazon. Consumers may benefit from a more vetted catalog, which could mean higher quality products.
The future of Walmart’s ecommerce business looks bright
Walmart.com’s rising popularity among consumers indicates that it will continue to grow. Amazon firmly holds its title as the number-one retailer in the U.S., but Walmart’s differentiation in terms of seller qualifications offers customers an alternative that many are willing to try.
In any event, Walmart and the many third-party sellers interested in joining it can proceed knowing that ecommerce isn’t going away anytime soon. After all, 73% of Americans believe the majority of consumer shopping will happen online in the future — and Walmart.com will be there to serve them.