Walmart v. Amazon v. eBay and the Winner is...
When the online retailer pricing battles heat up, just before the holiday season, it’s a good time to be a shopper. It may also be a good time to be a third-party seller. Recently the NYT called the big fight of the year. In one corner we have “The Undisputed Champion of The Low Price World…Walmart” and in the other “The 800 Pound Gorilla of online retail…Amazon.” So what is this fight going to look like? Bare knuckled for one thing; but, lets look at “the tail of the tape”:
- Both players have an amazing distribution and supply chain network.
- Both players are willing to lower prices to attract sales.
- Both players are now courting third-party sellers.
- Both players have a war chest, and political capital.
- Amazon is all online; while Walmart has thousands of brick and mortar stores.
- Amazon’s recommendation engine is a huge benefit; expect Walmart to improve here.
- Size matters. Walmart is over $400B in sales, and Amazon is at $20B in sales.
- The target customers are different…but, the overlaps are growing.
- Is eBay still a contender?
Lets dive in a bit deeper, to try and forecast some of the action, and see who will be the winners in the long term. Hint: it will be consumers, and probably independent suppliers that are small or mid-sized businesses (or “SMBs”).
Walmart.com has always competed against Amazon.com. We recently posted a blog article discussing Walmart welcoming 3rd party sellers into Walmart.com. This was a significant event for a few reasons. Walmart is recognizing they must expand product depth on Walmart.com, and Amazon has proven that third-party sellers are the way to do that. When (not if) Walmart opens their marketplace to SMB third-party sellers, we will open the champagne, because it will be a new distribution channel for SMBs, and you can bet Shipwire will be there to offer seamless automated fulfillment for Walmart.com sales. Third-party sellers play an important part in the equation. Amazon’s growth has impressively paralleled their opening up of their platform to third-party sellers. As we’ll cover below, they stole this thunder from eBay, and haven’t look back. Expect Walmart to follow suit soon, to the benefit of independent retailers and brands.
Shipwire already handles Amazon order fulfillment and e-Bay order fulfillment for independent sellers. The reality is that Walmart is just now testing the idea of opening up their marketplace; but, you can bet with their years of experience dealing with Walmart.com drop shippers and supplier management, they will move effectively into this space. Shipwire, being an independent champion of small business growth, and a provider of small business online product fulfillment, is looking forward to the day when Walmart opens up their platform APIs. This will allow us to plug in, and create an avenue for merchants we power to gain access to Walmart.com’s marketplace. The benefits to Walmart are clear: Access to additional seller data, and being able to see what products are selling well in the marketplace, without the risk of inventory. Once products are identified, Walmart (like Amazon) can source directly from a supplier, or the independent seller.
The questions for Walmart will be whether their brick-and-mortar distribution supply chain will be nimble enough to power Walmart.com. Even more challenging will be whether they can leverage it, as they expand their product base with third-party seller product. That is where Shipwire comes in.
Shipwire can expand on the unique role we play already for Amazon and eBay sellers. We are marketplace-independent, and hyper-focused on meeting the needs of our merchants. Shipwire is designed from the ground up, to enable a seller to get products into the warehouse, quickly plug into marketplaces and shopping carts, and be selling in multiple countries. Today it’s 6 warehouses, in 3 countries, on 2 continents, via 1 account. That means fast, effective shipping, automated after the closure of a transaction from any marketplace, in most major markets. With multiple local fulfillment centers in the U.S., Canada and the U.K., Shipwire uniquely allows international merchants to gain a local presence in major markets and marketplaces, allowing businesses from all over the globe to function like a local seller when selling in key marketplaces. Shipwire provides our services using the SaaS business model – on demand, Internet delivered, pay-for-use, no contracts or commitments, scale on demand – allowing merchants to focus on growing their business. You can see all our compatible marketplaces and e-commerce tools here. Multi-channel fulfillment for multi-channel sellers.
Expect Walmart to try and take “online” out of the equation, by leveraging their in-store network and their size to make buying online as “fast and free” as possible. (See our previous free shipping options blog post regarding “fast and free”). Amazon has tried to take the shipping price out of the equation, with Supersaver and Prime; now it is likely a profit center for them. The NYT article has a great quote from Walmart, that they see Amazon’s Prime as too expensive. Amazon is also testing new shipping options in major metropolitan centers, to make online delivery as fast as same day. Walmart’s clearly looking to take the wind out of Prime’s success. The key to “fast and free” for online orders is the Shipwire distribution model: putting inventory in multiple warehouses close to major population centers, so that the order can be sent the shortest distance to reach the buyer. Walmart, being nearly everywhere, gives them a lot of options for fast delivery for their own inventory.
There are many more ways that Walmart will likely take “online” out of the equation. Today, Walmart allows for Site-to-Store Shipping. Buy online; pick-up in store. This doesn’t work for purchases made from third-party sellers in the marketplace today; but, perhaps Walmart has something up their sleeve. Clearly, being able to return products purchased online, to any Walmart store, could create a large competitive advantage that would rival the ease of return that Zappos pioneered.
If Max Kellerman was calling this fight he would have to note that Amazon appears to have, just yesterday, won a decade long battle against eBay, for most page-views going into the holidays. [See Auctionbytes for a nice write-up, Amazon v eBay, and ColderIce.com’s e-commerce blog, and John’s hilarious vocal YouTube commentary here]. Industry pundits have been forecasting Amazon traffic surpassing eBay in the U.S. for a while. If you have kept an ear on the tracks, you will have noticed that sellers have grown frustrated with eBay over the past few year,s and many seem to have switched to Amazon. The now public rivalry between Amazon and Walmart is not a real surprise to anybody. Walmart.com and Amazon have been competing for years; now they are just being vocal. Will the competition soon be for the hearts and minds of independent sellers?
This is a fight over the future of online sales. As more and more of middle America goes online for shopping, you can bet that Walmart will be there. Shipwire hopes that Walmart will quickly open up their marketplace to third-party sellers, in an effort to match Amazon’s product depth. This will benefit independent sellers. Will Target, Kmart, Costco, and the other retailers or warehouse retailers, do the same?
Being entrepreneurs dedicated to the success of the entrepreneurs for whom we fulfill product – we hope so.