GrowByData
Ecommerce data services for online retailers
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Walmart is a leading e-commerce giant globally and one of the biggest online retail platforms. According to NRF, Walmart is the largest retailer in the US, based on the sales with more than 4,700 stores across the country. Walmart Marketplace is now comprised of thousands of sellers and it is still growing. Walmart’s online sales grew 79% for its fiscal year 2021 and the shoppers are not just browsing or comparison shopping, they are adding products to their virtual cart.
Walmart flaunts an extraordinary network of stores, distribution centers, and buyers as the largest retailer in the world. It is a strategic decision for sellers to sell on the Walmart marketplace. Selling on the Walmart Marketplace can have a major impact on a brand’s business and growth in the short term and long term.
There are two different ways that Walmart sellers can start on the platform: 1P (first-party) and 3P (third-party) sellers. To get started on the Walmart platform as a seller, you need to know what 1P and 3P sellers are and the pros and cons of each seller type.
In this article, we will dive into detail on the different types of Walmart sellers with each of their advantages and disadvantages that can potentially help you make a well-informed decision.
As a 1P seller, you are responsible for sending your products to the fulfillment center of Walmart where your product will be stored and distributed. You will be supplying the products in bulk to Walmart at wholesale prices. Walmart will be listed as the seller instead of your brand. Products are listed as “sold and shipped by Walmart” as shown on the image above. You do not ship to Walmart stores or customers instead Walmart assumes all ownership and responsibility for selling the products. This includes pricing the products, optimizating the Walmart listings, advertising, marketing, and delivering your products.
You must apply for approval and meet certain business qualifications to become a Walmart Third Party seller. As a Walmart 3P seller, you will have maximum control over your Walmart product listings and inventory. You own the product, listing, and brand. Walmart Marketplace is only used as your channel/medium. You can list your products to the marketplace through Seller Center or third-party management software and optimize your Walmart listings, set your price, promote, manage the shipping, and fulfill orders. 3P offers you the most control over your business.
Deciding whether to sell as a Walmart 1P vs 3P seller is crucial for your e-commerce success. Sellers can make decisions based on their business structures and objectives considering the pros and cons of both business models (Walmart 1P vs 3P marketplace sellers). Sellers can gain maximum advantages from both options by having good marketing strategies that allow them to compete for the Walmart Buy Box.
Since winning the buy box is the ultimate goal of every seller, it is valuable to learn about the advantages and disadvantages of these two types of business models (Walmart 1P vs 3P sellers). In-depth knowledge and understanding of the pros and cons of each seller type allows you to make the right decisions to maximize your brand visibility, sales, and business growth.
Listed below are the pros and cons of both Walmart 1P vs 3P business models.
One of the ways credibility and trust are measured is by the reviews and ratings on the products. Using our Ad Intelligence solution, we analyzed thousands of shoe products on Walmart.com. We saw that 1P sellers had much more products rated above 4 and more products with 50+ reviews as shown on the graph below.
Using our Product Intelligence tool, we analyzed shoe products on Walmart Marketplace. We saw that 1P sellers almost exclusively provided shoes priced under $50, whereas 3P sellers provided shoes across a variety of price ranges. This gives the impression that to be a 1P seller on Walmart Marketplace, you need to only provide low-cost products.
Providing sales and promotions is one of the best ways to get customers as everyone loves sales. Analyzing the data on shoe products on Walmart Marketplace, we found that 1P sellers provided more special promotions on their products versus 3P sellers. Walmart extensively uses its ‘Rollback’ feature to reduce the price of the products to entice customers as shown on the graph below.
Walmart Marketplace is an effective sales channel for sellers with both big and small businesses. With its worldwide recognition and wide distribution, Walmart is the go-to shopping destination for many.
With the right marketing strategies, your product line can get great exposure on Walmart. It offers a tremendous opportunity for your business and is a great platform for anyone looking to expand their e-commerce business. By selling on Walmart’s rapidly expanding marketplace, many sellers and brands can gain greater visibility and sales volume.
If you are a new seller or an existing seller on the Walmart Marketplace and want to expedite your success on the platform, using an external tool such as Marketplace Intelligence from GrowByData can be extremely supportive to help you enrich your Walmart product listings, optimize your product detail pages, and offer a holistic view of your performance across channels in real-time. As a brand, if you are worried about MAP Price violations from your resellers, tools such as MAP Violation Monitoring Software will help you track your resellers and ensure they comply with your channel policies.
