Amazon and Walmart are the two big names in the e-commerce industry. In this blog, you will learn about Amazon & Walmart in detail, as well as their comparative insights.
Amazon captures nearly 40% of all online sales in the US, while Walmart is gaining its position next to Amazon for sellers to sell their products on.
Amazon & Walmart may seem similar to eCommerce, but they have their unique pros, cons, requirements, and guidelines for sellers to keep in mind.
Amazon Overview
In the U.S. e-commerce market share, Amazon is leading the e-commerce industry. Data from eMarketer indicates that in 2023, Amazon accounted for 37.6% of US online retail spending. It also represents about two out of every five dollars spent on online shopping.
Amazon benefitted as internet spending surged due to the COVID-19 outbreak. Amazon saw a 13% increase in net sales from $127.10 billion to $143.08 billion in the third quarter of 2023.
With a 10.32% growth from the previous year, Amazon’s net revenues for the 12 months that ended on September 30, 2023, came to $554.028 billion. Furthermore, more than half of American households currently have an Amazon Prime subscription.
Online purchasing is therefore severely hurting physical stores that don’t have an online presence. Given these circumstances, Amazon is in a strong position to take the lead in US e-commerce in the years to come.
Walmart Overview
Walmart, the biggest retailer in the world, is an unexpected competitor that presents a serious threat to Amazon.
Walmart has become a formidable rival of Amazon in the online retail market. Now that it has established itself as America’s #2 online marketplace, the corporation has successfully found its footing in e-commerce.
By October 31, 2023, Amazon’s online sales had reached $638.785 billion, up 6.44% from the previous year.
Walmart increased its entire online sales share in the United States from 5.4% in 2019 to 6.4% in 2023.
Because Walmart’s delivery and pickup services are convenient for stay-at-home shoppers, a large portion of this surge is being driven by an increase in online grocery sales. Utilizing its vast physical presence to facilitate curbside pickup and delivery from more than 7,000 locations, Walmart also avoided the debilitating strains on fulfillment centers that Amazon faced.
Amazon VS Walmart
Both Walmart and Amazon provide membership-based services that grant subscribers access to a range of advantages. Amazon Prime was introduced in 2007 and now has over 200 million members globally (with 102 million in the United States alone). It is one of the most well-liked and prominent aspects of the Amazon platform.
In September 2020, Walmart introduced Walmart+, a membership service of its own. Walmart+ has far fewer members than its Amazon counterpart, with only 8.2 million. Walmart+’s limited data set makes it challenging to compare the two programs’ performance. From the perspective of the client, both operate almost in the same way and provide comparable advantages.
1. Selling Fees
Seller fees are a significant factor to take into account when comparing Walmart with Amazon. How much will selling products on each platform cost you? How similar are the fee schedules?
In general, Walmart is less expensive than Amazon because it sells more products at bigger quantities, but it also has higher commission and activity fees. But let’s examine the details in each of the two marketplaces:
Amazon: Higher Fees, But Volume Access
Unlike Walmart, Amazon charges monthly subscription fees to its vendors. The “Professional” seller plan is $39.99 per month, while the “Individual” plan starts at $0.99 per month for up to 40 orders each month.
For product sales, Amazon receives referral fees that range from 8 to 15% of the entire transaction price. Amazon Devices is one of the very high-volume categories that has a 20% referral fee. Furthermore, a per-item “variable closing fee” of around $1.80 per sale is mandated by certain media categories.
When selling through Fulfillment by Amazon (FBA), there are extra fees involved:
- Fees for FBA Pick and Pack: Apply per item, depending on size and weight
- FBA Weight Handling Fees: Based on weight, fees are assessed per unit.
- FBA storage fees are approximately $2.40 per cubic foot of space (more during Q4 peak, reaching up to $4.80/cubic foot if storing for more than two months).
- Fees for FBA Removal Orders: If stock needs to be deleted or returned because it doesn’t sell
Coupon generation, reverse logistics, and picture services are just a few of the many other programs and features that are available at an additional cost. Examine them thoroughly to prevent any unexpected fees.
Walmart: Reduced Volumes But A Sleeker Fee Structure
Walmart does not impose closing order fees or monthly seller subscription costs, in contrast to Amazon.
Rather, you simply have to pay Walmart:
- Per-sale referral fees: Depending on the product type, rates vary from 6 to 20%.
- Expenses for WFS storage and handling if you choose to use their fulfillment services
And that’s it! Walmart keeps things straightforward by only charging referral fees, whereas Amazon charges a variety of other costs.
Nevertheless, Walmart generates significantly lower sales quantities than Amazon. Though probably fewer sales, you’ll benefit from lower activity expenditures per transaction.
Therefore, you need to decide if the revenue potential of Amazon’s reach outweighs lower platform fees. Walmart has additional expenses that are specific to its UPC requirements.
2. Listing & Onboarding
How simple—or difficult—is it to begin selling on Amazon and Walmart? Now let’s contrast and compare:
Amazon: A Lot of Automation, but Often Changing Policies
Amazon provides a smooth onboarding process for new sellers because of extensive automation. You can begin listing products as soon as you pay $39.99 per month for a Professional seller account and link your bank and tax information. No protracted application or approval processes.
This “Bulk Upload” option also streamlines the process of creating new listings. To hasten the debut of new products, Amazon has now made it possible to “clone” already-existing listings.
Onboarding is quick, but there’s a high learning curve to comprehend and adjust to Amazon’s regulations, laws, and listing adjustments. For more than 100,000 product categories, requirements are constantly changing, which presents challenges for new vendors.
Walmart: Stricter Inspections But Greater Stability
Every new Walmart vendor needs to fill out an application that includes the following information:
- Documents proving the business (W9, EIN, business licenses)
- Prior experience and history in online sales
- Product List and Provider Information
- Capacity to fulfill a wide range of performance criteria
- Walmart carefully reviews every application, looking at seller stability, order accuracy potential, product quality, and other requirements.
- If an applicant doesn’t meet Walmart’s priority categories, they risk being rejected in large numbers.
- From the time an application is first submitted until it is finally approved, it may take six to eight weeks.
Following approval as a Marketplace Retailer, Walmart additionally places listing restrictions such as:
- Needing to list five to ten sample products upfront
- UPCs for each SKU
- More stringent shipping regulations, such as limitations on name-brand packaging
Thus, compared to Amazon, Walmart requires far more work for onboarding.
3. Pricing & Buy Box
For sellers on marketplaces, winning purchase boxes and price optimization are essential. In these regards, how do Walmart and Amazon compare?
Amazon: Harsh Competition but Effective Pricing Strategies
To put it simply, there is fierce competition on Amazon for Buy Boxes.
There is strong competition amongst over 2 million active merchants for the coveted “Add to Cart” button on every product page.
Although price is a major consideration in determining whether a product will be awarded a buy box, it is not the sole one. Experts in SellerApp say that the following components—in that order—are crucial to Buy Box dominance:
- Participation in Fulfilled By Amazon (FBA): About 80% of the time, FBA listings will outperform non-FBA offerings at the same costs.
- Total Cost + Shipping: If all other factors remain the same, the lower cost prevails.
- Seller History: Your order cancelation, delay in shipment, and defect performance metrics
- Product Availability: When prices are equal, in-stock deals outperform out-of-stock ones.
- Seller Feedback Score: Increased probability with 500+ favorable ratings
Even so, competitive pricing continues to have a significant impact, particularly when individual sellers are only able to regulate price. Repricing is therefore a useful tactic to maintain your Buy Box positioning.
Walmart: Stricter Regulations But Less Competition
There are advantages and disadvantages to Walmart’s pricing in comparison to Amazon.
The greatest advantage? significantly less rivalry among sellers. Currently, there are only 150,000 vendors on Walmart Marketplace, compared to almost 2.3 million on Amazon.
This increases the likelihood of achieving Buy Box, particularly for conscientious sellers who consistently maintain top-ranked pricing.
Walmart forbids the use of outside repricing software, which modifies offer pricing automatically, in contrast to Amazon.
Every day, any modifications to the seller must be made manually.
Repricing limitations reduce pricing volatility from hyper-aggressive bot repricers, but they also require more manpower.
The marketplace operations team at Walmart, however, keeps a close eye on seller pricing across all listings.
Additionally, they uphold stringent guidelines for pricing compliance:
- Price Parity Rule: The Walmart listing is deleted if a vendor offers a product for less money on another website.
- Price Leadership Policy: You will be required to match any competitive seller’s listing that offers an identical product at a significantly lower price on Walmart or another platform, or else your listing will be removed.
These harsh regulations surprise a lot of merchants. Even brief pricing differences result in instantaneous listing removals, compelling banned vendors to submit support queries requesting reactivation.
What’s the lesson learned? Walmart gives retailers no pricing flexibility but less head-to-head competition.
Astute vendors employ meticulously designed price structures to evade policy transgressions. Walmart offers an alluring return on investment if your margins can withstand extremely thin earnings.
4. Fulfillment & Shipping
One important factor in the marketplace is order fulfillment. Let’s examine how the shipping and fulfillment strategies used by Walmart and Amazon compare and contrast.
Amazon: Rules for Fulfilled By Amazon (FBA)
Considering that Amazon has over 150 million devoted Prime members, winning Buy Boxes basically means getting free two-day shipping.
Employing Fulfillment By Amazon is the only method sellers can consistently fulfill Prime purchases (without having to pay for Seller Fulfilled Prime qualifying).
Sellers transport large quantities of their inventory to Amazon warehouses under the FBA arrangement. Without involving the vendor, Amazon manages order selection, packaging, shipping, and returns/exchanges.
Sellers benefit from great logistical simplicity via FBA. It does, however, have some significant drawbacks, such as:
- lengthy lead periods for regular shipments of merchandise to FBA facilities
- High long-term storage costs for items that move slowly
- Unexpected category access cancellations or increased restrictions
For instance, Amazon prohibited the entry of any non-essential commodities into FBA facilities for several weeks during the initial COVID-19 issue. Non-essential sales could only be sustained by vendors with their own independent fulfillment routes.
However, the advantages exceed the hazards for high-volume vendors. Amazon’s U.S. shipping and logistics network has grown rapidly, and it currently consists of:
- 110+ Centers for Fulfillment
- More than 150 Package Sorting Locations
- 50+ Regional Air Hubs for Amazon Air
- a collection of semi-trucks with branding and cargo planes
Thus, in spite of sporadic glitches, Amazon continues to be the seller’s most dependable and effective fulfillment option.
Walmart: Option for First-Party and Alternative FBA Acquire momentum
Similar to Amazon’s marketplace, Walmart’s marketplace places a strong emphasis on independent sellers who manage their own fulfillment and shipping.
Nevertheless, acknowledging Amazon FBA’s growing popularity and subscription income,
Walmart announced Walmart Fulfillment Services (WFS) lately.
Pallet loads of merchandise are shipped by authorized merchants to Walmart warehouses under WFS. Similar to Amazon, Walmart picks, packs, and sends orders to customers in boxes bearing the Walmart logo.
Walmart also gives Fulfilled By Merchant sellers specific badges for items not managed under WFS, provided they can meet Two-Day shipping deadlines.
WFS is still rather limited in comparison to FBA, though.
Thankfully, Walmart Marketplace has accepted a number of substitute fulfillment partners, such as ShipHero, ShipBob, ShipHype, Rakuten Super Logistics, Simpl Fulfillment, ShipMonk, Easyship, and Shipwire, that new sellers can use to obtain Prime-like shipping without the need for WFS.
5. Performance Guidelines
Also, Amazon and Walmart evaluate vendors in various ways. Let’s look at their enforcement guidelines and key performance indicators.
Amazon: Customized KPIs for Merchants and Sellers
Three fundamental metrics are outlined by Amazon Marketplace for sellers:
- Order Defect Rate (ODR): 1 percent or less of all orders over 60 days that are defective overall
- Pre-shipment Cancellation Rate: Total orders canceled seven days or more / total pre-shipment cancellations (goal under 2.5%)
- Total shipments over seven and thirty days divided by the total number of late shipments (goal under 4%).
- “Defects” include chargebacks, A-to-Z guarantee claims, and unfavorable seller feedback, all of which can seriously impair profitability.
Your seller account may be suspended by Amazon following several infractions.
Walmart: Just Three Core Standards
Unlike Amazon, Walmart Marketplace only judges sellers on three numbers:
- Order Defect Rate (ODR): Total defects/total orders over the past 90 days (target under 2%)
- On-Time Shipment Rate: Total on-time shipments/total shipments (target over 99%)
- Valid Tracking Rate: Total valid tracking #s/total shipments (target over 99%)
If any of the above rates fail, Walmart issues warnings by email. Consistent failures to meet the requirements can lead to account suspension.
However, Walmart tends to work with sellers through issues instead of immediately suspending them.
Their policy team provides clear requirements around a “Plan of Action” to remedy defects over a probationary period. If the Plan of Action succeeds and metrics improve, you avoid sanctions.
This collaborative culture helps sellers manage seasonal peaks where meeting every SLA proves infeasible.
6. Expectations for Customer Service
Amazon
Because of the success of its Prime membership program, Amazon has had a significant impact on how modern consumers expect to purchase.
About 150 million people worldwide are Prime members, and they get privileges like free two-day shipping, discounts, and access to music and video streaming that were unheard of ten years ago when people started shopping online.
Because of this, modern Amazon customers want and expect extremely quick, frequently free delivery along with simple return and exchange policies. They also rely on Amazon’s well-known customer service team, which is reachable by phone or chat around the clock, to promptly address any problems. To fulfill these demands, Amazon has invested billions in its supply chain and logistical systems.
To provide excellent customer service, Amazon also has very high expectations for its Marketplace merchants.
Walmart
In contrast, Walmart customers frequently have a different perspective on customer service because of the company’s strong history of brick-and-mortar retail.
Conventionally, service views are shaped by walking retail floors and conversing with store associates: price is the most important factor, queries are addressed functionally, and management handles complex situations. Waiting times occur more frequently.
Longer shipping durations, delayed refunds for returns, and more patient customer service are all possible.
Customer service will be less tense as long as pricing remains fiercely competitive—a fundamental Walmart value.
Last Words
When comparing Amazon vs Walmart for selling, there isn’t a single optimal marketplace that suits all sellers. The ideal match is determined by what matters most to your company.
If your primary concerns are profit margin and sales volume, Amazon is probably a superior choice.
Walmart might be a better fit for you if having control over your brand experience is more important to you. Despite having fewer customers than it does now, Walmart offers vendors greater freedom. Adhere to Walmart’s pricing guidelines and make use of shipping partners such as Deliverr.
Even if you choose Walmart or Amazon, you can enroll with U-commerce to get the best solutions for your e-commerce needs.
