Walmart sees boost from wary Amazon merchants
Sellers heading to rival due to web giant’s cluttered marketplace, steep fees
SEATTLE— Chad Rubin began selling vacuum cleaner parts on Amazon.com in 2008 and turned it into a multimillion-dollar business. But in recent years, Rubin has found it increasingly difficult to compete on the cluttered site, where he has been forced to buy advertising that cuts into his profit.
Last year, he decided to shift some of his business to an up-and-coming website where it’s easier and cheaper to stand out: Walmart.com.
“Amazon sells 25,000 different kinds of toilet paper holders,” says Rubin, who is actually undercounting a product with more than 70,000 search results on the site. “How do you win and differentiate in that environment?”
In the last year, thousands of merchants such as Rubin have answered that question by signing on with Amazon’s biggest rival.
The notion of Amazon merchants selling through Walmart.com would have been risible just a few years ago. But much has changed. Walmart’s struggling e-commerce operations have shown signs of life since the company acquired startup Jet.com last year and put its co-founder, Marc Lore, in charge. Meanwhile, among merchants, Amazon has earned a reputation as a demanding and cranky landlord, kicking sellers off its marketplace when customers complain and reaching deeper into their pockets with steeper fees and new advertising products that merchants say are now required to get a sale.
For merchants, Walmart today is what Amazon was a decade ago: a vast frontier with room to grow. Amazon, meanwhile, is reaping the rewards of its popularity. It attracts 180 million unique web visitors each month, about double Walmart’s traffic, and can charge merchants ac- cordingly to get a piece of the action.
The overcrowding on Amazon.com is of particular concern to merchants generating almost all of their sales there.
Last year, Robert Roque began putting inventory from his health and beauty business on Walmart.com and Jet. About half his sales are now on Amazon — down from 90 per cent — due to the quick surge he’s seeing on Walmart.
“We had to diversify,” he says. “We could not sit back and depend on Amazon and have all our eggs in one basket.”
Walmart has a long and contentious history with its suppliers — using its thousands of brick-and-mortar stores and millions of shoppers as leverage to pressure them to cut prices.
The world’s biggest retailer has good reason to be more accommodating to its online merchants. While Walmart’s online store has generated impressive sales growth in recent quarters, it hosts mere thousands of sellers versus Amazon’s two millionplus. Walmart needs to catch up if it is to match Amazon’s reputation as the Everything Store.
“You don’t want to have a shopper look for something on your site and not find it, because you might lose that customer for good,” says David Spitz, whose ChannelAdvisor works with Walmart to recruit new sellers.
Though Amazon’s marketplace is open to virtually anyone who goes through an online registration process, Walmart is invite-only because the company wants to vet sellers before giving them access to its customers.
Wal-Mart’s acquisition of Jet.com is accelerating its progress in e-commerce.