Insights

Shopify & Walmart: A Quick Take on this New Partnership

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On Monday, Shopify announced that it has partnered with Walmart to allow Shopify merchants to sell products on Walmart.com. This new partnership allows Shopify users to list their products on Walmart.com at a transaction-based rate, meaning merchants are only charged a “referral fee” on each transaction.

Since Walmart’s release of its Walmart Fulfillment Services program, the company has been working hard to attract third-party merchants and brands to its online marketplace. This new partnership with Shopify is expected to bring 1,200 sellers to Walmart’s marketplace by the end of 2020.

Walmart.com has been on the rise since early this year. The company’s e-commerce business grew by more than 74% in the first quarter of 2020. That growth represents a combination of online grocery and marketplace sales. However, much of that growth was driven by the outbreak of COVID-19. Stay-at-home orders and the closure of many brick and mortar retailers caused consumers to turn to e-commerce for their daily shopping needs.

Walmart wasn’t the only company to experience a surge of growth due to COVID-19. Amazon.com also experienced massive growth and still maintains a considerable lead as the most popular online marketplace. To put the competitive gap in perspective, Amazon.com is currently estimated to have 2.1 million active sellers. Walmart.com is estimated to only have around 45,000. It’s a young marketplace for third-party sellers, and is still very much in its infancy when measured against Amazon.

 

What does this partnership mean for brands?

Brands that run a Shopify store will soon be able to list products on Walmart.com. This functionality helps bridge the gap between direct-to-consumer and one third-party e-commerce channel, and it’s most useful for brands that are a good fit for the Walmart marketplace.

Brands need to be where their customers are. For most brands, that means a combination of brick and mortar, D2C, and online marketplaces. Amazon.com has been the longstanding leader in online marketplaces and still holds the lion’s share of US e-commerce sales. Walmart.com as a third-party marketplace is relatively new to the digital scene, and will likely become more important as it grows in popularity.

At the end of the day, it’s about priorities and resource allocation. If a brand’s audience largely crosses over with Walmart’s audience, then it makes sense to have products on Walmart.com. For specialty brands with niche audiences, the decision is a bit more complicated.