A large part of that domination is attributed to the addition of their third party sales channel, which allows sellers like you and I to sell products and make money off of the platform. Is it any wonder that other retailers are starting to take the Amazon FBA business model hint?
This is not to say that anyone is exactly close to dethroning Amazon, however some are trying. One of the more booming attempts is from US retail giant Walmart.
So if you’re about to start an ecommerce store, where should you launch?
Today, I’m going to take you through eight points of comparison to finally answer the question: should you sell on Amazon FBA or Walmart Marketplace WFS?
You can’t answer which is better without identifying the options.
If you’re not familiar with all the ways you can make money by selling on Amazon FBA (FBA = fulfilled by Amazon), there’s a tremendous opportunity there. Visit JOD.com/freedom to learn more about Amazon FBA and how we can help you transform your store into a thriving ecommerce business.
Walmart also doesn't need too much of an introduction. The company dominates the traditional, brick and mortar retail space.
In 2009, however, the company launched Walmart Marketplace which, like Amazon, is open to third party sellers like you and I.
In 2020, Walmart set up to keep pace with rising ecommerce (selling & buying) trends with WFS—Walmart Fulfillment Services. Much like Amazon’s FBA, Walmart’s WFS allows sellers to have their shopper orders fulfilled by Walmart, or at least not on their own.
Which do customers buy from most?
Hands down, Amazon.
Currently, Amazon controls over 50%—around 57%—of the US ecommerce market. They are the clear leader in the sector. To be fair, Walmart comes in second, but their share of the market is just above 6%.
But the greater picture is not so clear cut.
Amazon dominates in the Appliances and Electronics product categories, no doubt.
But Walmart is the heavy hitter in Food and Beverage categories, even with Amazon’s 2017 acquisition of Whole Foods.
That said, it’s worth noting that with Amazon FBA, sellers can currently reach buyers in 20 other marketplaces (countries), whereas Walmart is limited to the US.
In terms of broad, shopper scope, there’s no comparison. But, we know that the US is much more consumer driven than other markets, so it’s not like Walmart doesn’t reach anybody.
Keep in mind, however, that just because Walmart is down with shoppers, does not mean they’re out by any stretch of the imagination. Afterall, they just got started!
Now, let’s say you wanted to sell to Amazon and/or Walmart shoppers on their respective platforms…
Which is easier to sign up for?
Amazon wins again.
That said, the process is technically as simple as completing the online sign up process by providing some basic information and verification documents. But you might run into a few snafus in the verification process.
Because the process can be so rocky, Just One Dime makes it a point to regularly update our Amazon FBA Mastery membership lesson on setting up your Amazon Seller Central account. This allows our students to become verified and move to action on their stores more quickly.
Bonus points for Amazon: you can sign up either as a business or an individual, and just about anyone can get approved.
Walmart is more selective.
Walmart Marketplace only allows registered businesses to apply for their platform. They care that you’re already selling products…and that those products fit with the rest of their catalog (the exact opposite of Amazon, where you can sell almost anything, A to Z).
And the fact that Walmart requires an application over a verification makes the process even more dubious.
At least you can predict who your competition might be if your Walmart WFS application is approved.
Which has lower competition?
We could also phrase this question “which has a fewer number of sellers?”
Number of sellers
Amazon has 1.1 - 1.5 million sellers in its US marketplace, alone.
Of course, to get the full competitive scope we’d need to consider its other markets. However, since Walmart Marketplace is only available in the US, there’s no need.
Walmart Marketplace has around 130…thousand active sellers.
Based on that data alone, Walmart is the clear winner 10x over with far, far fewer sellers. However, competition is not solely determined by the number of other sellers.
Let’s pick a popular, competitive market to flush this part out with a comparative exercise: yoga mats.
On Amazon, type that word—”yoga mat”—into Amazon’s shopper search bar. Ignore the top results labeled Sponsored (ignore them in later results, too).
From the first row of organic—non-sponsored—products, we see review counts of 14k, 38k, 67k, and 84k.
The second row of organic results shows review counts between 4k and 33k.
Now, type that same word into Walmart Marketplace’s shopper search bar and look for the same attribute: number of consumer reviews per product.
Again, skip the sponsored products. We can see that the top listed organic products have review counts between 8 and 365…no “k”.
If we assess a market better suited to private label products—such as a beard grooming kit—on Amazon, we see the top organic results (1st row) still have anywhere from 13k to 44k reviews.
On Walmart Marketplace, those numbers fall to 17 and 1,500.
That said, most products on Walmart Marketplace are from the same small set of brands. There’s also much less variation compared to products on Amazon.
Let’s try one more point of comparison: the super niche private label-able product whiskey glass set.
On Amazon, the top organic results have review counts between 203 and 4400 (that’s a strong, blank canvas market).
Walmart’s top products show between 5 and 10 reviews.
So when all is said and done, the answer is…Walmart!
That said, for as much as Amazon is growing, the number of new third party sellers is actually decreasing, which is good news for current and prospective sellers.
Meanwhile, Walmart’s third party numbers are increasing.
So if you’re looking for the answer to which platform is better for newbie sellers, we’ll have to keep going. For instance, ease of getting your product to a place it can be sent to shoppers is quite important.
Which is easier to send inventory to?
Amazon wins…or at least Walmart loses. In fact, Walmart hurt themselves on this one.
A key—nay, critical—difference between FBA and WFS is that Walmart only allows sellers to ship inventory to its fulfillment centers from within the US.
Head spinning yet?
Consider that thousands, if not more, ecommerce sellers build their products in China (this is also where we advise our students to source from—we even took several on a sourcing trip to Yiwu, China).
This means that if you, too, currently source products from China, you would not be able to directly ship your inventory from manufacturer to fulfillment center. You would have to intentionally establish a 1st shipping plan from China to inside the US and then create a second shipment for your product from that first location to the WFS fulfillment center.
On the other hand, Amazon does not care where your inventory comes from; the platform allows you to import your products directly from literally anywhere.
Amazon also allows you to advertise to shoppers located outside the US.
Which has lower cost advertising?
You can’t get profits until shoppers find your product. And rarely can shoppers find your product on a giant ecommerce platform without advertising.
To determine which platform has more wallet-friendly ad spend, we’ll measure by cost per click (CPC). CPC is the cost to the seller every time a shopper clicks on their sponsored—advertised—listing.
Amazon’s PPC ad system, on average, generates an $0.87 CPC.
Walmart’s average CPC is $0.13 higher at $1.
Keep in mind that Walmart’s significantly smaller number of sellers and products could mean that those clicks will more often result in a sale than on Amazon. In other words, your ACOS—advertising cost of sale—might not be worse on WFS despite the higher CPC.
Regardless, Amazon seems to have a cheaper in-house advertising system.
And if you’re curious about what PPC ads are, why ACOS is important, or even just how to apply any of this information, visit JOD.com/freedom. Our Amazon FBA Mastery membership takes you step-by-step through the entire process of finding a product idea, bringing it to life, getting it listed, getting it to Amazon (and Amazon shoppers), expanding it outside of Amazon and beyond.
If you are dead set on changing your life, we can help.
Which has the lowest selling fees?
Here, selling fees refer to both the subscription cost of a seller account (any type) along with product referral fees to sell via each platform.
First off, Amazon offers both an individual seller account (ISA) and a professional seller account (PSA). Since ISA is free (although users pay $0.99 per item sold on top of referral fees), we will only compare Amazon PSA to Walmart Marketplace.
Secondly, here are similarities between Amazon PSA and Walmart:
- Users may create as many listings as they please.
- Users may take advantage of on-platform advertising options.
- Users may sell in any product category, although some may require approvals.
Amazon PSA (Professional Seller Account)
An Amazon PSA costs $39.99 per month.
The lowest fee, 8%, is in the Camera and Photo category (among others), the highest is in the Jewelry category. Clothing & Accessories comes in second highest at 17%.
Walmart Seller Account
A Walmart Seller Account is free.
Referral fees to sell on the platform also range from 8 to 20% of each item sold and are most often 15%.
If we compare product categories that lend themselves best to private label, Walmart’s referral fees match Amazon’s (by category) almost exactly.
Once again, the Camera and Photo category (among others) carries an 8% referral fee. Jewelry also has the highest—20%—referral fee. Clothing is close to the top at 15%.
It seems Walmart Marketplace’s referral fees are almost identical to Amazon’s.
And with that said, Walmart takes the win here: no monthly selling fees compared to Amazon’s $39.99 monthly subscription.
As for the (several) other types of fees?
Which has the lowest fulfillment fees?
FBA and WFS calculate order fulfillment—finding, packaging, and shipping each order to the customer—similarly: costs are based on the product's unit weight or dimensional weight, whichever is greater.
Unit weight is most familiar: it’s how much the product, in packaging, weighs on a scale.
Dimensional weight refers to how much space or volume the product, in packaging, takes up. Dimensional weight accounts for oversized products that don’t necessarily weigh a lot, but still require extra shelf, truck, etc. space. We calculate dimensional weight by multiplying the product’s length by width by height and then dividing that number by 139.
Let’s say, for example, we have a product that measures 2.5 lbs on the scale and 7” x 6” x 4”. 7 x 6 x 4 = 168. 168 ÷ 139 = 1.2lbs dimensional weight.
2.5 > 1.2, so in this case, our product’s fulfillment fees would be based on its unit weight.
That aspect of calculating fulfillment fees by the greater of either unit or dimensional weight is the same for both WFS & FBA.
But that’s not all there is to it.
Walmart Fulfillment Service
Walmart sees your greater unit or dimensional weight and raises you 0.25lbs for packing materials.
From our example, 2.5 + 0.25 = 2.75lbs total. And the fun doesn’t stop there.
After that, you then round to the nearest whole pound for your final shipping weight, which in our example would be 3lbs.
We can see from their shipping fees by weight table that they would charge us $5.45 to fulfill one order of this product.
So every time a shopper orders one unit of our product, WFS takes $5.45 out of our revenue to pack up that product and ship it to the customer.
As for FBA,
There are no added packing material fees with FBA.
That said, Amazon also rounds each product’s weight to the nearest whole pound, so our product would also be billed as a 3lb product for fulfillment, which is currently $6.08 per order.
Keep in mind that Amazon added a fuel and inflation surcharge of 5% to all fulfillment fees in April. $6.08, for example, was $5.79 even in March of this year. However, as current global conditions change, we may see that fee change or even possibly peace out.
To get some perspective on product sizing and fulfillment fees, let’s go through a few small and large standard product examples.
Baby cot: 7.9lbs, 24” x 7.5” x 6” (unit weight)
FBA: we round the weight to 8lbs; the unit weight is greater in this case, so the FBA fulfillment fee is $12.18.
WFS: we add those same measurements to Walmart’s calculator and get $7.75.
Iron: 3.35lbs, 12.6” x 6.6” x 5.5” (unit weight)
Computer Monitor: 41lbs, 54” x 35” x 3.5” (dimensional weight)
WFS: $61.55 (note that heavier items may require longer than the promised two day shipping delivery speed)
T-Shirt: 12.32oz, 14” x 10” x 0.76” (unit weight)
WFS: $5.45 (apparel has an extra $0.50 fulfillment charge on WFS)
Phone case: 2.88oz, 13.8” x 9” x 0.7” (unit weight)
If we include the 0.25lbs to all WFS orders, based on outbound shipping weight (unit or dimensional), the results are:
Small standard size
If your product measures 15” x 12” x 0.75” or less and weighs between 0.76 and 0.99lbs, FBA is always less expensive—by $1.18, no less.
Large standard size
If your product measures 18” x 14” x 8” or less and weighs between 0.37 and 18lbs, WFS is almost always cheaper, with two exceptions:
- 0.75 to 1lb, FBA is less
- 1.75 to 2lbs, FBA is less
Additionally, fulfillment fees for apparel are generally less with FBA.
Otherwise, WFS is cheaper for larger and/or heavier products, often by almost or more than a full dollar. However, those products may not always be delivered within a two day shipping window.
Which has the fastest fulfillment?
Both officially offer and guarantee “day-day shipping” to customers (Prime customers for Amazon).
As far as who actually has the fastest fulfillment, on paper they are extremely close (although keep in mind that WFS does not guarantee two day delivery for larger objects).
And with that, we’ve covered just about every measurable attribute of the two platforms.
- More popular with shoppers
- Easier to sign up for
- Easier to send inventory to
- Lower advertising cost
- Lower competition
- Lower selling fees
- Lower fulfillment fees
Both offer two day fulfillment, making the score 5-4. The winner by one point?
For ecommerce newbies, I personally think Amazon is a no brainer. It dominates as the go-to for online shopping, which means broader shopper reach. Amazon is also easier to sign up for and easier to send your products to, which takes a lot of the hassle out of the ecommerce, private label process.
If you’re wondering what to do with all this information, I’ll give you an easy answer: visit us at JOD.com/apply. There, you can speak with a member of our team about our Amazon FBA Mastery membership—everything you need to know (and more) about how to sell on Amazon from beginning to beyond (Amazon). We would love for you to join our epic community of FBA sellers.
Now, you probably already know we at Just One Dime prefer Amazon in most cases. However, I do believe that Walmart has an incredible opportunity to open their doors to more sellers—maybe with less restrictions—so that they can introduce a larger number of products to their platform, which will inevitably bring more customers. Don’t count them out.
What are your thoughts on Walmart Marketplace and WFS? Let me know in the comments.