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Walmart Inc. has removed rules requiring sellers on its marketplace website to be registered in the U.S. — an attempt to close the e-commerce gap with Amazon.com Inc. and tap into China’s vast network of manufacturers.
This month, the world’s largest retailer began opening up its third-party marketplace to foreign sellers, who no longer need a U.S. address or business tax identification. The vendors still will be carefully vetted, both locally and by Walmart’s global trust and safety team, to prevent the listing of unsavory items. The new sellers will make up just a fraction of Walmart’s total seller population, which is mainly based in the U.S.
Walmart is looking to expand its marketplace, where suppliers can offer their products via the company’s website, and the services that branch off of it, like fulfillment and advertising. For retailers, marketplaces are attractive because they provide revenue from fees without the cost of storing inventory. Last year, Walmart began offering fulfillment services for its marketplace sellers, a move that Amazon made 15 years ago. Sellers can also purchase advertising on Walmart’s websites, which supports the company’s new Walmart Connect media platform.
McMillon by Andrew Harrer/Bloomberg News
Chief Executive Officer Doug McMillon has said that Walmart’s marketplace business is a “huge opportunity” for the retailer, and in February told investors that Walmart would make a “greater push” to expand new services like fulfillment.
“We have strong relationships with many reputable companies around the world and we have some of the most rigorous seller requirements in the industry,” Walmart said in an emailed statement. “As a result, we are opening our U.S. marketplace to a limited number of international companies who share our commitment to customer trust and safety.”
There are risks to opening the doors, however. Walmart’s marketplace, along with Amazon’s, has faced criticism over the years for carrying offensive items like Confederate flags. Several years ago, Walmart pulled about 20 million items off the marketplace that failed to meet its quality standards. Though Amazon’s marketplace is open to virtually anyone who goes through an online registration process, Walmart is invite-only, so it can vet sellers. Walmart has also made deals with Shopify Inc. and BigCommerce Inc. over the past year to widen its reach.
For Chinese manufacturers, U.S. marketplaces have become a popular way to reach American customers. In January, Chinese merchants represented 75% of new Amazon marketplace sellers, an increase from 47% a year earlier, according to researcher Marketplace Pulse, which monitors the site. Walmart will likely see a similar ratio, the firm estimates.
“This will get Walmart more selection, more affordable goods that already dominate Amazon best-sellers lists,” said Juozas Kaziukenas, founder and CEO of Marketplace Pulse. “To an investor, that reads as positive news.”
The move was noted earlier by Chinese e-commerce publication Ebrun.com, but hasn’t been reported outside of China.
More than 60% of the $532 billion global shoppers will spend on Amazon this year will go to marketplace merchants, according to researcher eMarketer. Amazon charges a commission — typically 15% — on each transaction plus additional fees for warehouse storage, packing and delivery. Amazon also charges its marketplace merchants to advertise on the popular website. Amazon’s advertising business will grow 30% this year to reach $23 billion in sales, according to eMarketer.
Walmart doesn’t disclose how many marketplace sellers it has, but Marketplace Pulse pegs it at about 80,000. Walmart carries more than 80 million unique items online. Not all of the new vendors will be based in China.
While the company is opening up its marketplace to international sellers, it’s also making a push to stock more U.S.-made products in its own aisles.
Walmart Inc. ranks No. 3 on the Transport Topics Top 100 list of the largest private carriers in North America.
— With assistance from Belinda Cao.
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