The Marketplace Is Probably a Distraction for Walmart E-Commerce

The Marketplace Is Probably a Distraction for Walmart E-Commerce

Walmart News

Walmart marketplace, allowing third-party sellers to sell on walmart.com, launched all the way back in 2009. It was a slow launch, requiring big technology investments, so it wasn't until the end of 2015 when Walmart was able to finally have it open for thousands of sellers. There are now over 11,000 sellers on Walmart.

But the marketplace wasn't resulting in the only thing which mattered - sales growth. Walmart e-commerce growth kept slowing down every quarter, and the increasing catalog didn't have much impact. So Walmart went out and acquired Jet.com for $3.3b to bring in new talent and have the founder Marc Lore run Walmart's e-commerce. Since then Marc has been busy reorganizing Walmart's e-commerce organization and going on an acquisition spree.

One of the new things introduced recently is the ability to pick up online orders at Walmart stores. While we aren't sure if this is what customers want, it is - we hope - one of many experiments Walmart is going to try to use their massive infrastructure for online. When compared to this, the marketplace looks like a lazy attempt to grow the catalog without committing or investing anything substantial.

For a very long time the only context the marketplace would get mentioned in was as a way to expand their online catalog. In a recent interview and article on Bloomberg titled "Can Wal-Mart’s Expensive New E-Commerce Operation Compete With Amazon?" there is no mention of the marketplace at all.

The marketplace was launched before Jet.com acquisition happened. And in many ways Jet.com acquisition happened because everything done before that wasn't working, marketplace included. Marketplaces are expensive to integrate, require complex technology investments, and on Walmart never felt like a full commitment. Many customers were and are still confused about buying from it.

The marketplace is a distraction because Walmart could be focusing on other areas. Product categories like fresh food and grocery delivery, and utilizing Walmart's stores are two examples. There are plenty opportunities where Walmart could become a leader. For Amazon the future is likely a massive marketplace, but for Walmart it could be something else entirely.

We think that Walmart rightfully realized that they need to do other things than the marketplace to grow. In the race of competing to Amazon, they need to first become a fast growing online retailer.

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