Walmart Marketplace Struggles to Meet Customer Expectations

We think Walmart marketplace is one of the most hyped opportunities in retail. However we noticed that customers are not always pleased.

Walmart Marketplace

Average rating for top 100 sellers on the Walmart marketplace is 3.9 out of 5.

In comparison, top sellers on both Amazon and eBay have an average rating of 4.9 out of 5. Most of them are nearly perfect at 5 out of 5 if not for a few slip-ups.

Walmart marketplace requires pre-approval, so it avoids allowing inexperience retailers on board. Yet we ran some sentiment analysis on the recent reviews and found that most reviews are complaining about shipping issues - products taking too long to ship or returns not being free. On Amazon top sellers are either using Fulfilled by Amazon or have perfected their own shipping, while on Walmart the sellers are left to deal with their own fulfillment only.

The issue for most sellers is managing expectations - many customers shopping on Walmart.com expect to be buying from Walmart itself. The marketplace is still a new concept and is creating confusion. The confusion for customers is that marketplace sellers and Walmart.com itself delivers different quality of service, something no doubt Walmart is working on.

First, Walmart doesn't control the price marketplace sellers set. Walmart social media support is filled with answers like "That listing is from a Marketplace Seller and Walmart does not set third party pricing. Please contact the seller for info.".

Second, customers cannot complain or return the item to Walmart stores. This was a big reason for shopping on Walmart online, so finding out that they cannot take the product to a local store after already receiving it is not great.

The grand task for Walmart is how to make the marketplace invisible to the customer. Jet.com, which Walmart acquired last year, doesn't even show what sellers are selling the product - the complexity of the marketplace is completely hidden. Walmart.com doesn't do this, and so far the varying customer experience has been causing frustration. Thus the ultimate challenge for Walmart is to figure out if they want customers to be aware of "buying from Walmart" vs "buying from a Walmart Marketplace seller", or if this should be invisible experience-wise. Amazon show sellers just like Walmart does, yet most customers think they are buying from Amazon because of how well oiled the marketplace is.

The duality of Walmart.com buying experience is not ideal.

What Walmart needs is the growth of sellers to continue to accelerate. The more of them join the platform, the more strict Walmart can be about picking sellers with fault-less performance. We'll be monitoring the average rating value to see how Walmart improves.

Nonetheless all of this is a great opportunity for sellers: eventually sellers who cannot handle shipping in time will start getting suspended, like they do on Amazon, creating more opportunities for great retailers.