Did you know that Amazon and Walmart are two of the largest e-commerce marketplaces in the world? Deciding where to sell your products online can be a real head-scratcher. In this blog post, we're going to guide you through the pros and cons of selling on these platforms to help you make an informed decision for your business.
Keep reading, it may just switch up your entire game plan!
By the way - have you chosen your eCommerce niche yet? Identifying which platform to sell on relies heavily on your niche - so do your due diligence first!
Or you can take the first step towards scaling your business by exploring our services.
Pros and Cons of Selling on Amazon
Selling on Amazon offers a wide customer base and high traffic, allowing for greater exposure and potential sales. However, it also comes with high competition and fees that can eat into profits.
Additionally, the platform's ease of use and fulfillment options make it convenient for sellers.
Wide customer base and high traffic
Amazon's platform draws an enormous crowd. Millions of shoppers browse Amazon daily, making it a hotspot for sellers looking to get their products in front of as many eyes as possible.
This high traffic translates into potential customers from all corners of the globe. By tapping into this vast customer base, businesses can skyrocket their sales and significantly enhance brand visibility.
Moreover, having such wide audience coverage provides an opportunity for businesses to diversify their product offerings, paving the way for increased revenue streams. Having a large volume of consumers viewing your items also increases the likelihood that your products will be purchased quickly if priced competitively.
High competition and fees
Selling on Amazon can be a double-edged sword due to its high competition. With more than 2 million active sellers, securing your spot at the top of search results is no easy task.
Consider this: Every day, new products are added flooding the market further. This fierce market rivalry pushes sellers to adopt aggressive and often costly tactics such as sponsored listings and other paid promotions.
Not only does Amazon represent a battleground for visibility, but it also imposes hefty fees on its merchants. From referral and subscription fees to fulfillment costs, these charges eat into profits significantly.
For instance, Amazon charges a referral fee with rates that depend upon the product category. High-volume sellers might also need to pay additional storage costs for their inventory in Amazon warehouses under the FBA (Fulfillment by Amazon) program which can erode profit margins even further.
Here's a more detailed account on Walmart Seller Fees and how much it costs to sell on Walmart Marketplace in 2023.
Ease of use and fulfillment options
Navigating the user interface of Amazon's seller central is straightforward, ideal for both seasoned sellers and beginners. The platform offers comprehensive tools to manage inventories, process orders, and observe market trends.
Moreover, Amazon provides flexible fulfillment options through its Fulfillment by Amazon (FBA) program. Sellers can store their products in Amazon's warehouses where they take care of storage, packing, shipping, customer service and returns for these products.
This enables sellers to scale their business more easily while focusing on other important aspects like marketing and product sourcing.
Pros and Cons of Selling on Walmart
Lower competition and fees on Walmart can make it an attractive option for sellers, but the limited customer base and traffic compared to Amazon may require additional marketing efforts to drive sales.
Lower competition and fees
Selling on Walmart offers the advantage of lower competition and fees compared to selling on Amazon. With fewer sellers vying for customers' attention, it becomes easier for your products to stand out in the marketplace.
Additionally, Walmart charges lower fees, allowing you to keep a larger portion of your profits. This can be especially beneficial if you are a small business looking to maximize your profit potential.
By choosing Walmart as your online selling platform, you can enjoy reduced competition and fees that can positively impact your bottom line.
Limited customer base and traffic
Walmart's marketplace offers sellers access to a more limited customer base and lower traffic compared to Amazon. This means that your products may not reach as many potential customers on Walmart's platform as they would on Amazon.
While this could be seen as a disadvantage, it also presents an opportunity for niche sellers who want to target specific demographics or cater to a smaller, more focused audience.
By understanding the demographics of Walmart shoppers and tailoring your product offerings accordingly, you can still achieve success and generate revenue on the platform.
Access to in-store and online shoppers
Selling on Walmart gives you the advantage of reaching both in-store and online shoppers. With their extensive network of physical stores, you have the opportunity to showcase your products to customers who prefer traditional shopping experiences.
At the same time, Walmart's growing online presence allows you to tap into a larger customer base through their e-commerce platform. This dual access to in-store and online shoppers expands your potential reach and increases your chances of making sales.
Key Differences Between Selling on Amazon and Walmart
Seller competition, fees and pricing, branding and advertising opportunities, customer base and demographics, and fulfillment services all vary greatly between selling on Amazon and Walmart.
Now that you understand the pros and cons of selling on each, let’s get deeper into a comparison of the two platforms.
Seller competition
Amazon has more competition—but a wider customer base.
Walmart has less competition, and you keep more of your profits—but you don’t have as large of a captive market.
So, you have to ask yourself—do you want to carve out a niche market and reach customers who may be looking for an alternative to the more saturated Amazon platform? Or are you ready to compete with other sellers for the massive customer base on Amazon?
Keep in mind that regardless of the platform you choose, having a solid marketing strategy and unique selling points will be key to staying ahead of the competition.
Fees and pricing
Sellers on both Amazon and Walmart need to carefully consider the fees and pricing structures of each platform. Amazon charges a variety of fees, including referral fees and fulfillment fees, which can eat into profit margins.
While these fees may seem high, they are offset by the large customer base and high traffic that Amazon attracts. On the other hand, Walmart has lower overall fees compared to Amazon, making it a more cost-effective option for some sellers.
It's important for sellers to evaluate their budget and cost structure when deciding between the two platforms to maximize their profit potential.
Branding and advertising opportunities
Selling on Amazon provides sellers with robust branding and advertising opportunities. With millions of daily visitors, Amazon offers a massive platform to showcase your brand and products.
You can create a customized storefront that reflects your brand image and use features like Sponsored Products and Brand Stores to increase visibility. Additionally, Amazon's sophisticated advertising tools allow you to target specific demographics, optimize campaigns, and track performance metrics.
By leveraging these branding and marketing options, sellers can effectively promote their products and attract potential customers on the platform.
Customer base and demographics
Amazon and Walmart have distinct customer bases and demographics. Amazon has a vast and diverse customer base, attracting millions of shoppers from all around the world. It is known for its wide range of products and competitive pricing, appealing to customers of various ages, interests, and income levels.
On the other hand, Walmart caters more to local shoppers, both in-store and online. While it may have a smaller customer base compared to Amazon, it can still provide access to loyal customers who prefer the convenience of shopping at physical stores or are specifically looking for Walmart-branded items.
Fulfillment services
Fulfillment services are an essential aspect to consider when deciding between selling on Amazon and Walmart. Both platforms offer fulfillment options that can make managing your inventory and shipping processes easier.
With Amazon's Fulfillment by Amazon (FBA), sellers can store their products in Amazon's warehouses, allowing for fast and efficient delivery through Prime shipping. On the other hand, Walmart offers similar services through its program called Walmart Fulfillment Services (WFS), which includes warehousing, packaging, and shipping assistance.
By utilizing these fulfillment services, sellers can focus on growing their business while leaving the logistics to the experts.
Which Platform is Better for Your Business?
Now that we’ve delved into the comparison between the two, here are things you should consider before choosing which platform to sell on.
Consider your target audience and products
The average customer at both Amazon and Walmart is strikingly similar, according to data from Kantar Retail's ShopperScape; both are most likely to be a 46-year-old white woman. The two retail giants also have similar generational spreads among their consumer base, indicating that they are targeting nearly identical demographics. However, there is a notable difference in the average annual household income of their shoppers: Walmart's average is $76,313, brought down by a higher percentage of lower-income customers, while Amazon's average stands at $84,449.
Where do you think your product fits in better?
Assess your marketing and advertising strategies to determine which platform aligns better with your business goals. Consider the target audience for your products and how each marketplace can help you reach them effectively.
Analyze the various branding and advertising opportunities available on Amazon and Walmart, such as sponsored product ads or storefront customization. Compare the customer bases and demographics of both platforms to see which one attracts more potential buyers for your products.
Evaluate how each platform supports your marketing efforts, whether it's through email campaigns, social media integration, or other promotional tools. By conducting a thorough evaluation of your marketing and advertising strategies, you can make an informed decision about which marketplace is best suited for your business.
Analyze your fulfillment and shipping capabilities
Assessing your fulfillment and shipping capabilities is crucial when deciding between selling on Amazon or Walmart. Consider the logistics of getting your products to customers efficiently and cost-effectively.
Evaluate whether you have the resources, such as inventory management systems and packaging supplies, to handle a potentially high volume of orders. Analyze your ability to meet delivery expectations, including packaging, tracking, and timely shipping.
Understanding your fulfillment capabilities will help determine which platform aligns best with your business needs.
Assess your budget and cost structure
Evaluate your budget and determine the costs associated with selling on both Amazon and Walmart. Consider the fees, such as listing fees, referral fees, and fulfillment fees, that each platform charges.
Take into account your product's price point and how it aligns with the fee structure of each marketplace. Additionally, factor in any additional expenses you may have for advertising or branding opportunities on each platform.
By thoroughly assessing your budget and cost structure, you can make an informed decision about which marketplace will provide better profit potential for your business.
So, Amazon or Walmart?
In the ever-evolving landscape of e-commerce, the choice between Amazon and Walmart as your online selling platform holds significant implications for your business. Both giants offer unique advantages and challenges.
Amazon, with its vast customer base and fulfillment infrastructure, offers unparalleled access to a global audience. On the other hand, Walmart's commitment to a quality shopping experience and growing online presence make it a compelling choice.
Ultimately, your decision should align with your product, brand, and long-term strategy. Carefully assess your goals, evaluate the pros and cons, and consider the specific needs of your business. Whichever path you choose, success on these platforms often depends on your ability to adapt, innovate, and deliver exceptional value to customers in this dynamic marketplace.
If however you lean towards selling on Walmart Marketplace, head over to this blog for everything you need to know about selling on Walmart.com.
Start your journey towards seamless ecommerce operations - reach out to us today.
Frequently Asked Questions
Which is best, Amazon or Walmart?
If you're looking for budget-friendly grocery shopping and fresh grocery delivery, Walmart is your go-to choice. However, if you seek a more extensive range of products, including unique handmade items, an array of streaming services, and exclusive deals at Whole Foods Market, Amazon is the ideal retailer for your needs.
Who is number 1 Walmart or Amazon?
In 2022, Amazon surpassed Walmart Inc. in U.S. e-commerce sales, achieving $392.21 billion compared to Walmart Inc.'s $68.09 billion, based on our projections. However, Walmart maintains the lead in overall sales, thanks to its significantly larger network of physical stores.
Why is Amazon doing better than Walmart?
Amazon's success compared to Walmart can be attributed to its customer-centric approach, which emphasizes value and selection. While Walmart saw a modest increase in 2022, it still ranks second to last in comparison. Amazon's success is particularly notable in its focus on personalization and convenience, which have been key factors in its growth.
What company is bigger Amazon or Walmart?
Amazon.com, Inc. (NASDAQ:AMZN) and Walmart Inc. (NYSE:WMT) hold the top spots as the world's largest retailers in terms of market capitalization. When considering solely retail revenue, Walmart significantly outpaces Amazon, boasting $600 billion in comparison to Amazon's $280 billion.
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