Walmart WFS has fulfilled 25% of third-party sales! The flywheel effect is prominent

It is learned that according to MarketPlace Pulse, Walmart's WFS logistics service has fulfilled nearly 25% of Walmart's third-party sales orders in less than two years since its launch in February 2020. Walmart is taking the same path as Amazon, that is, creating the same flywheel effect.

Walmart CFO Brett Biggs announced the 25% WFS fulfillment target during the third quarter earnings call, and it is worth noting that it took Walmart only 20 months to achieve this target. In contrast, it took Amazon FBA 15 years to achieve the 75% fulfillment target.

Relationship between WFS and third-party sellers

What is the same is that both FBA and WFS use the unified packaging of Amazon and Walmart, hiding the information of the seller providing the product, which usually makes buyers think that Amazon and Walmart are the product sellers.

Most buyers on Amazon don’t notice they’re buying from a third-party seller because they rarely interact with them directly and all orders come in the same Amazon-branded box.

For Amazon, these moves enable it to provide a consistent shopping experience and, more importantly, most Amazon sellers use its FBA logistics.

More than 90% of the goods sold by Walmart online are provided by its third-party sellers. The role of Walmart WFS is the same as that of Amazon FBA, which is to integrate a huge selection of goods into its logistics system to provide a consistent shopping experience.

As more sellers adopt WFS, fewer buyers will notice individual sellers, which is especially important for Chinese sellers that Walmart began to enter this year.

WFS-driven growth flywheel

Walmart’s third-party GMV more than doubled in 2020 and is likely to continue to grow faster than Amazon’s, and its growth is a key reason for sellers to adopt WFS. For many sellers, Walmart is now large enough to manage multiple fulfillment networks.

When third-party sellers use the WFS service, delivery time is more guaranteed, so they can also be included in the range of products available to Walmart+ members. As the range of WFS products available increases, the value of Walmart+ also increases, which will attract more buyers to join Walmart+ members, and then encourage more sellers to join.

More sellers joining means Walmart will have greater bargaining power, which will lower product prices. At the same time, when enough goods are processed every day, the cost of logistics itself will also decrease. This is similar to the flywheel that Amazon has built with Prime.

However, many sellers on Walmart already offer fast, free shipping with no minimum order requirements, and Walmart will undoubtedly entice them to migrate to WFS in the future by offering discounted prices or indirectly adjusting its search algorithm to prioritize WFS sellers.

Editor ✎ Xiao Zhu/

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