Virtually all businesses have suffered as a result of COVID-19, but those with strong eCommerce capabilities have been able to weather this storm better than others. The recent growth in online sales has generally favored these businesses, but they face their own problems during the pandemic. Many sellers are looking for ways to turn these challenges into opportunities, ranging from modifying their websites to adding more relevant products to the current market.
Selecting the best fulfillment service is also a critical decision for sellers, especially those just getting started. Amazon’s Fulfillment By Amazon (FBA) and Walmart’s Walmart Fulfillment Services (WFS) are two of the largest of these services and will remain in fierce competition with each other for the foreseeable future. Sellers comparing FBA vs. WFS will find they share some similarities as well as significant differences. Furthermore, nothing specifically prevents sellers from using both services.
Overview
Amazon launched FBA in September 2006, allowing small businesses to use Amazon’s existing infrastructure for order fulfillment and customer service. Third-party sellers can also use FBA to sell products to Amazon’s own customers, which is especially beneficial to sellers who don’t have their own customer base. FBA provides sellers with the opportunity to sell to millions of potential customers throughout the world and has proven to be an extremely successful business model. According to Jungle Scout, Amazon.com gets over 200 million visitors per month just in the U.S., making it the world’s largest online marketplace for sellers.
Walmart launched WFS in February 2020, so it isn’t nearly as well established or as big as FBA. This service is generally similar to FBA in that both services allow third parties to sell products to an existing customer base. In the case of WFS, sellers ship their products to one of Walmart’s fulfillment centers. Walmart then handles the customer service and product-related tasks like picking, packing, shipping, and storing.
This strategy allows sellers to grow their business by leveraging Walmart’s state-of-the-art supply chain and logistical expertise. WFS also benefits Walmart by expanding its own product offerings to its customers, 120 million unique visitors to Walmart.com each month.
Similarities
Sellers need to remain aware of the similarities between WFS and FBA, as well as their differences. For example, both services handle customer service on the seller’s behalf, including return requests. Sellers can thus focus on growing their sales since they don’t need to deal with customer inquiries. This customer service only applies to FBA or WFS orders, not orders that sellers fulfill themselves.
Walmart’s Item Page Content policies appear to be similar to Amazon’s A+ Content. Both programs seek to increase the sales of certain sellers with more detailed product pages and enhanced marketing content. However, Walmart allows any seller on WFS to use Item Page Content, whereas Amazon requires sellers to be brand registered before creating A+ content.
Differences
The most significant differences between WFS and FBA include the following areas:
Shipping
Seller support
Fulfillment
Costs
Inventory
Bear in mind that WFS is still quite new, so its policies on these matters are likely to change more quickly than Amazon’s.
Shipping
FBA’s shipping options vary by location and service level, including free same-day, one-day, and two-day shipping for Amazon prime subscribers. Amazon has 110 fulfillment centers in North America, 175 globally. FBA fulfills orders for multiple marketplaces, and customers can return items by mail or to any Kohls or Whole Foods. Inventory is commingled by default, but sellers have the option for a dedicated inventory pool.
Amazon Prime is a subscription program from Amazon that costs $119 annually or $12.99 monthly. It provides buyers with additional services unavailable for regular Amazon customers, including free delivery. Amazon reported that Prime had over 150 million subscribers in January 2020.
WFS only fulfills orders for Walmart.com, which get TwoDay tags. This status provides free two-day shipping to the continental U.S. with a minimum order of $35. It also increases the sellers’ search ranking and Buy Box prominence. In addition, WFS provides each seller with a dedicated inventory pool. Walmart currently has 4,700 stores and 20 fulfillment centers in the U.S., with 11,766 stores globally.
Walmart launched a new program for its sellers in September 2020 called Walmart+ or Walmart Plus. It’s designed to compete directly with Amazon Prime by providing same-day delivery on general merchandise and groceries. Walmart+ also offers other benefits such as early access to deals and fuel discounts. Membership in Walmart+ costs $98 annually or $12.95 monthly, and includes a 15-day free trial.
Seller Support
Walmart.com must approve its sellers, whether they use WFS or not. Therefore, sellers on WFS will have less competition in that marketplace, allowing their products to stand out more to customers. On the other hand, anyone can register to sell on Amazon, so it has greater competition. Walmart.com currently has around 33,000 sellers, although this number is growing quickly. In comparison, Amazon has at least three million sellers.
Both Walmart and Amazon provide personalized account management, although there’s a great difference in cost. Walmart doesn’t charge sellers anything extra to connect them with a WFS fulfillment expert who can provide them with custom recommendations on growing their business. However, Amazon charges sellers $1,600/month plus a percentage of their sales to work with one of their dedicated account managers.
Walmart provides seller support for WFS, just as Amazon does for FBA. The main difference is that WFS sellers have dedicated call center associates to answer their questions, whereas Amazon Seller Support handles inquiries from all Amazon sellers.
Fulfillment
FBA’s longer presence in the eCommerce market gives it a distinct advantage over WFS when it comes to fulfilling sellers’ orders. For example, FBA can provide multi-channel fulfillment, meaning it can fulfill orders on and off the Amazon marketplace. Multiple fulfillment options with FBA include Amazon programs like Amazon Small & Light and Subscribe & Save, which can save sellers money.
Furthermore, many Amazon and Amazon Prime customers have been using FBA for years, so they have high loyalty and trust for this brand. WFS just launched in 2020, so it hasn’t had a chance to develop these qualities in its customers yet. FBA sellers are also eligible to include their products in Amazon Prime deals, allowing them to access Prime members. Prime currently has over 100 million members, so this feature is highly useful for increasing brand awareness.
Costs
FBA generally favors sellers with much larger sales volume than WFS. Walmart uses a simple pricing model for WFS that includes fulfillment and storage fees based on the order’s shipping weight. On the other hand, FBA’s fulfillment fees are based on the product’s dimensions and weight. Its storage fee depends on the amount of inventory the seller currently has stored in Amazon’s warehouses. Walmart doesn’t currently require WFS sellers to pay a monthly subscription fee, whereas sellers must pay $39.99 per month to join FBA.
Inventory
Walmart has been much longer in the retail business than Amazon, so it generally has greater inventory and market saturation than Amazon. WFS sellers can use Walmart’s physical stores to handle customer service and returns, located within 15 minutes of 90 percent of all Americans. Customer service and returns are thus easier for WFS sellers. WFS also provides sellers with a dedicated inventory by default, unlike FBA. This feature provides WFS with several advantages for sellers, including reduced cost and a lower chance of fraud, damaged products, and mislabeling.
Selling on Both FBA and WFS
Sellers who have sufficient inventory to cover multiple sales channels should consider selling on both FBA and WFS so that they can reach as many potential customers as possible. This is a particularly common strategy for sellers who are already well-established on FBA. WFS is much smaller right now because it’s so new, but Walmart’s enormous customer base ensures WFS will grow rapidly. The higher customer-to-seller ratio on WFS is also an incentive to expand onto WFS.
Before 2020, selling on Walmart.com was often impractical due to obstacles like customer support, logistics, and warehousing. However, the launch of WFS means that there’s now a viable alternative to FBA, especially for smaller sellers. Smaller sellers on FBA may find that WFS is more cost-effective since the FBA pricing model favors sellers with many customers and a large inventory. Large sellers may also benefit by adding WFS as a second sales channel. Sellers can also expect WFS to change rapidly as Walmart works to improve this new platform and compete with FBA more successfully.
