As you look for ways to improve and expand your business, you may consider getting eCommerce-specific liability insurance, and you may also be asking yourself if Amazon or Walmart are the next marketplace for you to start selling on. Walmart and Amazon are two of the world’s biggest retailers and are in constant competition. Both platforms generate more sales than any other in the US. Not only do they serve a similar purpose as a platform for online retailers, but they also compete for the same customers. As a result of this continuous competition, they are constantly meeting and matching each other’s innovations.
Although both platforms are leading eCommerce giants, there remain several points for comparison between the two. Amazon has opened brick-and-mortar stores and expanded its expertise to include an online platform, whilst Walmart created a profound eCommerce presence. Although Amazon may be winning the race when it comes down to revenue and traffic, not every product or brand is a good fit for the platform. When choosing the platform for your eCommerce store, selling on Walmart vs. Amazon includes pros and cons for both. In this article, we will provide a comparison between the two. We will take a look at defining factors such as fulfillment, costs, customer focus, application processes, location barriers, and liability insurance requirements. This comparison should provide you with a better idea of which platform is right for your store, so keep reading to learn more.
Table of Contents
Fulfillment
One of the biggest considerations when choosing your product is how it will be stored, shipped, and fulfilled. eCommerce fulfillment is the whole process of picking, packing, and shipping a product to a purchaser. For smaller businesses that don’t hold a warehouse or want to have a local presence in a specific state, fulfillment services hold a lot of value.
- Amazon: Fulfillment by Amazon (FBA) allows Amazon sellers to send inventory to Amazon where all the logistics of supplying products to purchases are taken care of. FBA also offers returns, refunds, and customer support which is a big plus for small eCommerce retailers. This may not be necessary for bigger brands that are looking to manage their own service and returns. In addition, brands that use FBA receive an Amazon Prime tag and receive better visibility in search results.
- Walmart: Walmart provides similar fulfillment services to Amazon, however, Walmart will only receive shipments to its centers from inside the US. In addition, Walmart’s maximum dimensions for packages are smaller than Amazon’s, serving as a disadvantage for Walmart sellers who are selling larger and more bulky products. Something unique and an advantage to smaller businesses is the option for Walmart to handle listings, pricing, and content, which Amazon does not offer.
Costs
Selling online involves various kinds of fees that eCommerce retailers are required to pay. Fees vary depending on the platform and can include the following:
- Subscription fees – a fee that account holders pay for opening an eCommerce store on a specific platform. The amount can be one-time or monthly.
- Referral fee – A fee that is made up of a percentage of the total sales price, kind of like commission.
- Closing fee – A set fee paid that is charged every time your product is sold.
- Processing fee – A fee that a seller is required to pay if a refund is issued.
Generally speaking, the two factors that determine the sum a seller has to pay are the product he is selling and whether he is using fulfillment services. If you are a smaller business, it is in your best interest to minimize your expenses, including the fees that you are forking out.
- How much does it cost to sell on amazon? Amazon Seller fees start with a monthly subscription fee of $39.99. In addition, once a product is sold, sellers are charged a referral fee of anything between 6% to 45% of the sale price. For media products like books and DVDs, sellers are charged a closing fee of $1.80 per sale. If a refund is issued, the seller will have to pay $5.00 or 20% of an item’s sale price. For FBA services, additional fees are included which vary depending on the size and dimensions of the product, return fees, storage fees, and long-term storage fees.
- Unlike Amazon, Walmart doesn’t require any subscription fees or return processing fees. The only fee Walmart sellers need to pay are referral fees which are 6%-20% of the sale. Walmart’s fulfillment fees are determined by the dimensions and size of the product, monthly storage fees, and long-term storage fees.
Customer focus
Although costs and inventory are important, they don’t hold much value when the customer’s needs aren’t being met. When choosing your platform, your clients must be satisfied with their online experience to guarantee their chance of returning.
- Amazon: Well known for its customer-first approach, Amazon sellers can feel confident that their customer’s needs are being taken care of. Not only that but Amazon’s ability to personalize and provide accurate recommendations exceed many other platforms. 35% of Amazon’s purchases are recommendation based. In addition, Amazon has improved its delivery options making it easier for customers to receive their orders.
- Walmart: Walmart has made many improvements to its customer experience and satisfaction both online and on its mobile app. Walmart’s growing brick-and-mortar presence maintains customer confidence as buyers don’t have to rely solely on an online presence to have their needs met or questions answered.
Application Process
For new sellers, the application process to any platform can be overwhelming and daunting. For many people, a difficult application process could even be enough to discourage them from doing so.
- Amazon: Sellers of any level can join and sell on Amazon. Not only is the application process very easy and open to almost anyone, but it is usually approved within 24 hours.
- Walmart: Walmart’s strict application requirements often serve as a roadblock for many eCommerce businesses as they are interested in attracting more experienced sellers. Walmart aims to be a platform for more established brands with a consistent amount of sales making application requirements a lot more stringent. Walmart’s strict application isn’t only bad news as it significantly reduces competition between sellers, which is a significant bonus for Walmart sellers.
Location barriers
- Amazon: Amazon accepts sellers from all over the world. To become an Amazon seller, all you need is proof of residence in that country, a valid phone number, and an internationally chargeable credit card.
- Walmart: Walmart is another story. If you are an international business without a physical location in the US then you can pretty much remove Walmart as an option for your eCommerce business. Selling on Walmart requires all sellers to have an address in the US, and a US tax ID number, along with a W8 or W9 form to apply. The only way an international retailer can sell on Walmart is if they open a physical entity in the US that will offer to ship locally.
Insurance requirements
Although many platforms don’t require mandatory insurance, both Walmart and Amazon have mandatory insurance requirements. Insurance is aimed to protect sellers from potential risks that may result in damage, injury, or loss. In most circumstances, liability insurance is the only way to protect your store from unexpected harm and potentially thousands of dollars.
- All Amazon sellers who have made at least $10k in any given month are required to be insured. Insurance requirements include product liability insurance and general liability insurance.
- Walmart’s insurance requirements are relevant for all sellers. Walmart’s basic requirements include general liability insurance and product liability insurance. Depending on the product being sold, the number of employees, or the use of a vehicle, other forms of insurance may be necessary.
As both platforms require insurance, finding the right policy for your store is determinantal for your store’s success and future. Most small businesses or businesses that are not yet insured are often not familiar with their product’s insurance requirements. Finding the right policy for your business isn’t always an easy task. With Spott’s insurance experts, all necessary assessments will be done on your behalf. After completing a full analysis of your store including its risks and other simple data, a quote is provided that contains several policies all at competitive prices and tailored to your business.
So what's the bottom line?
On the surface level, selling on Walmart vs. Amazon may seem to be not that different but as we have discovered, both platforms have their pros, cons, and demands. Luckily for more experienced businesses, the debate of selling on one platform or the other can be avoided as they can sell on both. Selling on both platforms is often recommended as it can increase your customer reach and boost sales. If you are an Amazon seller and looking to expand, becoming a Walmart seller can be a great step in the right direction for your business. The bottom line, the best choice for you depends on your products, business models, and warehouse location. Fortunately for eCommerce businesses, the safety of your store doesn’t fall entirely on which platform you chose, but can also be guaranteed by purchasing liability insurance. The platform you sell on is irrelevant if in one moment, after one mistake or technical glitch, you are forced to close your store indefinitely. To learn more about protecting your store from potential harm that you may never recover from, get in touch with Spott’s insurance experts.
Finding the right insurance for your business may be the difference between expanding your business on various platforms and having to close its doors for good.
