Did Walmart Overpay for Jet.com? No. SellerCloud CEO Explains Why…
Jeremy Greenberg

Walmart marketplace as it stands today is a failure. Walmart has “hundreds” of third party sellers as compared to Amazons over 2 million third party sellers.

Walmart has for sale approximately 5 million products on its marketplace, Amazon has 500 million products.

Walmart marketplace has stagnated in growth since it started. Amazon has grown year over year.

Another glaring difference between Walmart and Amazon is that customers will purchase on Amazon even though it is being fulfilled by a third party. Amazon washes that out quite well and backs it up with their stringent policies on sellers to accept returns, and their ultimate positive customer experience mantra.

Not so with Walmart. For example, customers on Walmart like to purchase from Walmart as they have the familiarity with the brick and mortar store and helps to back up their purchase. When they walk in to a Walmart store and try to return an item, only to be told this was purchased on Walmart.com through a third party, they leave with a negative experience .

Jet, as it stands in its infancy, does not have data of how many sellers there are on its platform.

How many products being sold on JET is also questionable.

The JET business model was to forgo any commissions from the sellers, and only make a profit from the membership fee that it charged the customers. 3 months in, and they abandoned that membership fee. The overwhelming consensus is that JET’s business model is quite expensive and they would have burned up many dollars trying to compete with Amazon. Now that they have Walmart’s deep pockets, it might stem the bleeding a little.

Combining two failing marketplaces does not seem to be a recipe for success.

I understand that Sellercloud is a multi-channel SaaS ecommerce management system and Jet and Walmart add to that platform. But as an E-commerce seller myself, all of these “magical platforms” can spread you very thin. Especially brand new platforms, as they will ultimately evolve over and over again until they get it straight. You will be turned into a pretzel trying to conform to their ever changing integration.

The only Achilles’ heel to the Amazon giant is their relationship with their third party sellers. They have a stranglehold on their sellers like no one else and every once in awhile they squeeze. Whether it is an impromptu suspension of your selling privileges or competing with you on items, they wield an iron fist on their third party sellers. This does have an effect on their customers. It limits who can sell what on the platform, and thereby limiting the customers reach to cheaper items. However, Amazon has said that they are not interested in more North American sellers, thereby having the cheapest price on the internet. They want to be price competitive with the fastest shipping and most convenient way to shop.

If Walmart/JET can prove to customers that they are getting ripped off on Amazon and getting a better deal by them (by having more third party sellers=more options), and show they have the cheaper prices, they can crack Amazons dominance.

Amazon’s catalog was created in 1996 and has grown in the last 10 years to be a gargantuan mess. Amazon started with books. All books have an ISBN number. This is how they limited it to one listing, with many sellers. They tried to replicate this with products via UPC codes. Big swing and a miss. You can apply any UPC code to any product as long as it does not conflict with any other UPC code in their catalog. Hence, everyone went out and purchased UPC codes and started slapping them on any products that they wanted. Existing UPC codes for products are sometimes attached to a totally different item. Multiple UPC codes are used sometimes for the same item, creating multiple listings for the same product. To change a product listing does not take much either. You can change pictures, descriptions, titles, brands quite easily. You can mess up your competition with this. You can claim a listing as your own and throw everyone else off. And so on and so forth. The Amazon catalog is the wild west of marketplaces. And the supposed sheriffs in town do not have clue. They rely on the sellers to clean it up and police themselves. Yeah, right. Not happening. Walmart/JET should not make these mistakes. Walmart definitely has better grasp of the nuts and bolts of products and product creation.

Amazon also has another tool at their disposal. Fulfilled by Amazon. They push it. They want you to do it. However, they control that tightly too. Their fees keep going up. They are more and more irresponsible with your inventory. And of course if you make too much of a ruckus, they tell you “your selling privileges are under review”. Then you hold your breath for five days and tip toe around your computer, afraid that Amazon might hear you. As soon as the review is lifted, you can live again.

Walmart already has built in warehouses that fulfill all their inventory needs. It is called their brick and mortar stores. Granted, they can only hold so much. Walmart also has relationships with very large vendors, with very large warehouses. If Walmart can use these resources properly and be able to create a hybrid FBA (havta call it FBW) program, they can compete in that market also. Especially for day to day items (band aids, shampoo, Iphones, TVs etc.) that they already sell. They could use third party sellers inventory for their stores and replenish from their vendors. It can even open up opportunities for them to cull new vendors from their third party sellers that have items for cheaper than their official vendors. But I’ll let them figure it out.

Amazon prides themselves on their logistics. They will deliver your package to you as fast as possible. Amazon fulfillment and sort centers currently run out of 13 states in the U.S. Walmart has stores across the entire U.S. including Alaska and Hawaii. Walmart’s reach is quite larger than Amazon can even dream of and as a result can get your product to you faster and definitely cheaper.

Amazon spends approximately $12.3 million a month in Adwords alone. Their advertising budget is astronomical. The only companies that can even dream of competing in this arena would have to be Walmart-esque.

I am hoping to see from the JET/Walmart deal, a marketplace that welcomes their third party sellers and nurtures that relationship into an Amazon like atmosphere where many budding small business are quite successful. No need for them to reinvent the wheel. Walmart/JET just need to perfect it.

But as you said in the beginning of your article, this is “an acquisition that’s hailed as everything from revenge — after losing out on a bid over six years ago to rivals Amazon — to a desperate attempt to make up lost ground.”

P.S. Another blow to third party sellers on Amazon: It is being reported that Amazon is rejecting retail arbitrage to be sold on Amazon. There go all the good deals that everyone is used to. And they plan on all third party sellers will have to be FBA by 2020. And I’m sure their fees will be through the roof.

They also announced Seller Support +. They will charge you $400 a month to talk to some type of “better seller” support. Because their regular seller support is TERRIBLE. First step to improving yourself is realizing you have a problem.

P.P.S. “Amazon Web Services, the company’s cloud computing arm, continues to grow rapidly and is the company’s most profitable segment.” So does this mean they will neglect their marketplace even more? Come on Walmart/JET…….

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