Walmart's E-commerce Marketplace and Its Impact on American Made Products

E-commerce marketplaces have become vital platforms for businesses to reach customers worldwide. There's Amazon, Etsy and even Walmart. Among these, Walmart's e-commerce marketplace has emerged as a significant player among the other corporate marketplaces, offering sellers access to a vast pool of potential buyers. However, this convenience comes with its own set of challenges, particularly for small businesses and American manufacturers looking to make their products in America. In this article, we will explore how Walmart's marketplace operates, the intricacies of its pricing structure, and why it may put companies selling American-made products at a disadvantage. We will also showcase how Apollo is designed specifically for American products and businesses.

Table of Contents

1. Introduction
2. Walmart's Marketplace Operations
3. Pricing Structure and Its Impact
4. Challenges for American Made Products
5. Apollo: A Solution for American Products
6. Conclusion

Understanding Walmart's E-commerce Marketplace

Walmart’s ecommerce marketplace allows third-party sellers to list their products alongside Walmart's own inventory. Sellers can join the platform by applying through Walmart's seller center, where their business credentials are reviewed. Once approved, sellers can list and manage their products, reaching millions of Walmart's online shoppers.

The marketplace offers several benefits, including access to Walmart's vast customer base and the credibility of associating with a well-known brand. At a cost, sellers can leverage Walmart's logistics capabilities through its fulfillment services, ensuring a quick delivery to customers. However, challenges exist, such as the stringent application process and the competitive environment sellers face within the marketplace. With an emphasis on competitive environment. Sellers must also adhere to Walmart's strict pricing policies and maintain high standards for customer service, which can be demanding for small businesses with limited resources. The biggest thing to think about here is how many small businesses are attempting to compete with the prices of the products that Walmart also supplies. Due to Walmart's vast size, chances are they are able to buy bulk products at a much lower cost, which makes it difficult for small businesses to compete on price. So, although sellers may have access to a larger consumer base, the question is whether or not those consumers will even consider their products. This is especially difficult for companies who are focusing on quality, American-made products since they are typically more expensive than products produced overseas or at a discount.

Fee Structure and Pricing

Understanding Walmart's fee structure is crucial for sellers considering the platform. Walmart charges referral fees, which vary by product category, typically ranging from 6% to 20%. For instance, electronics might carry a lower referral fee, while jewelry and apparel could be on the higher end. These fees are deducted from each sale, impacting the seller's profit margins. So, if you as a seller are already lowering your prices to compete with Walmart's supplied products, chances are your margins are going to be even less.

Unlike some other platforms, Walmart does not charge a subscription fee to sellers, which can be an appealing aspect for businesses looking to minimize upfront costs. However, there may be additional costs, such as fulfillment fees if sellers choose to use Walmart's logistics services. These fees cover storage, packing, and shipping, further influencing the overall cost structure, and ultimately the profitability of its sellers. Again, it's great to have access to a market, but at what cost? Due to Walmart's volume, it can be satisfied with 2-3% margins on some of its products, but can you as a business?

When compared to other e-commerce giants like Amazon, Walmart's pricing can appear competitive. However, sellers must consider the potential for hidden costs and the impact of referral fees on their bottom line. The lack of a subscription fee might be appealing initially, but the cumulative costs associated with each transaction can add up significantly over time, affecting profitability. It's important to note that once a product for certain categories reaches $15 or more, Walmart adds on an additional referral fee. Again, this puts American-made products at an immediate disadvantage. Sellers either have to lower their price to avoid that increased referral fee or deal with elevated margins. That tiered margin structure essentially forces its sellers to lower their product price in order to save 3-7% on their referral fee.

Impact on American Made Products

For companies selling American-made products, Walmart's fee structure and pricing policies can pose significant challenges. The referral fees and competitive pricing pressures can erode profit margins, making it difficult for these businesses to compete effectively. American manufacturers often face higher production costs compared to overseas counterparts, and the added burden of marketplace fees can further squeeze their profitability.

Case studies from affected businesses highlight these challenges. For example, a small American furniture manufacturer shared that despite the initial sales boost from joining Walmart's platform, the high referral fees and cost pressures eventually made it unsustainable to continue. Such testimonials underscore the need for a more equitable marketplace environment that supports domestic producers. Another company producing specialty foods faced similar hurdles, finding that the fees and price competition with imported goods made it challenging to maintain their market position. These stories are not isolated incidents but reflect a broader trend affecting American businesses striving to maintain their competitive edge. It leaves them with the option that many American businesses have faced. Either change their supply chain to access a customer channel or lose out on the ability to compete. More often than not, that change in supply chain usually leads to outsourcing their supply chain to some capacity.

Apollo: A Competitive Marketplace for American Made Products

To address these challenges, we created a competitive e-commerce marketplace specifically designed for American manufacturers and small businesses. Our focus will be on reducing fees and offering incentives that align with the needs of domestic producers. This will ensure that companies can maintain their American-made supply chain while accessing a market that wants and desires quality, American-made products.

One key advantage that our sellers experience is a reduced referral fee structure, allowing sellers to retain more of their sales revenue and improve profitability. Additionally, our platform offers marketing support and resources tailored to promote American-made products, helping them reach a wider audience without having to risk their brand image. We will always prioritize transparency and fair pricing, fostering an environment where American businesses can thrive without compromising their values. By highlighting the unique qualities and craftsmanship of American-made products, Apollo can continue to appeal to consumers seeking high-quality goods with a story and face behind them.

Looking Ahead

Looking ahead, Walmart's e-commerce marketplace offers immense opportunities for sellers but also presents challenges, particularly for American manufacturers and businesses that produce American-made products. The platform's fee structure and competitive pressures can disadvantage companies committed to producing their products domestically. Apollo is here to support initiatives that prioritize American-made products so that American businesses can find new avenues for product growth. In that growth, businesses can continue to expand their American-made product offering and continue to employ people right here at home.

We believe that together we can create an e-commerce ecosystem that values quality, sustainability, and fair competition, ultimately benefiting both American-made businesses and consumers alike.