Walmart is making a move to counter Amazon's fastest-growing retail business by partnering with Shopify
Gunnar Rathbun / AP pictures
With Walmart, Shopify sellers can list items on their website.
The deal will give Walmart.com customers access to more goods and boost Walmart's third-party marketplace business.
Walmart's third-party sales exceeded third-party sales in the first quarter of the year.
Third-party sales also dominated on Amazon. "Third-party providers kick us," wrote Jeff Bezos, CEO of Amazon, in his 2018 letter to shareholders. "Bad."
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Walmart is working with Shopify, a rapidly growing Amazon competitor, to grow its online business.
Shopify offers e-commerce tools for more than a million small and large companies like Lively, Allbirds, PepsiCo and Heinz. The company helps companies quickly and inexpensively set up online shops that include tools such as payment and inventory management. Monthly fees start at $ 29.
The new partnership enables Shopify sellers to list their items on Walmart.com. This could help sales of these sellers by giving them access to a new group of customers.
The deal will also expand the range of goods available on Walmart.com and boost business with third parties in the company's marketplace.
Both Amazon and Walmart have rapidly expanded their third-party business in recent years. These companies can be more easily scalable and more profitable than first-party providers because sellers often pay for the delivery.
Walmart said third-party sales in the first quarter of the year exceeded third-party sales.
"The U.S. e-commerce business grew 74% overall in the last quarter, and market growth outpaced overall business, although first-party sales were strong," said Jeff Clementz, vice president of Walmart Marketplace, in a blog post, where Shopify announced partnership.
He said the deal with Shopify would primarily focus on bringing small and medium-sized businesses to Walmart.com "that have been proven to exceed customer expectations."
"The growth of our marketplace is a strategic priority and we will be smart as we grow. We will now start integrating new sellers and expect 1,200 Shopify sellers to be added this year," said Clementz.
(He said sellers interested in Walmart Marketplace can find out more on this website.)
Amazon remains a leader in third-party sales
Amazon has also said that its third-party sales have exceeded first-party sales. The average annual growth rate for third-party Amazon sales was 52% between 1999 and 2018. The same key figure for first-party sales was 25% in the same period.
"Third-party providers kick us," wrote Jeff Bezos, CEO of Amazon, in his 2018 letter to shareholders. "Bad."
Charlie O'Shea, vice president of Moody's, said Monday that Amazon was the "undisputed leader" in third-party sales, but competition in this retail segment "is heating up".
"Walmart's ability to offer in-store space and space for select retailers on its website ... is a critical competitive advantage that is sure to have the potential to gain additional relationships," said O'Shea. "Belonging to Shopify is another indication that Walmart will continue to focus heavily on expanding its relationships with third parties."
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