WFS, a fulfillment service Walmart launched less than two years ago, already fulfills 1/4 of Walmart marketplace sales. Walmart is on a path to making the marketplace invisible to shoppers.
Brett Biggs, CFO at Walmart, confirmed the 25% Walmart Fulfillment Services (WFS) metric on the third-quarter earnings call. Significantly, it achieved that benchmark in twenty months (Walmart introduced WFS in February 2020). According to Marketplace Pulse estimates, FBA fulfills roughly 75% of marketplace sales on Amazon, but the service has been around for over fifteen years.
Services like FBA and WFS make shoppers think of Amazon and Walmart as retailers while hiding the complex marketplace behind the scenes that supplies most of the selection.
Most shoppers on Amazon do not notice they are buying from third-party sellers because they rarely get to interact with them directly, and all orders come in the same Amazon-branded box. That marketplace invisibility has proven crucial as it allowed Amazon to deliver a consistent shopping experience. Amazon’s fulfillment service FBA is a core pillar - most Amazon sellers use it.
Over 90% of items sold on Walmart online are by the marketplace. Walmart is going through the same steps Amazon has taken to wrap that vast catalog in an experience it can control. That’s the role for WFS. As more sellers adopt WFS, fewer shoppers will notice individual sellers. That will be especially important for the international sellers Walmart started onboarding this year.
Walmart marketplace GMV more than doubled in 2020 and likely continues to grow faster than Amazon. Its growth is key reason sellers are adopting WFS - for many, it is now big enough to be worth the added complexity of managing multiple fulfillment networks.
In addition, Walmart+ membership includes free next-day and two-day shipping without the $35 order minimum. As WFS selection grows, so does the value proposition of Walmart+. As more shoppers join the membership, more sellers will want to offer products to them. That is the same flywheel Amazon built with Prime.
Many sellers on Walmart already offer fast, free shipping without minimums, however. Walmart will undoubtedly try to entice them to migrate to WFS; by providing discounted rates or indirectly by tweaking its search algorithm to prioritize WFS sellers.
