An $18,000 Cartier Watch?! Walmart’s Booming Online Marketplace
While you may know Walmart as the world’s largest retailer, did you know that Walmart.com is the 2nd most visited e-commerce site in the U.S.? With 88 million unique visitors per month, the site offers over 20 million products after an aggressive campaign of pursuing third-party sellers.
Last week, Walmart made headlines when an $18,000 Cartier watch showed up on its online marketplace during Black Friday, causing many to ask: how exactly does a mid-price retailer have access to such luxury goods? While Cartier quickly distanced themselves from Walmart, stating that they could not vouch for the authenticity of any watches sold on Walmart.com, that is still a very good question.
The answer? Walmart isn’t exactly in possession of the items sold in its marketplace, but rather provides a platform for third-party e-commerce vendors at a fee.
While we’ve already covered what a marketplace is, we thought we’d delve deeper into why this infrastructure works for a retailer like Walmart.
Why a retailer would want to have a marketplace
Walmart Supercenters typically carry about 150,000 different items. Walmart.com is able to carry nearly 75 times that amount.
The margins don’t lie. While third-party vendors must pay a commission on sales made on Walmart.com, the retail chain gets to rake in the profits without any of the costs associated with warehousing and shipping.
Having a marketplace at this scale further solidifies Walmart’s position as a one-stop shop in consumers’ minds. They carry millions of products from hundreds of thousands of different brands, so when a consumer describes a specific product in their search bar, they’re way more likely to find it. As Walmart CEO Doug McMillon states, “It’s important that [when customers] come to Walmart.com or use our app, [they] find what they’re looking for, so we need to have a broader assortment.” Evidently, Walmart wants to keep hold of that promise while potentially tapping into a broader demographic by venturing into upscale designer goods.
Why a brand would want to join a marketplace
A smaller brand might benefit from selling on Walmart’s marketplace simply by widening its exposure to the site’s millions of users. A niche brand with an especially hard-to-find item might be in a particularly good position as many consumers who look to Walmart.com for all their needs are more likely to find them.
While a brand may only be able to take up two spots on Walmart’s physical shelves and sell a dozen units before they disappear from the customer’s view (until restock), their sales potential is unlimited on Walmart.com. Not just because they can move more product, but because a customer introduced to the brand via the physical store can now see what else they have to offer online.
Considering that U.S. e-commerce sales continue to soar – with sales projected to increase by 15 percent up to $457 billion – we predict that online marketplaces will continue to trend in retail. And for a brand that doesn’t necessarily have the resources to create their own e-commerce site, this might be the perfect arrangement.
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