Photo: Walmart
Walmart opens marketplace to non-U.S. sellers, hears DoorDash drivers’ gripes
Two news stories breaking in recent days have Walmart’s digital operations in the spotlight again. The retailing giant has announced plans to open up its online marketplace to non-U.S. sellers and is also addressing a report that DoorDash drivers, who make grocery deliveries to Walmart’s customers, are not happy with the process or the pay associated with doing the job.
Walmart’s success through the pandemic has largely been tied to the steps the retailer has taken in recent years to build up its omnichannel capabilities. The chain has succeeded by scaling its offers across its U.S. store base and by offering customers the options to shop and take possession of their orders in ways that align with their individual preferences and needs.
One area that Walmart has concentrated on building is its online marketplace. The retailer has not flung the door wide open, however, requiring that sellers be registered in the U.S. and go through a vetting process before selling their goods on walmart.com. That, Bloomberg reports, is changing. Walmart is dropping its requirement that sellers either have a U.S. address or business tax identification.
“We have strong relationships with many reputable companies around the world and we have some of the most rigorous seller requirements in the industry,” Walmart wrote in an emailed statement to the news service. “As a result, we are opening our U.S. marketplace to a limited number of international companies who share our commitment to customer trust and safety.”
Closer to home, Reuters reports, third-party drivers that make grocery deliveries to the chain’s customers are complaining of long waits to pick up orders and then of low tips once they complete the task. Drivers for DoorDash say that it is less of a hassle and more financially rewarding to deliver meals from the service’s restaurant customers than for Walmart.
The issue with DoorDash drivers can be seen as a worrying sign. The retailer ended similar arrangements with Lyft and Uber to make deliveries and also ran into problems using its own employees to do the job.
DoorDash and Walmart have added tips to their respective apps to help drivers out as the two companies seek to refine the delivery process.
Discussion Questions
DISCUSSION QUESTIONS: What do you predict will be the effect of Walmart opening its marketplace to non-U.S. sellers? What do you see as the challenges facing Walmart’s grocery delivery operations in the U.S. and what are some possible solutions?
Poll
BrainTrust
Carol Spieckerman
President, Spieckerman Retail
Suresh Chaganti
Consulting Partner, TCS
Opening up the marketplace will expand the array of products, taking a page out of the Amazon playbook. I don’t see any downside to expanding the marketplace, but just because Walmart offers more products doesn’t necessarily mean that Walmart customers will buy them. I think it will be important for Walmart to pay close attention to what gets added. The delivery challenge is a persistent challenge in last-mile delivery for virtually every retailer. Having disgruntled delivery personnel is not an ideal situation, but I suspect that people doing this type of work are willing to switch to whatever gig provides the best pay. This will be an ongoing challenge.
As forecast, the marketplace mayhem is heating up! Rigorous seller requirements are fine yet even extreme vetting won’t prevent a flood of no-name brands from diluting Walmart’s marketplace, as is the case on Amazon. (For more on this, catch the excellent March 15 issue of the New Yorker and the article: The Rise of Made in China Diplomacy.) Arguably, Walmart has less to lose since it isn’t courting high-end brands as aggressively as Amazon.
As for the DoorDash rebellion, this is a case of convenience clashing with value. Walmart has trained its customers to expect a price advantage, regardless of how orders are fulfilled. Customers are doing the math and unfortunately, DoorDash drivers are taking the hit. Walmart has done a great job in the past of absorbing or obscuring last-mile costs. Delivery tips fall outside of that realm.
If international companies “flood” Walmart’s marketplace and they are successful with their sales, it is not dilution at all. It is simply giving the customer what they want. If those international companies do better than the domestic companies isn’t that a win for Walmart and the customer?
It is dilution when it makes it harder for other brands to get discovered and when a single Chinese company can create hundreds of brands (and continually shift the names of said brands). There is a fine line between “giving the customer what they want” and the customer choosing among only what they see by default. If brands want to jump in and compete against these realities, and if retailers want to do business with brand factories, good for them, but brands should temper volume expectations accordingly. This isn’t about shutting out international companies, it is about policing brand factories (or not).
It is Walmart’s marketplace and it is up to Walmart to vet the companies in the same way they would in their stores. The success or failure of their marketplace depends on what they offer to their customers. Every marketplace sale they make is a reflection on Walmart, good or bad.
Just what I was coming here to say. Was looking for a table lamp this weekend and saw the same exact photo two dozen times on Amazon, each under a different registered brand. It makes the browsing experience worthless there for home goods, and increasingly so in small electronics.
I know Target + is being very deliberate with vetting, even to the point of allowing only one seller per SKU. Here’s hoping Walmart is being careful as well.
Both should be non-events. If DoorDash deliverers don’t like the Walmart deal, as an independent contractor, you switch to delivery meals. You are independent. Walmart will eventually figure out how to deliver (if they want to).
As for the international seller — I am struggling for the right words regarding someone making a big deal of this. Now hear this! There are very good companies all over the world that make great products. Walmart stores probably carry the majority of their SKUs (excluding grocery) from international companies. There is probably no company in the world that has more experience dealing with international companies than Walmart. Why would Walmart not let these companies participate in their marketplace? Walmart is in the business of offering and selling products to consumers. Why should those offerings be limited to domestic entities?
As long as Walmart lives up to its claim of a rigorous screening process and is working with merchants that can deliver within their expected delivery times, there’s no reason for the marketplace expansion to have issues. The last-mile fulfillment issue is more of a concern as it will be an ongoing issue for them given their target demographic. Is it surprising that the customers for Walmart would be less likely to tip as generously as those who order meals for delivery? It’s not clear how Walmart will look to solve this in the long-term given the capacity they need for their volumes but I would expect them to double-down on curbside pickup instead which is both more profitable and efficient for them.
Fake goods and fake sellers are a problem. With overseas sellers it gets multiplied. I hope Walmart differentiates itself from Amazon by putting product and seller authenticity as a core element.
The potential issues that arise with Walmart’s opening of its marketplace to non-U.S. sellers appear to be addressed by vetting their goods before allowing them on the site. The company’s supply chain for its stores has included numerous foreign suppliers for many years. My assumption is the vetting process for the website will be the same as for the retail locations. This will certainly broaden the number of items on their site but will still not allow them to match or beat Amazon’s.
Walmart must have a full logistics team, like Amazon, to cover the last mile. Depending on third-party contractors will not work for Walmart, and they need to face this and create their own in-house solution. This will eliminate concerns from DoorDash and increase Walmart’s efficiencies and profits, while preparing them better for the future.
Walmart is probably the only company in the U.S. who has a real shot at unseating Amazon in the e-commerce arena. By combining the power of their brick-and-mortar locations with an e-commerce platform, they can offer a true omnichannel experience, which is something Amazon has yet to achieve with any significance. The number of shoppers who prefer in-person pick up and return is staggering, and will only continue to grow with our increasing focus on environmental impacts and desire for in-person experiences.
Besides authenticity, supply chain traceability would be my big concern. E.g. in the case of food products, what ingredients are being used; in the case of toys, can I trust the material? If the seller is not accountable to comply with US regulations legally, it will be hard to trust the product. However, most customers might not think that much and that is why Walmart has to ensure the right checks are in place before opening up their marketplace.