Two-thirds of the top sellers on the Walmart marketplace use WFS, a fulfillment service Walmart launched less than five years ago. Virtually everything on Walmart.com ships from Walmart warehouses, whether it’s an item sold directly by the retailer or by one of its 140,000 active third-party sellers.
Jaré Buckley-Cox, Vice President of Walmart Fulfillment Services, confirmed the two-thirds figure during the Walmart Marketplace Seller Summit in San Francisco. Three years ago, 25% of the marketplace volume flowed through WFS; today, this figure is likely to be over 50%.
Remarkably, this was achieved less than five years after the launch of WFS in February 2020. Before that, all sellers used their own or 3PL warehouses. For comparison, according to a study by Marketplace Pulse, more than 90% of Amazon sellers use Fulfillment by Amazon (FBA), but the service has been in operation since 2006.
Walmart is ultimately all about its 4,606 physical stores in the US – 50% of online orders are fulfilled from one of these stores. In an interview with CNBC a year ago, Jaré Buckley-Cox said that pickup of Marketplace items will be possible within the next five years, calling it a “high priority.” That will be the ultimate appeal of WFS.
Services like FBA and WFS make Amazon and Walmart appear like regular retailers while hiding the complex marketplace that provides most of the assortment. Most shoppers don’t realize they’re buying from third-party sellers because they rarely interact with them directly and all orders are delivered in the same Amazon box. This invisibility of the marketplace was crucial when Amazon was competing with eBay, which couldn’t offer the same consistency.
Walmart has positioned WFS as an essential service, similar to what Amazon has done with FBA, although both companies describe it as optional. Amazon’s search results primarily show items stored in FBA because they offer Prime shipping and most shoppers are Prime members. Walmart’s story is similar: 38 out of 40 search results for “headphones” are stored in WFS. Walmart sells a Walmart+ membership that offers free shipping on WFS items.
Walmart used to advertise WFS as providing “higher search rankings and Buy Box wins – for an average of 50% more sales.” That description has been dropped because WFS no longer gets higher search rankings – WFS now means a choice to appear on the first page of search results or not be visible at all.
Both WFS and FBA create flywheels that benefit the sellers who use them. This is how Walmart got most sellers to use it in less than five years. The problem is that once the flywheel starts spinning, they become mandatory – not optional – and sellers are forced to accept any changes. At Amazon, this has become a recurring problem and led to Italian regulators imposing a fine of nearly $1.3 billion in 2021.
