Marketplace Throwdown: Wal-Mart vs. Amazon

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The biggest brick and mortar retailer and the biggest online retailer are facing off. The stakes? Control of a vast sea of third-party retailers looking to sell their wares online, and ultimately winning over consumers.

Face-Off

Discount retailer Wal-Mart (Stock Quote: WMT) has started selling products from smaller businesses on its own Web site, both to get a piece of their revenue and to increase their online offerings. That means the retail giant is going head-to-head against Amazon.com (Stock Quote: AMZN), which already runs a massive third-party marketplace.

Through Walmart Marketplace, the retail giant says it’s added about one million new items to its online offerings, according to The Wall Street Journal.

Wal-Mart hopes to make its site the most visited and most valued site on the Web, the Journal says. But whether it can even compete against Amazon, let alone eBay (Stock Quote: EBAY) this late in the game has yet to be determined.

Amazon.com says it currently has 1.7 million active marketplace sellers. That’s sellers, not items, so Wal-Mart has some serious catching up to do.

Supporting Mom and Pop?

Some of the first small retailers participating in the Wal-Mart Marketplace include eBags.com and CSN Stores, which also sells its wares on Cookware.com. 

Just like on Amazon’s Marketplace, shoppers can buy Walmart Marketplace merchandise on Wal-Mart’s Web site. After that, the Walmart Marketplace retailer will then manage the order, including shipping and handling, customer service, exchanges and returns, says Wal-Mart spokesman Ravi Jariwala. 


The participating retailers’ items add to Wal-Mart’s own online offerings, and eventually, as more products are added by new retailers, Wal-Mart says the company and its partners may offer the same products, possibly at different prices. But Wal-Mart never loses. Even if the partner sells the item for less than Wal-Mart, the giant retailers still gets a cut (neither Amazon nor Wal-Mart would tell us how big the cut is).

One Item, Two Options

The same Cal Pak Recess Backpack is available on both Amazon’s and Wal-Mart’s marketplaces, but the deals are very different.

On Walmart’s Marketplace, partner eBags is selling the backpacks for $34.99 plus $7.95 for shipping and handling.

On Amazon’s marketplace, Cal Pak is selling the backpacks for $34.99 too, but shipping is free.

So for the shopper, the Amazon deal is better. But what about Cal Pak? Assuming that Wal-Mart and Amazon are taking roughly the same sales commission, one would assume that Cal Pak would prefer to sell direct to the consumer through Amazon. However, on Amazon they must absorb the shipping costs, which could cut into their margins, though it’s hard to know by how much.

Do you have retail marketplace experiences you’d like to share? Please add them to the comments section.

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