Who do you think of when you hear the words “eCommerce.” Did you say Amazon? You’re far from alone. Amazon is the retailer behind 49 percent of all U.S. eCommerce sales in 2018, according to eMarketer. The company dwarfs its competitors in this regard, with second-place eBay only capturing 6.6 percent of sales.
However, Amazon isn’t the only retail giant out there. When factoring in brick-and-mortar retail, the top dog is actually Walmart. With just 3.7 percent of eCommerce sales going to Walmart, the Arkansas-based retailer does the bulk of its business in-store. Walmart is no slouch overall.
As a dominant force in brick-and-mortar retail, it’s only natural for Walmart to turn its eyes on Amazon’s eCommerce market share. Amazon’s surged to the top thanks to the ability for third-party sellers to use its platform, called Marketplace. In fact, Marketplace accounts for 68 percent of all of Amazon’s retail sales, eMarketer data showed.
So, what can Walmart do to compete in eCommerce? Build a better Marketplace of their own.
Shopify Enters the Picture
TechCrunch recently ran the headline: “Walmart acquiring Shopify is no longer a laughable idea.” They’re right. It’s not unimaginable for Shopify to become the tool Walmart wants to take on Amazon.
Shopify started as an online store to sell snowboards and is now an immensely popular eCommerce platform. It’s preferred by merchants throughout the world, with more than $63 billion in sales via Shopify.
If Walmart wants to eat into Amazon’s eCommerce share, it’ll need to supercharge its efforts to allow third-party sellers to reach shoppers under the Walmart banner. Walmart’s third-party marketplace earnings were a major driver of an increase in quarterly sales and total gross merchandise sales, according to eMarketer. It also acquired Jet.com in 2016. Remember, though, that only 3.7 percent of eCommerce sales are going to Walmart compared to 49 percent to Amazon.
With just 3.7 percent of eCommerce sales going to Walmart, the Arkansas-based retailer does the bulk of its business in-store.
Is Shopify the Answer for Walmart’s eCommerce Dreams?
Just because Walmart has a third-party marketplace doesn’t mean it’s positioned to compete with Amazon. Most brands want to sell via a marketplace, such as Walmart or Amazon, and create a webstore (using a platform such as Shopify). Walmart acquiring Shopify would bolster Walmart’s strengths across marketplace and webstore eCommerce.
As noted by TechCrunch, Shopify is already one of the most-preferred eCommerce platforms among merchants. It’s building, and already has, the consumer support. It is also considered user-friendly and provides a holistic service to merchants. The platform brings together developers, photographers, marketers, and other services for its users. Shopify is a popular brand in eCommerce, and like Jet.com and countless others before it, that means it likely has the attention of giants like Walmart.
All in all, Shopify and Walmart make sense as a partnership when comparing the services both provide. Walmart has the brand recognition and the dedicated shoppers already. Shopify has the technology and the tools to excel in eCommerce. Walmart buying Shopify would consolidate the number of eCommerce players and could bring the two nearer to Amazon’s market share.
Shopify is a preferred tool of merchants throughout the world, with more than $63 billion in sales.
What the Future Could Hold
In this hypothetical, what would the future look like if Walmart did acquire Shopify? The answer could be a more robust marketplace of small-to-medium-sized businesses that are currently under the umbrella of Shopify.
“Shopify’s network of third-party developers, marketers, and creative professionals is a major asset that will factor into Walmart’s decision as it weighs a potential acquisition,” Tom Vieira, Wiser’s Director of Product Management, explained. “Combining the eCommerce platform with its marketplace could help the retail behemoth compete with Amazon by bringing a huge number of small-to-medium-sized merchants into the Walmart ecosystem.”
This could then be folded in Walmart’s existing marketplace, connecting Walmart shoppers to a wider range of third-party sellers than before. The acquisition could contribute to a larger selection of goods and services through the Walmart site, and help bolster the sales of these SMBs that may not have had access to Walmart’s customer base and brand recognition before the acquisition. Walmart could also leverage Shopify’s platform to provide more logistics support or other benefits to vendors using a Shopify webstore.
Bring on the Omnichannel
While it will be hard for Walmart to threaten Amazon’s hold on eCommerce through one acquisition, what Shopify could do for the retail giant is provide them an omnichannel advantage.
Former Walmart CEO Bill Simon told CNBC that Walmart’s brick-and-mortar presence is an edge over Amazon.
“The question and the challenge for Walmart is, can they redefine their play into more of an omnichannel play than Amazon? Because that’s an advantage for them,” Simon said during an appearance on CNBC’s Closing Bell.
- Amazon dominates eCommerce
- Walmart is the top retailer when factoring in brick-and-mortar
- Both stand to gain by growing the other channel
For Amazon, that’s in-store. For Walmart, that’s online. Therefore, the future of retail will continue to be omnichannel, and Walmart could improve their eCommerce standing with an acquisition of Shopify.
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