Tech giants and startups continue to pivot to Covid-era demand signals, including everything from virtual communications to casual gaming. But the area that’s possibly seeing the biggest surge is eCommerce. After teetering around 10 percent of U.S. consumer spending for the last decade, it has shot up to about 15 percent.
We’ve been tracking this trend, including the aforementioned pivots, product launches and new eCommerce integrations. One that sticks out the most is Walmart’s June deal with Shopify that brings the latter’s sellers into the former’s marketplace. It was meant to start with 1200 top-performing merchants, by the end of 2020.
The latest news is that it has meaningfully exceeded that total. Research firm Marketplace Pulse reports that it added 3,000 sellers in June and will add 3,600 more by the time July is over (the end of this week). That July total alone is 3x the quantity of sellers that it announced/expected to add in the entire second half of 2020.
To be fair, this still trails Amazon, which adds thousands of new sellers per day. But Walmart’s Marketplace has a more stringent filtering process. This is to avoid counterfeiters and shady sellers. In this way, Shopify brings value in offering Walmart Marketplace a pool of validated sellers, given Shopify’s feedback system.
This is one thing Walmart gets out of the deal. The other is to generally accelerate its e-commerce to compete with Amazon — a big initiative over the past five years. As we know from watching Amazon for two decades, the name of the game is economies of scale and network effect, both of which benefit from more sellers.
Shopify conversely benefits from this deal in that it can offer greater distribution scale to its SMB sellers. It can boost new sales and retention by offering its merchants Walmart-scale distribution. Those sellers then of course benefit too, given that greater scale is gained without additional customer-acquisition cost.
These smaller sellers meanwhile get greater visibility within Walmart Marketplace. Marketplace Pulse reports that though the seller quantity continues to grow, Walmart’s catalog size has decreased by about 15 million products as a few large sellers have de-listing their catalogs. This makes the Marketplace more SMB-centric.
Regarding Marketplace Pulse’s metrics, it should be noted that this is an estimate — albeit an educated one. The newly added Shopify merchants aren’t distinguishable from other sellers on Walmart Marketplace, but the research firm claims to have manually checked new additions and cross-reference their Shopify affiliation.
We’ll continue watching as Walmart Marketplace’s SMB total grows — with and without the help of Shopify. We also expect more moves from tech giants to lean into eCommerce demand signals. The question, as we continue to speculate, is if these Covid-era dynamics will instill permanent digital transformation.