It’s not an overstatement when we say Walmart and Amazon have revolutionized and reshaped the e-commerce and retail industries. With nearly 6.5 million sellers, Amazon accounts for more than 38.7% of the U.S. e-commerce market share. Over the years, Amazon has redefined online shopping with its vast product range and expedited services.
Similarly, Walmart, with its $611 billion in revenue, is now embracing omnichannel retailing, setting an example for seamless offline-online integration. According to the Walmart Q2 FY24 earnings report, the retail giant’s U.S. e-commerce sales grew 24%, and international e-commerce grew 26%. These stellar numbers are a testament to Walmart’s presence and growth in the e-commerce industry.
Amazon boasts some of the biggest numbers in the e-commerce industry when it comes to third-party sellers. There are over 6.5 million Amazon sellers globally. This is where Amazon’s Fulfillment by Amazon (FBA) – a service that allows you to outsource order fulfillment to Amazon – comes into the picture.
A whopping 94% of Amazon sellers use the FBA program for order fulfillment. On the other hand, in the recently launched Walmart's WFS (Walmart Fulfillment Services), about 25% of sales on Walmart Marketplace are fulfilled by WFS, another significant number that one must not ignore.
Sellers and businesses are constantly looking for the best marketplace and fulfillment service that is cost-efficient and offers the maximum benefits. Most often, the competition comes down to WFS vs FBA. In this blog, we bring you everything you need to know about Walmart WFS vs Amazon FBA to choose a fulfillment service that best suits your business.
What is Amazon FBA?
Fulfillment by Amazon, or FBA, is a paid Amazon service that allows third-party sellers to outsource order fulfillment to Amazon. As part of its FBA service, Amazon takes care of inventory storage, order fulfillment, and returns management and offers customer service.
FBA benefits for sellers
There are multiple benefits, from faster order fulfillment to hassle-free returns and refund mange. Below are some of the most significant benefits for sellers:
Faster shipping
Amazon’s state-of-the-art warehouse technology enables third-party sellers to ship their items faster to the customer.
Higher discounts
Through its FBA program, Amazon offers sellers reduced rates from leading shipping carriers, which sellers won’t be able to get when they ship their items.
Hassle-free refund and returns management
In any business, there are going to be unsatisfied customers who will be raising return or refund requests. It is daunting to go through every refund or return request and verify it, especially if you send out hundreds of orders in a day.
This is where Amazon’s FBA can help. Since Amazon will take care of this, sellers don’t have to worry about receiving the returns and refunding. Meanwhile, sellers can work on scaling the business.
24/7 customer service
Amazon provides round-the-clock customer service dedicated to FBA sellers. Moreover, sellers can leverage their FBA platform to handle customer service requirements.
Consumers benefit from FBA by enjoying fast and reliable shipping, often with free two-day or one-day delivery through Amazon Prime. This encourages more shoppers to choose products fulfilled by Amazon, which are perceived as more trustworthy and convenient.
What is Walmart WFS?
Walmart Fulfillment Service (WFS) is a warehousing and fulfillment solution offered by Walmart to its third-party marketplace sellers. Launched in 2022, it operates similarly to Amazon's FBA, where sellers can store their products in Walmart's fulfillment centers, and Walmart takes care of the packing, shipping, and customer service.
WFS benefits for sellers
Here are some of the significant benefits sellers can enjoy while opting for Walmart Fulfillment Services:
Fast shipping
WFS allows sellers to provide fast delivery options to their customers, such as two-day delivery. This can greatly improve customer satisfaction.
Maximize product visibility
Using Walmart's Fulfilled by Walmart (WFS) service lets sellers add the ‘Fulfilled by Walmart’ and "TwoDay shipping" tags to their products. According to Walmart's data, sellers who opt for WFS typically experience a 50% boost in conversion rates. In comparison, stats say that 46% of Amazon sellers achieve an average Amazon FBA success rate of 11-25%.
This shows that by opting for WFS to fulfill orders, sellers can substantially enhance the visibility of their products and conversion rate.
Customer services
Walmart, like Amazon, offers free customer services to third-party sellers’ products shipped through WFS.
Simple pricing structure
Walmart Fulfillment Service (WFS) provides sellers with straightforward and easily understandable pricing str. The pricing is determined by the weight of the products, allowing sellers to calculate the precise cost of fulfilling their orders. We have discussed in detail Walmart WFS fees in this blog, keep reading.
Consumers benefit from WFS by experiencing faster and more reliable shipping options when purchasing products from Walmart's online marketplace. With Walmart's reputation for affordability and convenience, WFS enhances the overall shopping experience for consumers, particularly those who value quick delivery and a wide range of product options.
WFS vs FBA - An in-depth comparison
Services offered under the program
Here are the Amazon FBA services offered by Amazon to help sellers manage their inventory and fulfill orders on its platform:
- Storage: Under the FBA program, Amazon allows sellers to store their products in Amazon's fulfillment centers.
- Order Fulfillment: It handles the entire order fulfillment process, including picking, packing, and shipping orders to customers.
- Customer Service: FBA provides customer service support for orders fulfilled through the program. Amazon manages customer inquiries, returns, and other post-purchase issues, relieving sellers of these responsibilities.
- Returns Processing: On behalf of the FBA sellers, Amazon manages returns, inspecting and reconditioning returned items when necessary.
- Multi-Channel Fulfillment: FBA allows merchants to fulfill orders from their websites or other e-commerce channels.
- Global Fulfillment: Using FBA, sellers can reach international customers and leverage Amazon's extensive global logistics network.
- Inventory Management: FBA offers tools and insights to help sellers manage their inventory effectively. This allows sellers to forecast demand, restock recommendations, and automate inventory removal options.
- Amazon Prime: FBA products are eligible for Amazon Prime and receive a badge.
On the other hand, here are the services offered by Walmart Fulfillment Services program:
- Warehousing and Storage: WFS provides storage facilities for sellers' products in Walmart's fulfillment centers.
- Order Fulfillment: Like FBA, WFS manages the entire order fulfillment process, including picking, packing, and shipping orders to customers.
- Returns Management and Customer Service: WFS handles all customer returns and offers customer service support to handle inquiries and issues related to orders fulfilled through the service.
- Two Day Shipping: Walmart's TwoDay shipping tag is applied to products fulfilled through WFS, offering customers faster shipping options.
Pricing and fees
Fulfillment by Amazon fees
The Fulfillment by Amazon (FBA) fees vary depending on the size and weight of the product, the duration of time it is stored in Amazon's fulfillment centers, and the shipping method used. Sellers can use Amazon's FBA fee calculator to estimate the fees they will be charged, as the fees are subject to changes, and multiple factors can affect the fee.
Amazon fulfillment fee for standard-sized product tiers
Amazon fulfillment fee for oversized product tiers
FBA storage fees for non-dangerous items (Jan-Sep)
Here are some of the common fees collected by Amazon for its FBA program:
- Fulfillment fees for FBA orders: Start at $3.22 and go up to $7.17 for non-apparel products. For apparel products, the rates start at $3.43 and go up to $7.17.
- Monthly inventory storage fees: It has two components. First is the base monthly storage fee, which is determined by product size and time of year. Next is the storage utilization surcharge, which is in addition to the base monthly storage fee and varies based on product size and storage utilization ratio. The base monthly storage fee for non-dangerous goods from January to September is $0.87.
- Long-term storage fees
- Removal order fees and disposal order fees (Fees for Amazon to return or dispose of your inventory in the Amazon fulfillment centers)
- Returns processing fees
- Unplanned service fees (Fees for services offered by Amazon when inventory arrives at a fulfillment center without proper preparation or labeling)
Note: Check out Amazon’s FBA fees page for detailed pricing information.
Walmart WFS fees
Like FBA, Walmart also levies its fees based on the size and weight of the product, the shipping method, and the amount of time it is stored in the Walmart fulfillment center. The WFS calculator can help sellers in estimating the fees. The standard fulfillment fee starts at $3.5 and goes up to $155 for bulk fulfillment. The storage fee is $0.75 per cubic foot per month for storing items from January to September.
WFS Fulfillment Fee
WFS storage fees
Here’s a list of other additional fees associated with WFS:
- Long-term storage fees: Applicable for products stored in Walmart's fulfillment centers for more than 180 days
- Inbound transportation fees
- Outbound transportation fees
- Customer service fees
Scale of operations
Approximately 94% of Amazon sellers use Fulfilment by Amazon. What’s more, Amazon ships close to 1.6 million packages daily, a considerable amount of which are part of the FBA program.
According to Forrester, Amazon generated $118 billion from third-party seller services in 2022. “The share of third-party seller services in total net sales increased to 23% in 2022, up from 21% in 2020. The third-party seller services include commissions, related fulfillment and shipping fees, and other third-party seller services,” the blog said.
Though Amazon had a head start in order fulfillment, Walmart is slowly climbing up the ladder and is increasing its pace. Walmart’s investment of over 11 billion dollars into e-commerce, technology, and the supply chain a few years back clearly shows where it is headed. As of 2021, WFS fulfilled about 25 percent of sales on Walmart Marketplace.
Holiday season pricing
Amazon increases its FBA fees during the holiday season. From October 15, 2023, until January 14, 2024, Amazon will impose a Holiday Peak Fulfillment Fee on FBA (excluding apparel). On January 15, 2024, fulfillment fees for FBA will return to the standard rates that apply during non-peak periods. During this period, sellers must pay an additional fee ranging from $0.20 to $2. For example, the fulfillment fee for small standard-sized items is $3.22 during the normal season, and it increases to $3.42 during the holiday season.
The WFS fulfillment fee from January to September is $0.75 per cubic foot. During peak season, from October to December, sellers must pay $0.75 per cubic foot per month for items stored for fewer than or up to 30 days and $1.50 per cubic foot per month for items stored for more than 30 days.
Shipping speed
Fulfillment by Amazon (FBA) provides sellers with a Prime badge for their products and offers same-day, one-day, or two-day shipping through Prime. What’s more, the company also provides shipping to merchants who use FBA through its Amazon Shipping program. On the other hand, WFS offers two-day shipping anywhere in the contiguous U.S.
Product restrictions
Sellers using FBA must comply with Amazon’s restricted product policy. Here are the products prohibited from FBA:
- Alcoholic beverages (including non-alcoholic beer)
- Vehicle tires
- Gift cards, gift certificates, and other stored-value instruments
- Products with unauthorized marketing materials, such as pamphlets, price tags, or other non-Amazon stickers
- Loose packaged batteries
- Damaged or defective units
Here are the product restrictions that sellers must keep in mind while using WFS:
- Products should be non-perishable or non-regulated
- Product weight should be within 500 lbs
- Dimensions of no more than 120″ x 105″ x 93″
- Products should be shipped from within the United States
Coverage and fulfillment network
As of 2023, Amazon has over 185 fulfillment centers across the world. This means sellers have a wider market to sell their products. What’s more, FBA export uses your FBA inventory in U.S. fulfillment centers and allows customers worldwide to buy products on Amazon.com.
Amazon has a network of 1,137 distribution centers in the United States, and these facilities range from large warehouses strategically positioned near densely populated areas to smaller hubs dedicated to serving remote locations.
Walmart has 31 dedicated e-commerce fulfillment centers and 4,700 stores within 10 miles of 90% of the U.S. population. However, Walmart only fulfills items sold on Walmart.com within the United States.
Level of competition
The competition in Amazon's FBA program stems from the sheer volume of sellers operating on the platform. With a vast pool of over 5.67 million FBA sellers, the race for product visibility and sales can be fierce, particularly in popular product categories.
When compared to FBA, Walmart Fulfillment Services are not as competitive. With only about 30,000 sellers, the chance of securing a spot in the Buy Box is much higher here.
Other adjacent services
Other services offered by Amazon for third-party sellers are:
- FBA label service: Amazon will apply barcode labels (UPC, FNSKU, etc.) to the seller’s inventory
- FBA prep service: Amazon will prepare the inventory sent by sellers to meet FBA prep requirements
- FBA repackaging service: Amazon will repackage eligible FBA items that buyers have returned so the items can be resold
- Advertise with Amazon: Grow your business on Amazon using sponsored product placements
Like Amazon, Walmart sellers and brands can advertise their products to get them in front of buyers.
Where should your e-commerce business sell?
Fulfillment by Amazon (FBA) is a favorable option for sellers dealing with high order volumes in the e-commerce space. That’s because Amazon has the most buyers on its platform and boasts of high e-commerce activity, allowing users to access an extensive customer base. What’s more, FBA's charges and model incentivize high-velocity selling.
Similarly, if you are looking to expand your business operations internationally, then without any doubt, FBA is the best choice to reach a global audience. That is because WFS primarily focuses only on the United States.
FBA can also be the most preferred option for merchants just starting e-commerce, as it’s been a tried, tested, and popular service. And when they expand, they can diversify to services like WFS to increase revenue.
On the other hand, a brand selling only on physical retail will find it easier to expand into e-commerce with WFS since they are already selling on the Walmart marketplace and are used to partnering with Walmart for sale and fulfillment. Also, medium-sized and small sellers might prefer Walmart for its straightforward fee structure.
Another reason why these sellers might shy away from FBA is because of its hefty penalties. The penalties Amazon FBA charges on products that do not adhere to the packaging and labeling requirements set by it are much higher than WFS. That is why merchants seek the help of FBA prep centers and WFS prep services. These prep services can prepare your inventory in accordance with the packaging and labeling guidance stated by FBA and WFS and ship them to the respective fulfillment centers.
Fulfillment by Amazon is suitable for a wide range of product categories, including standard items, electronics, books, and more. And WFS is favorable for certain product categories that align with Walmart's customer base and marketplace. For example, a merchant selling houseware or personal care items can leverage the popularity of Walmart in that category to make more sales.
Merchants can also consider the commission or referral fee both the services charge for products they sell before deciding. For example, Amazon charges a referral fee of 8% for computers, whereas WFS charges 6%. This means the merchant will pay a lesser amount as a referral fee while selling computers through WFS.
Check out the Amazon and Walmart referral pricing pages for more details.
Conclusion
The choice between Amazon FBA and Walmart WFS ultimately comes down to your business goals and needs. Both of these fulfillment services offer valuable solutions for e-commerce merchants, but they have distinct advantages and considerations.
For example, FBA is a versatile option with a global reach, making it an excellent choice for businesses of all sizes looking to tap into Amazon's vast customer base and leverage its robust fulfillment infrastructure. On the other hand, WFS caters to merchants looking to expand their presence on Walmart's platform, which is particularly popular in the United States. If your target market aligns with Walmart's customer base, this service can offer a competitive edge.
How Hopstack simplifies selling on e-commerce marketplaces
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Additionally, Hopstack's fulfillment workflows help achieve 100% compliance with Amazon and Walmart's prepping, packing, labeling, and shipping requirements. This ensures that e-commerce merchants do not get penalized for non-compliant inventory. What’s more, Hopstack's suite of features for marketplace sellers includes shipment automation, automated generation and printing of barcode and shipping labels, weight and dimensions compliance, real-time order and inventory synchronization, and more. Schedule a demo to learn more about how Hopstack can maximize the efficiency and accuracy of your e-commerce operations.
