The Web Retailer News Digest for February 25, 2022
It’s no secret that Walmart is looking to go big in ecommerce. The company clearly has aspirations to become “Amazon, but with retail stores” – and the fast growth it has been showing in both marketplaces and fulfillment have put it firmly on that path. There’s a lot of recent Walmart news to review here, and tying it all together is the golden thread of growth throughout its diversified business model.
Walmart’s ecommerce sales climbed 11 percent year over year in fiscal 2022, and a staggering 90 percent when compared to two years ago, according to a recent report. Compared to the same quarter a year ago, online sales at the retailer increased by 1%, but by 70% compared to two years ago. Last year, Walmart added over 20,000 new sellers in the United States, with plans to add over 40,000 more this year. Possibly the most shocking numbers are in fulfillment, where services via WFS grew over 500% last year, with over a 90% seller retention rate in the program.
For sellers, this means there’s a lot more potential opportunity at Walmart, both now and on the horizon as the marketplace and associated services continue to grow. Let’s look at an incentive for new sellers to use WFS, and what Walmart will be getting into in the near future.
Walmart wants to do more than sell – so what’s next?
If you’re a seller interested in trying out Walmart and curious about Walmart Fulfillment, there’s a new WFS incentive program that might be useful. Per Walmart, new WFS sellers who sign on and inbound at least one item between February 21 and April 30 receive free storage and 10% off fulfillment for the first 90 days. Items are shipped to customers in a Walmart box and are labeled “fulfilled by Walmart.” According to the firm, this helps develop confidence with customers and promotes trust and openness.
But trust and openness aren’t all that’s on Walmart’s agenda. Marketplace expansion (including to India), and continued growth of fulfillment services and advertising revenue are high on the ecommerce to-do list. In Walmart’s earnings call, CEO Doug McMillon noted that its global advertising business reached $2.1 billion, and active advertisers using Walmart Connect in the U.S. increased a whopping 136%.
Other plans include social commerce, a cryptocurrency and set of NFTs, as well as a metaverse initiative with wearables, AR, and mixed reality. Walmart has the momentum to keep growing in 2022, and if the mega-retailer has shown us anything of late, it’s not to bet against it. The diversified, Amazon-esque business model it’s embracing should make for exciting competition between the marketplaces in the future for both brands and sellers.
Read more at Forbes.
eBay 2021: Increased revenue, fewer buyers and sellers
Ebay announced its 2021 results for the full year and Q4, and like most marketplaces, it’s a decidedly mixed bag. The report showed full year 17% growth in revenue to $10.4 billion and a flat GMV. For Q4, revenue rose only 5% to $2.6 billion, and GMV fell 10%. More concerning is that annual active buyers declined by 9% to 147 million, while annual active sellers declined by 8% to 17 million.
The reduction in buyer and seller numbers undoubtedly reflects something we had reported on earlier: the aging of eBay sellers. The report also included a significant section called “Tech-Led Reimagination of the Platform” which touted new initiatives in focused categories, including luxury watches, sneakers, handbags, trading cards, and the Certified Refurbished program. While this section tried hard to posit many good things coming from eBay’s new focus on luxury collectible goods, it’s hard not to read it as desperate puffery in light of less than expected numbers. The market took note, and eBay’s stock tumbled shortly after.
After its release, sellers were posting to message boards about the report at a higher than normal volume. Apparently the slow decline of the platform’s user base, an out-of-touch vertical strategy, and general issues with various listing features have captured the sellers’ attention. The question is, will it capture the attention of eBay leadership – and what will they do about it?
Amazon sues fake review brokers
In a case of Amazon getting out ahead of a review scandal, the company announced that it sued Rebatest and AppSally, two major brokers of fake reviews. These businesses were allegedly arranging the posting of fake or misleading reviews by their members in return for payment in cash or products. Marketplaces compromised by the fake reviews included Amazon, Etsy, eBay, and Walmart. The announcement notes that “Amazon’s legal action comes after an in-depth investigation into these review brokers, which taken together claim to have more than 900,000 members willing to write fake reviews.”
The ongoing fight against review manipulation continues, as we’ve previously reported on the Chinese manufacturer review scandal of Summer 2021, an incentivized Amazon review scheme on Twitter, and the FTC dispute with Fashion Nova over unpublished negative reviews. Amazon claims to have “stopped more than 200 million suspected fake reviews before they were ever seen by a customer.” But is it enough, and why this lawsuit right now?
Perhaps in the wake of the Fashion Nova case, Amazon is trying to get out in front of potential FTC scrutiny of reviews and the possible sanctions that could come with them. Or perhaps, as seen in the Chinese sellers bans of last summer, Amazon is finally getting serious about rooting out the “nefarious industry” around review manipulation. Either way, fewer fake reviews are good news for sellers.
Amazon sellers are doing well while looking to flip their business.
A convergence of new reports has reinforced a trend that most sellers were keenly aware of. In general, Amazon sellers are doing well to start 2022 – and a significant number of sellers are eyeing selling their business to Amazon aggregators. Let’s unpack the numbers that support this.
Jungle Scout released its free State of the Amazon Seller 2022 report and offered some key findings.
- From 2020 to 2021, 45% of sellers reported profit increases.
- 76% of sellers are profitable so far in 2022
- In 2022, 95% of Amazon sellers plan business expansions.
- 25% of new sellers are motivated to sell their business to an investor.
- Compared to SMBs, million-dollar earners are much more likely to invest in marketing through search engine ads and social media.
- Million-dollar earners invest more in marketing and advertising for their ecommerce products than SMBs.
- The #2 top challenge faced by former sellers was increasing ad costs.
A survey by Ecommerce Aggregators of Amazon’s largest third-party sellers ($1m+ revenue) showed that:
- 49% have started to prepare their FBA business for sale.
- 43% have spoken with a broker or Amazon aggregator since the beginning of 2022.
- 87% would prefer to sell to an Amazon Aggregator.
Finally, an NBC news report detailed the pain felt by SMBs due to the increased costs of Amazon Advertising, which has become a necessity to remain competitive in the marketplace. Research has shown that “merchants spent an average of 4.6 percent of their 2021 sales revenue on Amazon advertising, up from 1.1 percent in 2016”. In other words, the cost of advertising is much harder on SMBs than the largest third-party sellers.
So what’s it all add up to? For larger sellers, the game has changed to invest in as much ad spend as you can, grow big, and sell high to an investor or aggregator. For SMBs, the marketplace remains profitable, but not as much as before. It takes more effort and advertising expense than before for small brands to grow big – and when they do, most are looking to sell and get out. It’s the Circle of Life in the Amazon marketplace, 2022 style.
Read more at Newswire.
Also in the news
- Submissions for the Amazon Spring Deals 2022 event are now open. Amazon UK.
- Amazon Sponsored Discount is now available for shipping labels on Buy Shipping. Amazon US.
- New tax service providers to assist you with European VAT compliance. Amazon US. Amazon UK.
- eBay drops price for Trading Card Authentication, shipping problems reported. Value Added Resource.
- Changes to eBay’s feedback system and how it affects sellers. Value Added Resource.
- Etsy USPS billing crisis continues. EcommerceBytes.
- TikTok prompts retailers to reassess how it reaches younger consumers. Digital Commerce 360.
Webinars in the week ahead
March 2: Amazon Advanced PPC Webinar. Sellics.
March 3: How to provide an extraordinary multi-channel customer experience. eDesk.
Various dates: Amazon advertising’s global webinar program rolls on with 20+ webinars scheduled, covering Sponsored Products, Sponsored Brands, reporting, optimization and tips. Amazon.
For US sellers
March 2: Spring Business Refresh & Declutter with Stephanie Shalofsky. eBay.
March 2: Create and launch your store on Amazon. Amazon.
March 3: The 2022 Social Media Advertising Series. Tinuiti.
March 3: The Manufacturers’ Technology Stack. Digital Commerce 360.
For UK sellers
March 1: Optimise your Store to captivate shoppers. Amazon.
March 2: Amazon Ads – Tips for optimising and expanding your targeting strategy. Amazon.
March 3: Amazon Ads – Tips for optimising your keywords strategy. Amazon.
March 4: Amazon Ads – Understand your campaign performance throughout the year. Amazon.
Various dates: Amazon webinars covering selling, fulfillment, SFP, advertising, and Amazon Business. Amazon.
Amazon fires Twitter “cheerleading squad”, the FC Ambassadors
Once upon a time at Amazon in 2018, there was a meeting. In this meeting, someone decided it would be a good idea to create a virtual “cheerleading squad” on Twitter made up of fulfillment center employee accounts. Their mission: to rebut any posts criticizing Amazon or its fulfillment centers. They were named the “Amazon FC Ambassadors” (FC = fulfillment center) – and as everyone who was not in that meeting can imagine, it all went very wrong. The good news is, a recent report from Slate indicates that this incredibly dubious PR effort is no more.
How did it work? According to the Slate article, the FC Ambassadors “typically tried to mask their corporate propaganda as neutral fact checks based on their own experiences working at the company’s warehouses up to that point. When it came to the prospect of labor organizing, though, the accounts became more clearly opinionated, with ambassadors arguing that unions breed laziness and cronyism.”
In fact, Twitter users caught onto the ruse inside of a year. An August 2018 article from TechCrunch detailed Amazon’s “unnerving, Stepford-like presence on Twitter in the form of several accounts of definitely real on-the-floor workers who regurgitate talking points and assure the world that all is right in the company’s infamously punishing warehouse jobs.” While some of the accounts were likely real, more were found to be hilariously obvious bots.
Of course, parody accounts soon followed, which completely undermined Amazon’s original intention to control the narrative about fulfillment center working conditions on social media. Amazon has long struggled with its social media presence and messaging, and the FC Ambassadors scheme, once uncovered, really just made it worse. The ethical issues of using robots to promote a social media cover-up of poor working conditions for humans who were treated no better than machines is, to use a technical term, pretty bleeping messed up.
But alas, the Amazon FC Ambassadors are no more. We’ll miss their absurdist humor, their shocking lack of humanity, and their liltingly robotic tweet cadence. We hope that Amazon invests the program’s budget into improved worker benefits. And as my grandmother likes to say, “Good riddance to bad rubbish.”
Read more at Slate.