Author Topic: Walmart Seller Store -> Similar to FBA  (Read 2258 times)

SteadyDoinIt

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Walmart Seller Store -> Similar to FBA
« on: January 28, 2021, 07:05:29 AM »
Good morning all,

I've been approached by a drop shipping automation company with an offer for them to open and run a Walmart seller store.

Details:
1) initial investment = $35k
2) monthly fee = $500
3) profit share = 30% to them, 70% to me
4) yearly contract renewal fee = $5k
5) this company provides all back end support -> llc, product research, listing, shipping, customer service, returns, books
6) Walmart is loads harder to become a seller than Amazon, thus trimming the seller pool -> there's about 10% seller saturation compared to the available market.

I can't find a ton of resources online about the risk/potential for this opportunity, so I came to MMM! Please help me realize anything I'm missing, and let's have a healthy discussion!

I don't believe this topic already exists, but if there's another thread somewhere, please point me in that direction.

Thank you,
JB

SeattleCPA

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Re: Walmart Seller Store -> Similar to FBA
« Reply #1 on: January 28, 2021, 09:50:37 AM »
Good morning all,

I've been approached by a drop shipping automation company with an offer for them to open and run a Walmart seller store.

Details:
1) initial investment = $35k
2) monthly fee = $500
3) profit share = 30% to them, 70% to me
4) yearly contract renewal fee = $5k
5) this company provides all back end support -> llc, product research, listing, shipping, customer service, returns, books
6) Walmart is loads harder to become a seller than Amazon, thus trimming the seller pool -> there's about 10% seller saturation compared to the available market.

I can't find a ton of resources online about the risk/potential for this opportunity, so I came to MMM! Please help me realize anything I'm missing, and let's have a healthy discussion!

I don't believe this topic already exists, but if there's another thread somewhere, please point me in that direction.

Thank you,
JB

No knowledge on this subject. But my antenna goes up when someone wants to provide a bundle of services that include an LLC filing and doing your books. Seems very odd. Those services have nearly zero to do with successfully running a store. For what that's worth...

BTW, we provide CPA services to a number of Amazon FBA vendors.

SteadyDoinIt

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Re: Walmart Seller Store -> Similar to FBA
« Reply #2 on: January 28, 2021, 10:23:23 AM »
@SeattleCPA  - Thank you for the reply! They will file for the LLC and will maintain books on their end, but I will also be responsible for maintaining a separate set of books for auditing purposes on my end. Would you mind taking a quick look at the proposed contract?

LongtimeLurker

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Re: Walmart Seller Store -> Similar to FBA
« Reply #3 on: January 29, 2021, 12:05:46 PM »
Is this an addition to an existing business or something new?

SeattleCPA

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Re: Walmart Seller Store -> Similar to FBA
« Reply #4 on: January 29, 2021, 02:31:27 PM »
@SeattleCPA  - Thank you for the reply! They will file for the LLC and will maintain books on their end, but I will also be responsible for maintaining a separate set of books for auditing purposes on my end. Would you mind taking a quick look at the proposed contract?

No, sorry, looking at a contract isn't an accountant thing. It's an attorney thing.

Michael in ABQ

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Re: Walmart Seller Store -> Similar to FBA
« Reply #5 on: January 29, 2021, 06:07:44 PM »
Good morning all,

I've been approached by a drop shipping automation company with an offer for them to open and run a Walmart seller store.

Details:
1) initial investment = $35k
2) monthly fee = $500
3) profit share = 30% to them, 70% to me
4) yearly contract renewal fee = $5k
5) this company provides all back end support -> llc, product research, listing, shipping, customer service, returns, books
6) Walmart is loads harder to become a seller than Amazon, thus trimming the seller pool -> there's about 10% seller saturation compared to the available market.

I can't find a ton of resources online about the risk/potential for this opportunity, so I came to MMM! Please help me realize anything I'm missing, and let's have a healthy discussion!

I don't believe this topic already exists, but if there's another thread somewhere, please point me in that direction.

Thank you,
JB

I've never heard of any e-commerce sellers where Walmart was more than 5-10% of their total sales if they were operating on multiple channels (Amazon, eBay, Etsy, own website, etc.).

Frankly, the volume is just not there for Walmart.

So this company wants $35k (plus $11k/year) to set you up as a dropshipper on Walmart.com?

Run away. This sounds like a great deal for them, not so much for you. Margins for drop shippers are usually quite low, say 10-15%. Pretty hard to make a profit on that unless you're able to quickly ramp up to mid 6-figures in sales.

Archipelago

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Re: Walmart Seller Store -> Similar to FBA
« Reply #6 on: January 29, 2021, 10:33:14 PM »
This seems like a sketchy offer at best. Any company asking for $35k up front and $5k annually just...doesn't seem to make much sense. What kind of products do they sell? What is their reasoning for needing the up front capital?

ender

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Re: Walmart Seller Store -> Similar to FBA
« Reply #7 on: January 30, 2021, 06:18:23 AM »
I'm trying to understand what value this company is providing you here.

It seems you are taking on nearly 100% the risk/work.

SteadyDoinIt

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Re: Walmart Seller Store -> Similar to FBA
« Reply #8 on: February 01, 2021, 06:27:21 AM »
Is this an addition to an existing business or something new?

This is a new business. I understand getting approved to be on Walmart's marketplace is difficult, so the bulk of the initial investment is creation of business pages to be legitimate and product research to stock your store.

SteadyDoinIt

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Re: Walmart Seller Store -> Similar to FBA
« Reply #9 on: February 01, 2021, 06:36:07 AM »
Good morning all,

I've been approached by a drop shipping automation company with an offer for them to open and run a Walmart seller store.

Details:
1) initial investment = $35k
2) monthly fee = $500
3) profit share = 30% to them, 70% to me
4) yearly contract renewal fee = $5k
5) this company provides all back end support -> llc, product research, listing, shipping, customer service, returns, books
6) Walmart is loads harder to become a seller than Amazon, thus trimming the seller pool -> there's about 10% seller saturation compared to the available market.

I can't find a ton of resources online about the risk/potential for this opportunity, so I came to MMM! Please help me realize anything I'm missing, and let's have a healthy discussion!

I don't believe this topic already exists, but if there's another thread somewhere, please point me in that direction.

Thank you,
JB

I've never heard of any e-commerce sellers where Walmart was more than 5-10% of their total sales if they were operating on multiple channels (Amazon, eBay, Etsy, own website, etc.).

Frankly, the volume is just not there for Walmart.

So this company wants $35k (plus $11k/year) to set you up as a dropshipper on Walmart.com?

Run away. This sounds like a great deal for them, not so much for you. Margins for drop shippers are usually quite low, say 10-15%. Pretty hard to make a profit on that unless you're able to quickly ramp up to mid 6-figures in sales.

This company (and others like it with similar automation structures) handles the complete back end - website building, product research and shuffling, listing, fulfillment - total automation.

A couple of questions/points just to establish the devil's advocate POV. I'm open to more conversation based on your input.

1) Pardon my ignorance, but what is your e-com background?
2) With Walmart's platform being new, is there any credence to the idea that since that market is not saturated with sellers, there is a ton of low hanging fruit?
3) With Walmart only taking a 15% cut (where other platforms take additional fees per unit), could margin be closer to 25-30%?
4) I've been shown the back end of live stores with gross sales >$50k. Are you saying that $50k is likely only 5-10% of that business' total top line?

SteadyDoinIt

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Re: Walmart Seller Store -> Similar to FBA
« Reply #10 on: February 01, 2021, 06:48:32 AM »
I'm trying to understand what value this company is providing you here.

It seems you are taking on nearly 100% the risk/work.

For one, they understand the droppshipping model both on Amazon and Walmart - they have 7+ years of dropshipping experience and have currently over 70 Amazon stores and 50 Walmart stores that they run. They have an expertise that I do not.

For two, to scale as quickly as the market will apparently allow, it will take a team and more than just me wandering around blind. On the front end, this includes approval to sell on Walmart, website creation, initial product offering(s), etc. Day-to-day, this includes product research, shuffling of products that have fallen out of favor, listing, fulfillment, customer service, returns, etc.

In essence, I'd be franchising their knowledge.

SteadyDoinIt

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Re: Walmart Seller Store -> Similar to FBA
« Reply #11 on: February 01, 2021, 06:51:46 AM »
This seems like a sketchy offer at best. Any company asking for $35k up front and $5k annually just...doesn't seem to make much sense. What kind of products do they sell? What is their reasoning for needing the up front capital?

The reason for up front capital is explained in a previous post, but simply, it is paying for their model/knowledge.

Any product that is sold by Walmart is a possibility. From a dozen eggs, to a washing machine. The whole business is understanding where the demand lies at any given moment.

Michael in ABQ

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Re: Walmart Seller Store -> Similar to FBA
« Reply #12 on: February 01, 2021, 08:00:33 AM »
Good morning all,

I've been approached by a drop shipping automation company with an offer for them to open and run a Walmart seller store.

Details:
1) initial investment = $35k
2) monthly fee = $500
3) profit share = 30% to them, 70% to me
4) yearly contract renewal fee = $5k
5) this company provides all back end support -> llc, product research, listing, shipping, customer service, returns, books
6) Walmart is loads harder to become a seller than Amazon, thus trimming the seller pool -> there's about 10% seller saturation compared to the available market.

I can't find a ton of resources online about the risk/potential for this opportunity, so I came to MMM! Please help me realize anything I'm missing, and let's have a healthy discussion!

I don't believe this topic already exists, but if there's another thread somewhere, please point me in that direction.

Thank you,
JB

I've never heard of any e-commerce sellers where Walmart was more than 5-10% of their total sales if they were operating on multiple channels (Amazon, eBay, Etsy, own website, etc.).

Frankly, the volume is just not there for Walmart.

So this company wants $35k (plus $11k/year) to set you up as a dropshipper on Walmart.com?

Run away. This sounds like a great deal for them, not so much for you. Margins for drop shippers are usually quite low, say 10-15%. Pretty hard to make a profit on that unless you're able to quickly ramp up to mid 6-figures in sales.

This company (and others like it with similar automation structures) handles the complete back end - website building, product research and shuffling, listing, fulfillment - total automation.

A couple of questions/points just to establish the devil's advocate POV. I'm open to more conversation based on your input.

1) Pardon my ignorance, but what is your e-com background?
2) With Walmart's platform being new, is there any credence to the idea that since that market is not saturated with sellers, there is a ton of low hanging fruit?
3) With Walmart only taking a 15% cut (where other platforms take additional fees per unit), could margin be closer to 25-30%?
4) I've been shown the back end of live stores with gross sales >$50k. Are you saying that $50k is likely only 5-10% of that business' total top line?

1. I've been selling on Amazon since 2017 using FBA. Started out as retail/online arbitrage but I've switched to a wholesale model primarily in the grocery space. I've learned from trial and error and listening to hundreds of podcasts of e-commerce sellers ranging from those just starting out to others doing 8-figures in annual revenue. I'd recommend EcomCrew, eCommerce Fuel, The Quiet Light Podcast, and The Smartest Amazon Seller.

2. Yes, Competition on Walmart will be much lower and there is almost certainly some low-hanging fruit. But sales volume will also be far lower. Over 50% of product searches online start on Amazon. The latest figures I can find show Amazon's market share is about 8-10x larger than Walmart. Also, I'm not sure how much they count in-person pickup that's ordered online. Obviously, Amazon is not able to compete as strongly for a gallon of eggs, a loaf of bread, and a package of eggs.

3. Amazon only takes 15% unless you use their fulfillment services (FBA). Actually, that's one reason I went with the grocery category as it's only an 8% commission on products priced under $15. It's hard to compete on Amazon unless you use FBA. Walmart.com is dominated by drop shippers now but as they continue to roll out Walmart Fulfillment Service (WFS) their direct competitor to FBA, I'm sure they'll prioritize those sellers like Amazon did. For buyers, they'll almost certainly pick that 2-day shipping versus the longer shipping time for most sellers using 3PLs or drop shipping.

4. I've heard dozens of eCommerce store owners talk about trying to diversify off Amazon. In most cases they report that these other channels (not counting their own store, usually using Shopify) make up a small percentage of their business. I've evaluated about a dozen eCommerce stores myself to buy and Amazon or their own website are always the dominant channel. Granted, I'm looking at companies in the $500k - $2M gross revenue range. Once you're into 7-figures of sales it makes more sense to try and diversify off Amazon. So a store doing $50k a month on Walmart doesn't necessarily mean they're selling on other channels. Like I said, drop shipping is tough on Amazon so most people using that business model have their own website or operate on platforms other than Amazon.

Archipelago

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Re: Walmart Seller Store -> Similar to FBA
« Reply #13 on: February 01, 2021, 11:34:12 AM »
This seems like a sketchy offer at best. Any company asking for $35k up front and $5k annually just...doesn't seem to make much sense. What kind of products do they sell? What is their reasoning for needing the up front capital?

The reason for up front capital is explained in a previous post, but simply, it is paying for their model/knowledge.

Any product that is sold by Walmart is a possibility. From a dozen eggs, to a washing machine. The whole business is understanding where the demand lies at any given moment.

You can interchange "paying for their model/knowledge" to paying for expensive Amazon FBA courses and guru-type advice. In the end, they're the same thing.

The bottom line is you do not need to pay or buy in to learn and run a successful e-commerce business. IMO, the proper (and perhaps the only*) way to build a successful e-commerce company is by doing and learning, not spending your capital to "buy into" something. This means learning first-hand how the platforms work, buying your own products and learning from experience. Look at it this way: let's say you start buying products only to find that some of the products flopped. Even if they do, you're out maybe a couple hundred $ or maybe even $1000. But the experience is gained and experience is invaluable. Still then, even if you lost $1000, you're still ahead $39k which is what you would've been charged for the buy in fee.

One other note - drop shipping is playing with fire on Amazon and Walmart I wouldn't expect to be much different. Amazon rules with an iron fist and wipes out sketchy/foreign sellers like whack a moles. Just be careful with that. I've never engaged in drop shipping and doubt I ever will.

*Saturated FBA markets necessitate the idea of learning and developing the business yourself, IMO. You need your own niche, not latching on to other sellers who all use the same suppliers and flood the market.

Source: Been an FBA seller for almost 4 years. Progressed the business to $250k+ in annual sales operating at a 28% profit margin. Did not buy any courses or education. Started with $500 and credit cards.

SeattleCPA

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Re: Walmart Seller Store -> Similar to FBA
« Reply #14 on: February 02, 2021, 07:38:52 AM »
This seems like a sketchy offer at best. Any company asking for $35k up front and $5k annually just...doesn't seem to make much sense. What kind of products do they sell? What is their reasoning for needing the up front capital?

+1

hodedofome

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Re: Walmart Seller Store -> Similar to FBA
« Reply #15 on: February 03, 2021, 09:17:24 AM »
I sell on Amazon and this sounds like a crappy deal. I'd run away.

BigMoneyJim

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Re: Walmart Seller Store -> Similar to FBA
« Reply #16 on: July 14, 2021, 10:54:20 PM »
I have no knowledge of the business side of this, but as a customer who has been using WalMart.com for grocery pickup for months:

The website itself was split into "walmart.com" (which I've always ignored) and "Pickup and Delivery" portals.

In recent weeks I seem to have been moved onto a beta platform which kind of annoys me but might be of huge interest to anyone wanting to sell on WalMart's platform: It doesn't really emphasize which products will be at my local store and which will be shipped to me from "walmart.com", the analog to Amazon FBA I gather.

I add stuff including stuff that I've recently picked up at the store, and when I go to checkout is when it becomes clear they intend to have some stuff ready for pickup and will ship me the rest.

I've been grumbling about this and about the fact that the beta website and the WalMart app are no longer synced. (Later found out there is a beta Walmart app that *is* synced.) But this last time I figured, "what the hell, I'll let them ship me some stuff and see what happens."

The good news as a customer is that the shipped stuff counts towards the $35 minimum required order for free pickup at store. And there was no shipping charge for what they did ship. And as you might expect, the shippable stuff tends to be nonperishable items that generally aren't "must have today" items.

So I started poking a little out of curiosity and noticed that it has similar language to Amazon with the "sold by" and "shipped from" labels which was my first hint that they may be trying to hone in on the FBA market. Or maybe they have been and I never noticed until now.

As a customer who's had Prime for years I've found no reason to go test out other general goods shippers, but WalMart has sneakily introduced me to a way or order items with free shipping along with my groceries.

If I were interested in FBA or similar fulfillment providers, I'd definitely take a look at WalMart.com is doing right about now. I have often checked to see if things are available for pickup with my grocery runs before ordering on Amazon; now I may be convinced to let WM ship it to me if they stock it.

I have no idea how many folks currently use WalMart pickup, but every location I've picked up at always has others picking up, so there may be a whole lot of "new" customers getting exposed to their fulfillment platform.

Editing to add: I'm not saying I'd trust anyone who tries to get in between you and WalMart's FBA equivalent as what OP seems to be about; I'm going to presume that if there is an FBA-alike that you should be able to apply to WalMart directly, but I don't actually know that.
« Last Edit: July 14, 2021, 10:58:35 PM by BigMoneyJim »

Joel

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Re: Walmart Seller Store -> Similar to FBA
« Reply #17 on: July 14, 2021, 11:10:37 PM »
I'm trying to understand what value this company is providing you here.

It seems you are taking on nearly 100% the risk/work.

For one, they understand the droppshipping model both on Amazon and Walmart - they have 7+ years of dropshipping experience and have currently over 70 Amazon stores and 50 Walmart stores that they run. They have an expertise that I do not.

For two, to scale as quickly as the market will apparently allow, it will take a team and more than just me wandering around blind. On the front end, this includes approval to sell on Walmart, website creation, initial product offering(s), etc. Day-to-day, this includes product research, shuffling of products that have fallen out of favor, listing, fulfillment, customer service, returns, etc.

In essence, I'd be franchising their knowledge.

If they have that many successful businesses, why are they fundraising for $35k? Chances are they have found that many other suckers.

jojoguy

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Re: Walmart Seller Store -> Similar to FBA
« Reply #18 on: September 29, 2021, 07:31:28 PM »
I came really close a couple of months back to get into this. The people I was working this out with are legit, but I got cold feet because Walmart behaves like Walmart. They suspend stores way too often for my liking, and they are too flexible on customers returning merchandise. It has worked out great for a lot of people, but it almost seems like Walmart randomly suspends or closes stores without warning. You can plead your case, but they will hold your store inactive for up to two months without paying you what you are owed.
« Last Edit: September 29, 2021, 07:37:23 PM by jojoguy »

BigMoneyJim

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Re: Walmart Seller Store -> Similar to FBA
« Reply #19 on: September 30, 2021, 11:10:05 AM »
Interesting time to see an update in this thread. I mentioned two posts ago that as a customer I was on a beta platform where they seem to be mixing their shipping service with their local pickup & delivery portal.

This week they moved this platform to the non-beta main app. So everyone using the Walmart app (and presumably everyone using the web interface) is now being exposed to WalMart's FBA-alike platform when ordering pickup or delivery from their local WalMart.

As I am changing locations frequently it's annoying the hell out of me, but it basically just shows you everything and ships the non-local stuff to you. As I have no persistent location I keep having to ensure nothing gets snuck into shipping, but for most people this is probably not terrible. And for sellers it means you have a wider range of customers seeing your offerings.

Johnny

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Re: Walmart Seller Store -> Similar to FBA
« Reply #20 on: October 07, 2021, 04:59:58 PM »
I would walk away with those contract terms, especially through a market that is questionable at this point in time.

There's Amazon for general shopping queries and Google for organic searches. Almost all the big players play in these two fields and the other channels they dabble in make up less than 10%-15% of their sales/profit.

Amazon literally owns ecommerce goods:

https://www.statista.com/statistics/788109/amazon-retail-market-share-usa/

Michael in ABQ

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Re: Walmart Seller Store -> Similar to FBA
« Reply #21 on: October 08, 2021, 08:31:38 AM »
I sell some grocery products on Amazon where I have an exclusive arrangement with the manufacturer (who happens to be my neighbor). He contacted me recently because he saw one of his products on Walmart.com and asked if I was selling it. Someone - actually a couple different sellers - had taken the photos, infographics, bullets, title, etc. from the Amazon listing I created and copied it on Walmart. Then they added 50% on to the price because it's obvious they were just going to drop ship from Amazon.

So a product that I was selling on Amazon for $11 was now on Walmart.com for $18. Meanwhile, on the manufacturer's website or in the local stores he distributes to it's $6.00-7.00. If someone paid $18 and found out they could have got it for $6-7 (or $11 with free shipping) they're probably going to be upset at the manufacturer, not the third-party seller who just copied thousands of Amazon listings to drop ship on Walmart.

Fortunately Walmart has a process to file intellectual property complaints. I created the photos and infographics on those listings and hold the copyright to those images. Within a day of submitting the form all of those drop ship listings were remove from their catalog. Presumably those sellers got dinged for an IP complaint similar to the process Amazon has. On Amazon if you get more than a few of those they'll shut down your account.



So, the lesson to be learned is that you shouldn't steal people's intellectual property and try to profit from it. Yet another reason why this company is selling a system instead of using it themselves because they know that it's just a matter of time before some of these sellers run afoul of others protecting their IP and get shut down. However, they've already made their money up front.

ChpBstrd

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Re: Walmart Seller Store -> Similar to FBA
« Reply #22 on: October 08, 2021, 08:46:37 AM »
1) What activity is left for you to perform?

2) This sounds a lot like a multilevel marketing business, minus the incentives for you to recruit more participants. If you're about to hand over $35k and $500/mo for these services, maybe you should be their competitor rather than their customer?

Archipelago

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Re: Walmart Seller Store -> Similar to FBA
« Reply #23 on: October 08, 2021, 09:26:01 AM »
I'm not on Walmart but applied for Walmart Fulfillment Services for when they take on more sellers. I sell on Amazon and eBay.