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Walmart for Business Shows B2B Aspirations and Google Builds a Retail Marketplace

Walmart for Business Shows B2B Aspirations and Google Builds a Retail Marketplace

July 2, 2019

Walmart.com has grown very quickly since the company acquired Jet.com in 2014. One of the outcomes was that Marc Lore, Jet.com’s CEO and co-founder, became the CEO of Walmart eCommerce U.S. Several other Jet executives remained with Walmart and have generated a great deal of growth for the world’s largest retailer – including a 37% jump in online sales in the first quarter of its current fiscal year. Much of this is coming from Walmart’s third-party marketplace. Just like Amazon, Walmart allows many other companies to sell on its website. 

You can also find a section on the company’s website called, “Walmart for Business” where it lists about a dozen categories such as Janitorial & Sanitation Supplies, Breakroom Supplies, Business Furniture, Shipping & Moving, Food Service Equipment and more. The company has also added many industrial products. For example, you can buy a $15,000 South Bend lathe offered by tool distributor Grizzly Industrial. Interestingly, Grainger’s Zoro division sells on Walmart.com, too. 

I recently talked to a senior executive at a major manufacturer of industrial products that only sells through distributors. He told me that his company just signed a deal to offer its products through Walmart.com, which informed him that it was about to make a major push into B2B distribution.

The executive with whom I spoke said that dealing with Walmart was much more pleasant than selling through Amazon. Not only were the buyers they spoke to both experienced and knowledgeable, but also the fees are much lower – 8% instead of the baseline 12% that Amazon charges them. 

It’s certainly a more serious threat to distributors if Walmart is signing up industrial manufacturers rather than simply opening its platform to third-party sellers. By carrying these products directly, the company isn’t just serving distributors – it’s competing with them, like Amazon Business. That’s an aggressive move into the B2B market. 

Does this mean Walmart will go head-to-head against Amazon Business or is this just a case of a big company dabbling in a market as a test? 

Walmart for Business is Not Yet Ready for Business

MDM has made two attempts to reach someone at Walmart’s media relations department and we have not yet received a response. Perhaps the company hasn’t gotten to our inquiries yet – or maybe Walmart wants to keep this initiative under wraps for now. 

In any case, Walmart for Business, as currently configured, does not offer a competitive value proposition versus Amazon Business or distributors. First, Walmart for Business is not a separate marketplace; it’s a section on Walmart.com and it’s not promoted very well. Second, the only thing you can currently buy as a “Corporate Account” are Walmart gift cards. Open account terms are a fundamental requirement to operate successfully in B2B and Walmart doesn’t offer that – yet. 

Walmart Will Enter the B2B Market Because Amazon Already Did

As far as I can tell, Walmart has dramatically simplified its strategic planning process over the last decade by simply copying whatever Amazon does. Here are some examples:

Walmart Business Graph

Note that, with the odd exception of Walmart’s decision to offer ebooks in 2018, the company is following Amazon’s lead more quickly than previously. Amazon began aggressively experimenting with B2B in 2012 when it founded AmazonSupply and replaced it with Amazon Business three years later. That means Walmart has waited for seven years to copy its largest rival in launching a dedicated B2B platform.

Based on these developments, my prediction is that Walmart will use its enormous capital, massive logistics platform and much-improved digital talent to pursue B2B distribution with a competitive and distinct marketplace. 

What Does This Mean for Distributors?

I present to many distribution organizations and companies and the subject I speak on most of the time is, “The Commoditization of Distribution.” The synopsis is that assortment, availability and delivery are no longer differentiating components of a distributor’s value proposition. Distributors still must offer many products and make them quickly available to customers, but pretty soon, just about everything you sell will be available online from other sources who can put them in your customers’ hands as fast – or faster – than you can. 

Distributors need to adapt quickly and that’s going to require a focus on innovation, particularly in services and technology. But most distributors don’t have processes to develop, price and sell services. Do you have separate, priced SKUs for yours or are they lumped into product prices or perhaps a single, generic SKU?

Second, digital disruptors are going to offer voice and image recognition ordering to buyers as customers rely less on keyboards and instead utilize faster and more accurate order methods (see my recent column, The Death of the Keyboard in the Online Order ). This is a problem in retail as well and explains why Walmart has partnered with Google to enable voice ordering through the latter’s smart speakers. 

But Google appears to have its own marketplace plans – at least in retail. Michael Wu, PROS’ Chief AI strategist, recently pointed out that if you visit Google Express, you’ll find a large marketplace supported by Target, Home Depot, BuilderDepot and many other retailers and distributors who appear to be banding together to fight Amazon’s and Walmart’s fast-growing marketplaces. Once again, you’ll find many products from Grainger’s subsidiary, Zoro. 

Google’s interest in building marketplaces could be a very intriguing development for distributors. Unlike Walmart and Amazon, Google appears to have no interest in becoming its own retail merchant or wholesaler. Could this be the platform distributors could join to create an independent, third-party marketplace to battle the rise of B2B marketplaces from Amazon and Walmart?

I’ll write more about Google and the possibilities for distributors soon. But for now, I suggest you bookmark Walmart for Business and keep an eye on Amazon Business. They’re coming after your business and you need to stay current as some of the world’s largest companies continue to disrupt our industry. 

I invite you to comment below or email me at ian@mdm.com. We always seek input from distributors and their partners and will talk to you on background if you’d like to keep our conversations confidential. 

 

 

 

© 2019 Gale Media, Inc.

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