Walmart.com bullish on growth of Marketplace

Fri Sep 25, 2009 5:30pm IST

Stocks

   

(Repeats story sent Thursday, Sept. 24)

* Marketplace lets it quickly expand online assortment

* Sees adding select large retailers as partners

By Nicole Maestri

SAN FRANCISCO, Sept 24 (Reuters) - Wal-Mart Stores Inc's (WMT.N) online unit is bullish on the prospects for Marketplace, a service it recently launched to offer shoppers a deeper selection of products than it would ever stock on its own, its chief marketing officer said in an interview.

Late last month, Walmart.com unveiled "Walmart Marketplace," and said it would allow select retailers, like eBags and CSN Stores, to sell merchandise on its website.

The program has allowed the retailer to quickly add one million items to its online assortment and appeal to shoppers who may want very specific items that Walmart.com would not typically carry, said Kerry Cooper, Walmart.com's chief marketing officer.

For instance, she said that by partnering with CSN, Walmart.com has added about 20,000 lights to its website.

"We probably had 200 lights that are the great basics of table lamps and lighting," she said of Walmart.com's own selection. "But if you're looking for that special blue pendant lamp for your kitchen, it's hard for us to, frankly, invest the resources against building out that strong lighting assortment."

In launching Marketplace, Walmart.com is following a strategy used by Amazon.com (AMZN.O) and eBay Inc (EBAY.O), which allow outside retailers to sell items on their sites.

J.P. Morgan analyst Imran Khan said diligence is required to perfect the strategy.

"A significant portion of Amazon's success in growing its third-party business has been driven by a focus on the customer experience," Khan stated in a research report.

"While maintaining a positive experience is challenging for all online sellers, we think a third-party business -- where a smaller seller is often piggybacking on the reputation of a larger one -- is especially fraught with complications."

Purchases from a Walmart Marketplace retailer are managed through Walmart.com's checkout process. But the Walmart Marketplace retailer manages the rest of the order, including shipping, customer service, and returns.

Cooper said customers can post reviews on its website of its retail partners, allowing Walmart.com to track how satisfied shoppers are with the service they receive and the merchandise they buy from these outside retailers.

She also said Walmart.com shied away from using small online retailers that might not be able to handle its volume.

"We were looking for large e-tailers that have the capacity from a distribution and a customer service perspective to make sure that they could match our scale," she said. "We focused very much on how many calls a day can you handle? How many packages a day can you handle?"

BULLISH ON GROWTH

According to Internet Retailer, Walmart.com ranked as the 13th-largest U.S. online seller in 2008, with an estimated $1.74 billion in sales. Amazon.com ranked as the No. 1 online seller, with $19.17 billion in sales.

EBay is not a retailer and stocks no inventory. Instead it connects sellers to buyers, and eBay has said that model ensures it does not compete with the very same retailers that use its site to sell their goods.

At the moment, Cooper said, Walmart.com and its retail partners do not offer the exact same items, eliminating price competition between the two.

"The areas that we've been building out have been in areas that we didn't have a really deep assortment," she said.

Walmart.com declined to discuss the business model for Marketplace or say whether it is pocketing a portion of the sales that outside retailers ring up on its site.

But Cooper said that since Marketplace launched, a number of retailers have voiced an interest in partnering with it.

"We're really bullish on how big this program can grow with a select number of partners," she said.

(Editing by Gary Hill)

((nicole.maestri@thomsonreuters.com, +1 415 677-3975; Reuters Messaging: nicole.maestri.reuters.com@reuters.net;)) Keywords: WALMART/

(C) Reuters 2009. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nN24477311

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared