How the pandemic helped Walmart battle Amazon Marketplace for sellers

CHICAGO (Reuters) – Between 2009 and 2014, Walmart’s Marketplace business, where outside merchants hawk everything from baby blankets to power tools, counted no more than six sellers, and was described by one expert as “in limbo.”

But what was treated as an afterthought for years has emerged as an important leg in the world’s biggest retailer’s long-term strategy to take on Amazon Inc, which it is battling for advertising and ecommerce dollars.

Walmart Marketplace grew to an estimated 70,000 sellers in 2020, fueled by a surge in online shopping due to the Covid-19 pandemic and a series of investments in technology and vendor relationships reported here for the first time.

That is expected to rise 146% by the end of 2022, according to projections by data firm Marketplace Pulse that have not yet been published.

The rapid growth is starting to stress the system, some merchants said, a growing number of whom worry that if the pace picks up, Walmart risks damaging its reputation as a haven for quality sellers. Reuters spoke with vendors from Walmart.com and Amazon, analytics companies that help merchants sell on both marketplaces, industry experts, consultants and executives.

“A year or two ago, every brand on Walmart.com would be trustworthy but now it’s getting very similar to Amazon and that’s a huge risk,” said Cal Chan, who sells supplements and skincare products on both Walmart and Amazon. “Amazon let everyone under the sun in – that helped them grow, but now they’re trying to clean up the riff-raff and it’s very hard to close Pandora’s Box.”

Amazon disputed the characterization by merchants and said it has a thorough vetting process designed to help honest sellers set up accounts quickly. The company employs more than 8,000 people to remove counterfeit products, false listings and identify intellectual property theft. In 2019, Amazon stopped over 2.5 million suspected bad actors from opening Amazon selling accounts, and blocked more than 6 billion suspected bad listings, an Amazon spokesman said in an email.

Walmart has distinguished itself as a safer, less crowded marketplace than rivals like Amazon, making it easier for merchants to stand out and sell products. But it is now expected to see a surge of new vendors after it said last month it will open its online store to international merchants, which are less accountable to U.S. consumer protection laws. Walmart has already added over 130 new Chinese sellers, Marketplace Pulse said.

(Graphic: More Chinese merchants join Walmart Marketplace – )

Reuters Graphic

The retailer said it is actively courting foreign vendors including from ecommerce giant Flipkart, which is bigger than Amazon in India and in which Walmart holds a 77% stake. It vowed to maintain quality control.

“We do not plan to lower our bar or change our vetting standards, our monitoring or management of sellers,” Jeff Clementz, Vice President of Walmart Marketplace, said. “We are aiming to attract the best from around the world.”

Walmart said its sourcing teams in other countries have begun vetting potential sellers by their reviews, licensing permissions, reputations and items.

The business of providing a storefront for outside sellers is, as one analyst called it, a “secret weapon” for Amazon and a major growth engine that has caught the attention of Target and big tech rivals Google and Facebook, which are eager to expand similar businesses.

Sales generated by Amazon’s third-party vendors totaled $189 billion last year in the United States, or nearly 60% of the company’s total U.S. retail ecommerce sales, according to eMarketer data from Insider Intelligence.

Amazon, which declined to verify these numbers, dwarfs Walmart’s marketplace and is estimated to have more than 3 million sellers on its U.S. third-party store at the end of 2022, and 7.5 million globally, according to Marketplace Pulse.

But the lure of Walmart’s over 5,000 stores and clubs – more important than ever as pick-up and delivery hubs take off due to the pandemic – is a big attraction for many vendors.

“Walmart has something Amazon can’t match: brick-and-mortar stores. If you do well on Walmart.com, there’s potential you can get into a regular Walmart,” said Bradley Sutton, who works at third-party seller consulting firm Helium 10.

“It’s like the Holy Grail for vendors. That’s way bigger than Amazon.”

(Graphic: U.S. third-party merchants’ sales surge – )

Reuters Graphic

‘STRATEGIC PRIORITY’

Marketplace’s elevation to what Clementz in June called a “strategic priority” tracks Walmart’s reinvention from digital also-ran to the No. 2 spot behind Amazon.

The transformation began with the 2016 addition of serial entrepreneur Marc Lore to lead Walmart’s U.S. ecommerce business. That year, it agreed to spend $3.3 billion on Lore’s less than three-year-old Jet.com.

“This company, over time, is going to look like more of an ecommerce company,” Walmart Chief Executive Doug McMillon said at the time.

By early October 2016, 17 days after joining Walmart, Lore laid out a strategy that included a plan to not only lure hipper, urban, millennial shoppers to Jet.com and Walmart.com, but also to make both sites attractive to smaller merchants.

Lore eyed an opportunity to lure sellers of “more premium-type brands that don’t typically want to sell on marketplaces” of rivals.

(Graphic: Walmart Marketplace vendors seen rising sharply – )

Reuters Graphic

Some vendors described a rigorous process to get on Walmart Marketplace that can take weeks and includes submitting bank account information, sales records and social security details.

When Clementz, previously COO of Walmart.com, was put in charge of Marketplace, the first order of business for the veteran of PayPal and Intel was to improve “glitchy,” complicated software for listing products and simplify the process of connecting analytics and delivery firms for vendors, said sellers.

Walmart spruced up its advertising platform, rolled out software to protect sellers’ intellectual property, launched a delivery and logistics service, and introduced its version of Amazon Prime, called Walmart+, a membership program that “100% boosts sales,” according to fitness equipment merchant Michael Lebhar.

Hoping to address complaints from sellers, Walmart hired “strategic account managers” who cater to top vendors. On Tuesday, Walmart emailed vendors to apply for “a chance to win the opportunity to sell” U.S.-made products in stores.

To sweeten the pot, Walmart has also undercut Amazon on the commission it takes on sales of some items. Walmart takes a 3%-20% cut of items sold versus Amazon’s rate of 6%-45%, depending on the type of product.

The month Walmart opened its market to international sellers, new vendors were told they would not have to pay a commission at all for a limited time.

But concessions like this generate concern among some sellers.

“This is alarming and will end up with Walmart having similar counterfeit or quality issues like Amazon is having,” said Ryan Ebel, 30, a third-party seller from Las Vegas.

Lore, who left the company at the end of January and remains an advisor, said he is “not worried” about Walmart’s expansion to foreign sellers.

“The magic is finding that white line, the right balance between adding more assortment but not going down a path of letting anybody on the platform,” he said.

Reporting by Richa Naidu in Chicago; Editing by Kenneth Li and Nick Zieminski

Amazon drivers urinating in bottles: Apology to Rep – Pocan

(Reuters) – Amazon.com Inc has apologized to U.S. Representative Mark Pocan, admitting to scoring an “own goal” in its initial denial of his suggestion that its drivers were sometimes forced to urinate in bottles during their delivery rounds.

“We know that drivers can and do have trouble finding restrooms because of traffic or sometimes rural routes, and this has been especially the case during Covid when many public restrooms have been closed,” the company said in a blog post bit.ly/2PnoLKr.

Its admission came a week after the Democrat criticised Amazon’s working conditions, saying in a tweet: “Paying workers $15/hr doesn’t make you a ‘progressive workplace’ when you union-bust & make workers urinate in water bottles.”

Amazon initially issued a denial, saying in a tweet: “You don’t really believe the peeing in bottles thing, do you? If that were true, nobody would work for us.” But it subsequently walked back those comments.

“This was an own goal, we’re unhappy about it, and we owe an apology to Representative Pocan,” Amazon said in its blog post, adding that its previous response only referred to staff at its warehouses or fulfillment centers.

The company said the issue was industry-wide and it would look for solutions, without specifying what these might be.

Amazon’s apology comes at a time when workers at an Alabama warehouse are waiting for a vote count that could result in the online retailer’s first unionized facility in the United States and mark a watershed moment for organized labor.

Amazon has long discouraged attempts among its more than 800,000 U.S. employees to organize. Allegations by many workers of a grueling or unsafe workplace have turned unionizing the company into a key goal for the U.S. labor movement.

Boohoo to probe price differences for same clothing

Online retailer Boohoo is investigating why the same items of clothing were sold for higher prices across a number of its fashion labels.

The BBC discovered that Dorothy Perkins and Coast, which are both owned by Boohoo, sold exactly the same coat but it cost £34 more at Coast. 

There are price disparities across a range of Boohoo brands, which also include Oasis and Warehouse.

Boohoo said the “miscommunication was not intentional”.

“All Boohoo group brands work independently, and so this miscommunication was not intentional as teams are not privy to what’s being bought and sold across the other group brands,” a spokeswoman for Boohoo said.

“Our internal investigation continues and we will be re-pricing all the crossover stock to be aligned.”

The price disparity was revealed after reporter Jennifer Meierhans bought a coat from Coast – as a friend happened to buy the exact same coat from Dorothy Perkins. 

The labels
image captionThe care label in the coat sold by Coast appears to have had the branding cut off

The Dorothy Perkins branding appeared to have been cut from the care label in the coat sold by Coast.

Boohoo said the coat was first sold by Coast and has now been re-priced at £17 on both brands’ websites.

‘Brand identity’

Catherine Erdly, founder of The Resilient Retail Club consultancy, and a former senior merchandiser at Coast, said: “If all Boohoo are going to do is buy the same stuff and slap different prices on it then it’s destroying that brand’s identity.”

She said that while each brand will have its own “architecture” for setting prices, it is likely Coast and Dorothy Perkins had benefited from some kind of trading “opportunity”, where a supplier had stock and both companies needed coats.

“But if they’re going to do things like that, they didn’t do it in a clever way,” Ms Erdly said. “The customer will sense that it’s just trying to get as much as possible out of them.”

She added: “There’s no way you could sell a genuine Coast coat at £17 without losing money because it costs more than that to make.”

There are a number of instances where the same item of clothing is priced differently across Boohoo’s brands.

A long “luxe” padded coat in the colour mushroom was originally sold for £89 at Oasisand £65 at Dorothy Perkins.

Coat for sale on Oasis website
Coat for sale on Dorothy Perkins website

The same coat in khaki was in the sale for £30 in Warehouse and £66.75 in Coast until the BBC brought the matter to Boohoo’s attention.

They are now both priced at £18. 

The online retailer operates a number of different brands after buying up businesses when their owners fell into administration.

Boohoo bought Coast’s online business in 2019along with sister brand Karen Millen. While in February, it acquired Dorothy Perkins, together with Wallis and Burton, from failed retail group Arcadia for £25.2m

Boohoo said: “Stock of the item in question was purchased and live on site by Coast prior to The Boohoo Group’s acquisition of the Dorothy Perkins brand.”

By Jennifer Meierhans
BBC News

H&M confirms commitment to China after backlash

STOCKHOLM (Reuters) – H&M said on Wednesday its commitment to China remained strong and it was dedicated to regaining shoppers’ and partners’ trust following a recent backlash in the country against comments it made in 2020 on China’s Xinjiang region.

“We are dedicated to regaining the trust and confidence of our customers, colleagues, and business partners in China,” the Swedish fashion retailer said in a statement on its website.

“By working together with stakeholders and partners, we believe we can take steps in our joint efforts to develop the fashion industry, as well as serve our customers and act in a respectful way,” it said.

H&M swings to loss in first quarter

H&M reported a quarterly loss on Wednesday and said that it was dedicated to regaining shoppers’ and partners’ trust in China following the recent backlash in the country after comments it made last year on the Xinjiang region.

The world’s second-biggest fashion retailer is under fire from consumers and officials in China after an H&M statement from 2020 began circulating in social media expressing concern over reports of forced labour in Xinjiang, saying it would no longer source cotton from the region.

It said on its website that its commitment to China remained strong and it was dedicated to regaining the trust and confidence of customers, colleagues, and business partners in China.

H&M reported a pretax loss for the December-February period, its fiscal first quarter, of 1.39 billion crowns ($159 million) against a year-earlier profit of 2.50 billion. Analysts polled by Refinitiv had on average forecast a 1.41 billion crown loss.

Sales in March 1-28 were up 55% measured in local currencies.

H&M said it would not propose a dividend at its annual general meeting but saw good prospects of one in the second half of the year.

($1 = 8.7416 Swedish crowns)

UK retail sales rise 2.1% in February

Retail sales rose 2.1% in February, recovering some ground from a steep fall in January.

The Office for National Statistics (ONS) said sales were still down by 3.7% on a year earlier, before the impact of the coronavirus pandemic.

Food and department stores benefitted from essential retailers remaining open, it said, though clothing shops continued to struggle.

Online sales continued to grow and hit a record 36.1% of all UK sales.

Jonathan Athow, ONS deputy national statistician for economic statistics said that despite national restrictions, “retail sales partially recovered from the hit they took in January” when they fell by 8.2%.

He said mixed stores, which were allowed to stay open as they sold some foodstuffs, had benefitted, with budget-end department stores increasing sales. 

Mr Athow said anecdotal evidence from retailers suggested people had been spending on home improvements and on outdoor furniture, as people prepared for lockdown easing, which will allow gatherings in gardens again.

John Lewis: Call for ‘devastating’ Aberdeen closure rethink

The retailer John Lewis is being urged to reconsider its decision not to reopen its branch in Aberdeen.

The department store – which opened in 1989 and employs 265 people – is among eight in the UK closing down.

Cross-party politicians and business leaders have called for more talks, and one online petition already has more than 12,000 signatures calling for the store to be saved.

John Lewis said it would “continue dialogue” about the Aberdeen decision.

The company said the eight shops were “financially challenged prior to the pandemic”.

Earlier this month, the retailer warned it would be making more store closures after the impact of the pandemic led it to report a hefty annual loss.

Russell Borthwick, chief executive of Aberdeen and Grampian Chamber of Commerce, said there was determination to save the store from the axe.

He said of the closure announcement: “This is sad news, not just for the 265 that worked at John Lewis but for Aberdeen city centre and the north east of Scotland.

“Aberdeen is Scotland’s third city. There is still an appetite for the real life bricks and mortar shopping experience and our offer to John Lewis is that they should engage with the Aberdeen economic partnership to discuss whether there may be ways found to enable them to reconsider this decision.

“Decisions being taken now could see our town and city centres, places that should be the beating heart of our communities, become urban deserts of the future. We must not allow this to happen.”

‘Loss felt widely’

Adrian Watson, chief executive of business-led initiative Aberdeen Inspired, said it was “devastating” news for the city.

“John Lewis is an iconic, trusted and respected retail brand which employs 265 local people, its loss will be felt widely by both staff and the people of the north east”, he said.

“Shoppers are attracted to the city by the presence of John Lewis which, in turn, supports other city centre businesses.”

After the initial announcement on Wednesday, John Lewis said in a later statement: “We’ve been in contact with the chamber of commerce in Aberdeen and relevant local politicians about the proposal to close and we will continue dialogue with them.”

More than 30 stores will start reopening from 12 April, subject to government guidance, with the exception of Glasgow, which will reopen from 26 April, and Edinburgh, which will reopen on 14 May.

After H&M, more foreign retail brands under fire in China in Xinjiang fallout

BEIJING (Reuters) – More foreign retail brands came under criticism from social media in China on Thursday, in the wake of Beijing’s propaganda offensive against H&M over the Swedish company’s previously aired concerns on Xinjiang.

Earlier this week, China denied allegations of human rights abuses by its officials in the western region of Xinjiang after the European Union, United States, Britain and Canada imposed sanctions on the officials on Monday. Beijing hit back with retaliatory sanctions on European lawmakers, academics and institutions.

Chinese state media singled out H&M on Wednesday for a statement that was reported by media last year in which the Swedish retailer said it was deeply concerned by reports of accusations of forced labour in Xinjiang, and that it did not source products from the Chinese region. It was not clear why the H&M statement was back in the public eye.

A social media frenzy ignited by a government call to stop foreign brands from tainting China’s name sent internet users looking for other previously issued statements by foreign retailers on Xinjiang.

Nike Inc, which said earlier in an undated statement it was “concerned” about reports of forced labour, came under fire. And so did German sportswear firm Adidas.

Many internet users said they will stop buying Nike and will support local brands such as Li Ning and Anta, while others bluntly told Adidas to leave China.

Shares of Anta Sports Products Ltd jumped over 6% in Hong Kong on Thursday after issuing a statement saying it will continue to use cotton from Xinjiang. Li Ning Co’s shares surged over 7%.

Internet users also targeted the Better Cotton Initiative (BCI), a global group that promotes sustainable cotton production which had said in October it was suspending its approval of cotton sourced from Xinjiang for the 2020-2021 season, citing concerns over human rights.

“If you boycott Xinjiang cotton, we’ll boycott you. Either Adidas quits BCI, or get out of China,” one internet user wrote.

The BCI’s members include Nike, Adidas and Japan’s Fast Retailing.

Nike, Adidas and the BCI did not immediately respond to requests for comment.

In response to the furore, H&M said on Wednesday it respected Chinese consumers and that it was committed to long-term investment and development in China.

But by Thursday morning, H&M did not exist on some Chinese store locator maps. Searches for H&M stores on Baidu Maps yielded no results. The Swedish clothing retailer’s official store on Alibaba’s Tmall, an e-commerce platform, was inaccessible.

A department store in Urumqi, capital of Xinjiang, said on its website it had shut an H&M section and demanded an apology from the company for “spreading rumours” and harming the interests of the region and China. (mp.weixin.qq.com)

Overnight, People’s Daily, the main newspaper of the Communist Party, rolled out a social media campaign in support of cotton sourced from Xinjiang. The graphic “I support Xinjiang cotton” posted by the newspaper on the Twitter-like microblog Weibo has since attracted about 2.2 million likes.

John Lewis announces eight store closures

John Lewis has said it will not reopen eight of its stores once lockdown eases, putting 1,465 jobs at risk.

John Lewis store Tunbridge Wells
image captionThe Tunbridge Wells store, on the list to stay closed permanently

The retail giant said some locations could not sustain a large store.

The closures include four “At Home” shops in Ashford and Tunbridge Wells in Kent, in Basingstoke, Hampshire, and in Chester, Cheshire.

Department stores in Aberdeen, in Peterborough, Cambridgeshire and in Sheffield and York in Yorkshire, are also closing.

John Lewis that the eight shops were “financially challenged prior to the pandemic”. 

Earlier this month, the retailer warned it would be making more store closures after the impact of the pandemic led it to report a hefty annual loss.

The latest move comes on top of the closure of eight stores that John Lewis announced last year.

Click-and-collect

The company said it planned to create more places to shop for John Lewis products across the UK. It suggested it would not entirely move out of areas where the main store was closing.

“In areas where we propose not to reopen stores, we will look at the right combination of options for that location to ensure we remain convenient for our customers, so they can continue to access John Lewis products and services.”

It added it would invest in improving click-and-collect in its Waitrose stores and offer more local collection points through third parties. It also will continue experimenting with John Lewis shopping areas in Waitrose stores, as well as trying out smaller, local neighbourhood shops.

John Lewis said 34 stores would start reopening from 12 April, subject to government guidance, with the exception of Glasgow, which will reopen from 26 April, and Edinburgh, which will reopen on 14 May. 

Woman carrying John Lewis shopping bag.
image captionJohn Lewis expects 60-70% of its sales to take place online in future

The company said it would “enter into consultation with the 1,465 affected partners” about the proposals.

Should it proceed, it said it would make “every effort” to find alternative roles for as many as possible.

John Lewis has a unique structure in that its staff are also partners in the business, and receive a share in the profits in good years. 

It said the stores that were closing were in locations where it did not have enough customers. “Given the significant shift to online shopping in recent years – and our belief that this trend will not materially reverse – we do not think the performance of these eight stores can be substantially improved.

“We expect 60% to 70% of John Lewis sales to be made online in the future. Nearly 50% of our customers now use a combination of both store and online when making a purchase.” 

2px presentational grey line
Analysis box by Emma Simpson, business correspondent

John Lewis has now axed around a third of its stores in less than a year. It wasn’t all that long ago that the chain was opening stores. In 2007, it had 26 when it decided to embark on an aggressive expansion plan, almost doubling the number of stores in a decade, even though internet sales were starting to climb.

This is now a painful correction. Of the 23 department stores it went on to open, only 12 will still be trading when lockdown ends. Its Birmingham store was the most high-profile casualty last year. The company is also reining back on its smaller “John Lewis at home” stores. Only four of the original 12 remain. But it’s also losing some older main department stores in regional cities, which will have a huge impact.

John Lewis has been a presence in Sheffield for some 80 years, for instance. The business insists that as the High Street changes, it has to change with it, reflecting changing shopping habits. It expects 70% of its sales to be online by 2025.

John Lewis is betting on fewer bigger “destination” shops as well as relying far less on retail in the future for its overall profits – from expanding financial services to using excess space for housing.

Some bold decisions are being made across retail given the turmoil over the past 12 months, but the question is whether John Lewis can pull off its turnaround plan without losing its competitive edge.

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Despite the shift to online, John Lewis said that stores were essential to its business, as people still wanted physical proximity: “They provide a sensory experience that online cannot, supported by the expertise of our partners.”

The pandemic caused the chain’s first ever annual loss of £517m for the year to January, against profits of £146m the previous year. At the time of that announcement earlier this month, the firm said it would reshape its business in response to the change in customer shopping habits.

Much of that loss was due to a write down in the value of its stores because of the shift to online shopping, as well as restructuring and redundancy costs.

Asda CEO Burnley to step down: Sky News

Reuters – Asda Chief Executive Officer Roger Burnley is set to step down weeks after the British supermarket group was acquired in a 6.8 billion pound ($9.47 billion) deal, Sky News reported bit.ly/2P4bMN1 on Thursday, citing retail industry sources.

Burnley is expected to remain in the role until a successor is appointed, the report said, adding that an announcement about his departure could come as soon as Friday.

Most recently Britain’s Issa brothers and private equity firm TDR Capital bought a majority stake in Asda from Walmart Inc.

The transaction is still subject to regulatory approval. An April 20 deadline has been set by the Competition and Markets Authority for a ruling.

The new owners are expected to commence the process of identifying prospective successors to Burnley in the coming weeks, according to the Sky News report.

Last month, Asda said 5,000 jobs were at risk from a restructuring announced a week after the acquisition.

Asda did not immediately respond to a Reuters request for comment.

($1 = 0.7180 pounds)

Walmart Canada to invest over C$500 million on store upgrades

(Reuters) – Walmart Canada said on Monday it plans to invest more than C$500 million ($400.06 million) this year to refurbish its stores.

It would be the largest yearly investment in store upgrades, with more than 60% of outlets benefiting from the plan, the Canadian arm of the world’s largest retailer said.

In July, Walmart Canada announced plans to spend C$3.5 billion over the next five years to strengthen its e-commerce business and renovate stores.

Walmart Canada said on Monday the plan was expected to create more than 2,000 construction jobs in the country.

($1 = 1.2498 Canadian dollars)