When most retail businesses consider Amazon’s eCommerce monopoly, they don’t even attempt to compete with them.
“If you can’t beat ‘em, join ‘em” is a common refrain. However, one brand has not given up the fight, steadily keeping pace and nipping at the heels of Amazon’s market share.
Over the past several years, Walmart has invested 72% of their strategic capital expenditure — over 11 billion dollars — into developing a supply chain logistics system worthy of high-volume eCommerce.
In 2020, they launched Walmart Fulfillment Services (WFS), a 3PL logistics program and a pointed answer to Amazon FBA.
In this post, you’ll learn:
- What WFS is
- How WFS benefits eCommerce sellers
- How to determine if WFS is right for your business
What is Walmart Fulfillment Services (WFS)?
Walmart Fulfillment Services (WFS) is a 3rd-party logistics (3PL) program that allows eCommerce sellers to outsource their inventory management, shipping, returns, and customer service to a dedicated fulfillment team.
Businesses pay storage and fulfillment fees for these services and a spot in Walmart’s massive online catalog. Walmart’s promotional copy summarizes it in the following way:
“The program enables sellers to spend more time focusing on increasing their sales, while having confidence that their orders will be delivered quickly and with outstanding customer support.”
How Does Walmart Fulfillment Services Work?
Walmart’s blueprint for 3PL is nothing new, but it’s a proven formula. In fact, it’s almost identical to Amazon’s model, with a few notable exceptions we cover in our Amazon FBA vs. WFS post.
eCommerce sellers prepare and send their inventory to a designated Walmart Fulfillment Center. There, Walmart stores products until a customer places an order through Walmart.com or the mobile app.
Once an order arrives, the WFS logistics team picks, packs, and ships the items on the seller’s behalf. If this is all new to you, we recommend checking out our primer on third-party logistics here.
Additionally, Walmart facilitates returns, refunds and customer service inquiries on all WFS orders.
Once a seller joins WFS, they’ll be greeted by Walmart’s Sales Central portal. Here, they’ll be prompted to fill out a specification sheet that includes all the relevant info for products they’d like to outsource.
Walmart has found that one of the keys to winning over busy eCommerce business owners is a seamless and user-friendly process. Therefore, it makes sense that the onboarding experience is so streamlined.
Next, the seller will download, fill out, and upload a purchase order (PO) spreadsheet to Walmart’s Global Supply Chain Operations System (GSCOPE).
Once approved, the seller is cleared to ship items to WFS and begin selling on Walmart.com.
Walmart’s Sales Central portal tracks data on sales, on-hand inventory, and returns. This is also where the sellers can:
- View analytics
- Edit the copy and photos on their listings
- Manage price promotions, discounts, or product updates
WFS Features and Benefits
WFS offers the following benefits to eCommerce sellers:
Guaranteed two-day delivery
Much like Starbucks and gas stations, it feels like you can’t throw a rock without hitting a Walmart store. Over the past 60 years, Walmart has developed a staggering empire of physical locations.
In fact, 90% of the country is within 15 miles of a Walmart store. The same distribution centers that serve these locations double as WFS distribution centers.
Thus, shipping to anywhere in the continental United States within two days is no problem.
Outsourced logistics and customer service
Many eCommerce businesses are more than happy to outsource the headaches of trying to fulfill, store, pick, and pack products in-house. In addition to shouldering this burden, Walmart will also process all returns, refunds, and customer service inquiries for products in the fulfillment network.
Small business owners already wear several hats. It’s almost always a good investment to outsource the grunt work so you can focus on high-level growth decisions.
Simple pricing structure
The WFS pricing structure is refreshingly straightforward. Pricing is fixed, simple, and clearly visible to all prospective WFS clients.
This enables business owners to do some number-crunching with their current sales and make an informed decision on whether WFS is a good investment.
Walmart’s Seller Center portal includes everything businesses need to track on-hand inventory, manage listings, and even see helpful analytics reports.
WFS Seller Fees
WFS sellers can expect to pay two different types of fees: storage fees and fulfillment fees.
Firstly, WFS customers pay for Walmart’s fulfillment centers to store their product. These fees are based on:
- The volume of the product (length x width x height)
- The length of time the seller will store the product with WFS
The volume is easy to calculate with a simple tape measure. Currently, the fees for storage time are broken up in two categories: products stored fewer than 365 days, and more than 365 days.
Here are the costs for products stored for fewer than 12 months:
- January through September: $0.75/cubic foot per month
- October, November, December (holiday season): $0.75/cubic foot per month for items stored 30 days or less and an additional $1.50 per cubic foot for items stored longer than 30 days.
Products that WFS stores for more than 12 months will incur a $7.50/cubic foot per month storage fee.
Sellers also pay for Walmart’s labor and resources in actually fulfilling orders — getting the products off the shelves, into boxes, labeled, scanned, and out the door to your customers.
Like most things in the world of logistics, fees are based on product weight:
|Less than or equal to 1 pound
|Less than or equal to 2 pounds
|Less than or equal to 3 pounds
|Less than or equal to 4 pounds
|Heavier than 4 pounds
|$5.75 + $0.40/each additional pound
|Heavier than 20 pounds
|Add $3.00 to the above fee
How are returns handled?
Sellers can initiate returns on WFS items via the Walmart mobile app or Walmart.com. Thanks to Walmart’s Free and Easy Returns system, customers will have two options for most items:
- Return the item to a local Walmart store
- Print a label and drop off at a USPS or FedEx locations
Once the Walmart fulfillment center receives the item, they handle the restocking and storage. The return is then recorded in the Seller Center portal.
Is Walmart Fulfillment Services Right for Me?
So how do you know if WFS (or any 3PL) is right for your business? Take a look at that fee structure once more. Did you notice the massive jump in price for storing products longer than 12 months?
That means you’ll want to consider the following questions to make sure WFS will produce a positive ROI:
- Can you move inventory quickly enough to avoid those post-year storage fees, while also avoiding stock-outs?
- Do you have a proven customer base that you know will purchase your product?
- Do you have slow-moving or seasonal products? If so, are you willing to incur the added fees for storage during the holiday season?
A brief review of these questions should quickly reveal whether or not WFS is right for you.
Also of note are the following other rules for using WFS:
- Products must ship to Walmart fulfillment centers from within the United States
- No perishable or regulated products are allowed
- Maximum product weight is 30 pounds
- Maximum product dimensions are 25″x20″x14″
Do my customers really shop at Walmart?
Let’s address the elephant in the room. Some eCommerce businesses may squirm a bit at being associated with Walmart. It’s no secret that their “everyday low prices” mantra hasn’t exactly made them a luxury retail experience.
But Walmart is working hard to improve their image. They’ve shifted their focus to a younger, urban, and more affluent demographic.
They’ve even begun to sell luxury items. Walmart.com now features Louis Vuitton handbags and Rolex watches. Imagine that — buying a Rolex at Walmart.
How Do I Join WFS?
According to the Walmart WFS site, the process for joining is very straightforward and can be done in under an hour.
The steps are as follows:
- Set up your account in the WFS portal
- Convert your products “fulfilled by Walmart” listings
- Fill out a PO for the products you’d like to outsource
- Prepare and send inventory to the Walmart fulfillment centers
Is it Better Than FBA?
Now that you know the basics of Walmart WFS, the million-dollar question is, “How does it compare to Amazon FBA?” Is it possible that anything can come close to competing with the world’s biggest online marketplace? Can sellers use both, or must they pick just one?
We answer all these questions and more in our next post on the topic: Walmart Fulfillment Services vs. Amazon FBA. Read it here.