Yesterday at its “Let’s Grow! 2024 Walmart Marketplace Seller Summit,” Walmart announced new multichannel logistics and cross-border fulfillment services for sellers.
Yes, Walmart, the mega-retailer, is encroaching further into the third-party logistics (3PL) space, just like Amazon has been doing for years.
Here are some details from the press release:
Walmart continues to leverage its next-generation supply chain and advanced technology to simplify and streamline fulfillment for sellers at some of the lowest rates in the industry. Walmart Fulfillment Services (WFS) is announcing new ways for sellers to quickly move merchandise across markets and use Walmart to fulfill any eCommerce retail order.
Multichannel Logistics: Walmart’s new Multichannel Solutions program allows sellers to use WFS to fulfill orders from any eCommerce site via Walmart’s supply chain. Walmart will fulfill orders and manage returns while offering plain, unbranded packaging, fast, reliable shipping and competitive rates averaging 15% lower than the competition. Walmart is launching the program on Sept. 10, in time for Holiday deliveries.
Cross Border Fulfillment: Through its new Walmart Cross Border import service for full-container-load shipments, WFS can now handle transportation of inbound goods from ports of origin in Asia directly to WFS facilities across the U.S.
Walmart is also opening its carrier network to sellers for full truckload shipments. Sellers using the Walmart Preferred Carrier program through WFS can now choose to ship a few items or an entire truckload at special rates through carriers vetted by Walmart.
This continues a trend I wrote about almost two years ago in “Retailers Offering 3PL Services: What Is Going On?” I encourage you to read the post for the full answer, but here’s the quick one:
First, a growing number of large retailers (and manufacturers) are starting to view logistics as a core strategic function, and so they are investing in assets, people, and technology to gain more direct control of their operations.
Second, once they have made these investments to benefit their own operations, retailers and manufacturers are now looking to leverage these assets, people, and technology to “diversify their revenue streams and profit pools” by offering logistics services to other companies, particularly small and midsize businesses that can’t afford to make these investments themselves (and/or who still view logistics as not being a core competency).
There is another important factor at play here: For too long, traditional logistics service providers ignored small and midsized (SMB) companies, which is what many sellers are on these marketplace platforms. As I wrote way back in December 2014:
For a variety of reasons (the high cost of sales being one of them), most 3PLs and software vendors have historically underserved the SMB market, focusing their sales efforts on large companies instead. But as the top end of the market becomes more saturated and competitive — and as new competitors emerge with hybrid business models, offering customers more flexible, faster-to-deploy, and more cost-effective solutions — the race is on to win market share in the SMB market, and to do so profitably.
The race was on, but most 3PLs didn’t get the memo, which is why Amazon, Walmart, and other “non-traditional” logistics service providers filled the void.
The SMB opportunity actually begins at the start-up stage. In May 2013, I interviewed angel investor Tom Friedman about the link between entrepreneurship, angel investing, and supply chain and logistics. In Tom’s experience working with startups, specifically those making physical products, many entrepreneurs are very knowledgeable about engineering and product development, but they lack the skills and expertise in one critical area to scale their companies: logistics and supply chain management.
As I wrote at the time, “Another thing that needs to change is the way third party logistics companies (3PLs) view startups and entrepreneurs. Simply put, 3PLs need to be more forward-thinking — they need to think more like investors and not just focus on the short-term risks and revenue opportunities.”
I also commented on this topic in a 2012 post titled, “Entrepreneurs, 3PLs, and Angel Investors: Kick-starting the Make Economy”:
Before meeting with an angel investor, [entrepreneurs should] meet with a forward-thinking 3PL first. If you can get the 3PL to effectively invest its time, resources, and assets in your business (via a Vested Outsourcing agreement, for example, where the risks the 3PL takes upfront are balanced with the rewards later on), then you have a partner at your side that can address whatever supply chain and logistics related concerns an angel investor might have.
And here’s what I’m suggesting to 3PLs: Be forward thinking if an entrepreneur knocks on your door. If an opportunity looks promising, find a creative way to partner with the entrepreneur, where you minimize the upfront costs and risks for him or her, while maximizing your longer term profit potential.
(For another post related to this topic, please read “Choosing The Right 3PL And IT Partners: An Entrepreneur’s Perspective.”)
Back to the Walmart announcement. A lot of the initial commentary I’m reading is about how this levels the playing field with Amazon or perhaps ups the ante for them. But for me, the more interesting questions are: What is a 3PL today? What business are they in?
As I’ve said many times before, the answers to those questions are very different today compared to a decade ago, and they keep changing.
