Please ensure Javascript is enabled for purposes of website accessibility

Walmart Goes After Amazon with Third-party Fulfillment Service

By John Ballard - Feb 26, 2020 at 9:38AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The competition between these two juggernauts just went to another level.

Walmart (WMT 1.97%) has been investing heavily to build up its e-commerce operations in recent years, and now it's taking another big step to close the gap with Amazon.com (AMZN 3.66%).

On Tuesday, the retail giant announced the launch of Walmart Fulfillment Services (WFS), which works the same as Amazon's fulfillment program. This will allow sellers to take advantage of Walmart's "world-class supply chain capabilities" to handle all the leg work of storing and shipping items. 

A blue Walmart shipping box moving through a warehouse.

Image source: Walmart.

Closing the gap

It goes without saying that Amazon is way ahead of Walmart in e-commerce. While Amazon was building out infrastructure to handle fulfillment going back to the 1990s, Walmart was busy building massive supercenters to expand its brick-and-mortar footprint. Walmart has been slow to respond, but it's fighting aggressively.

Walmart's e-commerce sales in the U.S. have been growing between 35% to 41% over the last four quarters. The launch of the new fulfillment service reveals the greater capabilities Walmart has gained to better compete with Amazon. Lately, Walmart has been allocating most of its yearly capital expenditure budget to e-commerce, technology, and supply chain. 

However, Amazon is still the king of online retail domestically. In the press release, Walmart said "select sellers" will be able to use WFS. That may indicate that while Walmart has gained enough capacity with warehousing to offer this new service, it is still nowhere close to having the necessary scale to match Amazon's clout. 

Last year, a report from eMarketer estimated Amazon's market share of U.S. e-commerce to reach 37.7%. Walmart was expected to increase its share to only 4.7%. A big piece missing from Big Blue has been a third-party fulfillment service, and now it's got that.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$128.48 (1.97%) $2.48
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$2,302.93 (3.66%) $81.38

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
344%
 
S&P 500 Returns
120%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.