For Walmart sellers, understanding pricing strategy is critical to success. Even with fierce competitors like Amazon, Walmart is carving its space in eCommerce, with projected online sales expected to hit $3.4 billion by 2025.
Walmart’s pricing strategy focuses on competitive pricing to attract value-conscious shoppers, making it an excellent opportunity for sellers to thrive.
Let’s explore how Walmart’s pricing model works and why mastering it is essential for maximizing your sales potential in this growing marketplace.
What is Walmart Pricing Strategy and How it Works for Sellers?
Walmart Marketplace pricing strategy is all about setting competitive prices to attract customers and boost sales. As a seller on Walmart Marketplace, pricing isn’t just about listing low numbers—it’s a critical factor that determines your visibility, competitiveness, and long-term success.
Walmart is renowned for offering Everyday Low Prices (EDLP), a strategy designed to provide consistently affordable pricing across a wide range of products. This philosophy doesn’t just apply to Walmart as a retailer—it’s also the standard for sellers on the platform.
Nearly 90% of Walmart shoppers prioritize value over brand loyalty, meaning they’re likely to choose a product based on its price rather than its name. If your prices don’t align with Walmart’s low-cost reputation, you risk losing sales to competitors.
Key Facts to Keep in Mind:
- Walmart prioritizes affordability. Sellers with competitive pricing often rank higher in search results, gaining more visibility.
- Dynamic pricing tools are frequently used by Walmart to adjust prices in real time based on market trends. Sellers can benefit from similar tools to stay competitive.
- Competitive pricing leads to better chances of winning the Buy Box, increasing sales by as much as 80%.
When setting prices, also factor in shipping costs, product quality, and excellent customer service. Offering affordable yet high-quality products while maintaining a strong focus on customer satisfaction can lead to increased sales and a positive seller reputation.
How does Walmart Marketplace’s pricing structure work?
Walmart Marketplace offers sellers a flexible pricing structure that allows them to set their prices for the products they list on the platform. This approach differs from some other ecommerce platforms that may have fixed pricing models.
Here’s how Walmart Marketplace’s pricing structure works for sellers:
Sellers Set Their Own Prices
Sellers have the autonomy to determine the prices at which they want to sell their products on Walmart Marketplace. This means they can consider various factors, such as their costs, desired profit margins, and competitive positioning.
Competitive Pricing
While sellers have control over their pricing, Walmart encourages them to provide competitive prices to attract more customers. Since Walmart is known for its commitment to low prices, competitive pricing is essential for success on the platform.
Price Monitoring
Walmart Marketplace monitors sellers’ prices to ensure compliance with its Walmart policies. This includes policies against price gouging (unjustifiably raising prices during emergencies) and price fixing (colluding with competitors to set prices at a certain level). Sellers must adhere to these policies to maintain their presence on the platform.
Price Consistency
To maintain a positive customer shopping experience, Walmart may require sellers to maintain consistent prices across multiple channels. This means that if a product is listed at a specific price on Walmart Marketplace, it should not be significantly cheaper or more expensive elsewhere, such as on the seller’s own website.
Buy Box Algorithm
Walmart uses a Buy Box algorithm to determine which seller’s offer appears as the default “Add to Cart” option for customers. While pricing is a significant factor in winning the Buy Box, other factors like shipping, seller performance metrics, and customer service also play a role.
Overall, Walmart Marketplace’s pricing structure offers flexibility to sellers, but it encourages competitive pricing to align with Walmart commitment to low prices, ensuring a positive shopping experience for customers. Sellers must also abide by pricing policies to maintain their presence on the platform and avoid practices like price gouging and price fixing.
What are Some Common Pricing Strategies Used by Walmart Marketplace Sellers?
Walmart Marketplace sellers use various pricing strategies to attract customers and achieve their sales goals. Let’s explore some common pricing strategies in simple terms:
Walmart Everyday Low Price (EDLP) Strategy
This strategy involves offering products at consistently low prices without frequent discounts or promotions. Walmart is famous for EDLP. Sellers using this approach aim to build trust with customers who appreciate reliable low prices.
Walmart Rollback Pricing Strategy
Rollback pricing is a temporary reduction in the price of an item. Walmart uses rollback pricing to attract and retain customers and stay competitive with other retailers. Rollback prices are typically displayed on red signs in Walmart stores and can last for a few weeks or even a few months.
Walmart Competitive Pricing Strategy
Sellers monitor and match their prices with competitors to stay competitive. They may adjust prices based on what other sellers are offering for similar products. For instance, if several sellers offer the same TV for around $399, a seller may price their TV similarly to remain competitive.
Walmart Dynamic Pricing Strategy
This strategy involves adjusting prices based on real-time market conditions, demand, and competitor pricing. It allows sellers to respond swiftly to changes in the market. For example, an electronics seller might increase the price of air conditioners during a heatwave when demand surges.
Tip: You can also use a tool like Walmart repricer. It is an automated pricing tool designed to help Walmart sellers on the Walmart marketplace automatically adjust the prices of their products in real-time.
Walmart Value Pricing Strategy
Sellers focus on providing value by offering a product with desirable features at a reasonable price. Value pricing emphasizes the product’s benefits. For instance, a laptop seller might highlight a laptop’s advanced features and price it at $799, emphasizing its value compared to competitors.
Walmart Premium Pricing Strategy
Some sellers offer premium products with higher quality or unique features. They charge premium prices to convey exclusivity and luxury. A seller might deliver artisanal chocolates at a higher price, targeting customers seeking gourmet experiences.
According to a study, products with competitive prices and high-quality images tend to perform better on Walmart Marketplace, with competitive pricing being a significant factor in winning the Buy Box.
These pricing strategies allow Walmart Marketplace sellers to cater to different customer segments and achieve their sales and profit objectives. Whether they opt for consistently low prices, competitiveness, dynamic adjustments, value propositions, or premium offerings, selecting the right strategy depends on their target audience and product positioning.
Useful Tips to Win the Buy Box on Walmart Marketplace
Winning the Buy Box on Walmart Marketplace is crucial for sellers to boost sales and visibility.
Here’s how you can do it:
Competitive Pricing: The price of your product plays a significant role in winning the Buy Box. Keep your prices competitive with other sellers offering the same product. Walmart algorithm looks for the best price when determining who gets the Buy Box. Consider using dynamic pricing tools to adjust your prices in real-time to stay competitive automatically.
Fast and Affordable Shipping: Walmart values fast and cost-effective shipping. Aim to offer quick and reasonably priced shipping options. Utilizing Walmart fulfilment service, Walmart Fulfillment Services (WFS), can help ensure fast and reliable shipping.
If you can provide two-day shipping for a reasonable cost, you’re more likely to win the Buy Box compared to a seller offering slower shipping.
High In-Stock Rate: Maintain a high in-stock rate for your products. Consistently having products available for customers is crucial. Use inventory management tools to track your stock levels and reorder products promptly.
If you frequently run out of stock for your popular kitchen gadgets, it may reduce your chances of winning the Buy Box.
Quality Customer Service: Excellent customer service can positively impact your Buy Box eligibility. Respond promptly to customer inquiries and address any issues or concerns professionally.
Reliable Order Processing: Ensure that you process orders accurately and promptly. Late shipments or order inaccuracies can harm your chances of winning the Buy Box.
Consistent Seller Performance: Maintain a strong seller performance record. This includes keeping your order defect rate, late shipment rate, and cancellation rate low.
Focusing on these key factors and continuously optimizing your pricing and fulfilment strategy can increase your chances of winning the Buy Box on Walmart Marketplace. Remember that it’s an ongoing effort, and monitoring your performance metrics is essential for maintaining Buy Box eligibility.
What to Consider When Pricing Your Products on Walmart Marketplace?
Setting the right prices for your products on Walmart Marketplace involves several crucial considerations. Let’s break them down:
Cost of Goods Sold (COGS)
Before you even think about pricing, understand your COGS. This includes all expenses for producing or sourcing your products, such as materials, labour, shipping, and Walmart Marketplace fees.
Competitive Margins
While profitability is vital, stay competitive with your pricing. Study your competitors’ pricing strategies to ensure your prices align with the market. Customers may pay more for exceptional service or unique product features.
Seasonality and Trends
Recognize that certain products perform better during specific seasons or events. For instance, summer might be great for outdoor products, while holidays boost sales of themed items. Adjust prices accordingly to stay competitive.
Data-Driven Decisions
Regularly analyze your sales and pricing data to make informed decisions. Identify top-performing products and adjust prices based on insights. Walmart analytics tools provide valuable customer behaviour insights for fine-tuning your pricing strategy.
Considering these factors, you can strike the right balance between profitability and competitiveness as a Walmart Marketplace seller.
How to Use Data to Optimize Your Walmart Pricing Strategy on Marketplace?
Data is a powerful tool for sellers aiming to maximize success on Walmart Marketplace. Using data effectively can help you set competitive prices, attract customers, and increase sales while maintaining profitability.
Here’s how you can leverage data to optimize your Walmart pricing strategy:
Analyze Competitor Pricing
Start by monitoring your competitors’ prices. Walmart emphasizes competitive pricing, and customers often compare options before purchasing. Use price-tracking tools or Walmart’s Listing Quality Dashboard to identify how your pricing compares to similar products.
If competitors consistently undercut your prices, evaluate if you can adjust your cost structure or bundle products for better value.
Monitor Market Trends
Track demand fluctuations, seasonal changes, and consumer behavior trends. For example, during holidays or peak seasons, customers might be more willing to pay a premium. Conversely, slow-moving months may require aggressive discounts.
Use Walmart’s Performance Dashboard to identify when sales volume spikes or drops for specific products.
Leverage Historical Sales Data
Your past sales data is a goldmine of insights. Identify patterns such as peak selling times, products with high return rates, or items that perform well at specific price points.
Compare pricing changes with sales volume to find the sweet spot for maximum profitability.
Understand Walmart’s Dynamic Pricing Tools
Walmart uses algorithms to adjust prices dynamically. By understanding how these tools work, you can align your strategy to remain competitive in real time.
Use third-party pricing tools or software that syncs with Walmart’s system to automate price adjustments based on competitor activity.
Incorporate Shipping Costs into Pricing
Shipping costs directly affect your profitability and competitiveness. Walmart Marketplace shoppers often prefer items with free or affordable shipping.
Use data to identify products where shipping costs can be reduced or integrated into the item price without hurting your margins.
Track Customer Behavior and Feedback
Customer reviews and return rates often reveal if pricing matches perceived product value. If customers complain about quality at your price point, it’s a signal to reassess.
Adjust pricing for items with high returns and invest in improving product quality or descriptions.
Test Price Elasticity
Experiment with different price points to understand how small adjustments impact sales. Use A/B testing or gradually raise or lower prices for a specific period to gauge demand.
Track conversion rates after each change to find the price point that balances profitability and sales volume.
Utilize Walmart Analytics Tools
Walmart provides tools like Walmart Analytics and third-party integrations that offer insights into product performance and pricing trends.
Regularly review these reports to ensure your pricing aligns with customer expectations and marketplace standards.
Use a Repricer Tool
A repricer tool can automatically adjust your prices based on a variety of factors, such as your competitors’ prices, demand for your products, and your profit margins. This can help you to stay competitive and to maximize your profits.
Factor in Rollbacks and Discounts
Rollbacks are a Walmart signature pricing strategy. Use data to identify which products are suitable for temporary price reductions to drive volume sales.
Plan rollbacks during high-traffic times like holidays or sales events and monitor the impact on overall profits.
Focus on Long-Term Profitability
While staying competitive is essential, ensure your prices allow for sustainable profits. Track gross margins, cost-per-unit, and advertising costs to keep your business profitable.
Test different prices
One of the best ways to find the optimal pricing for your products is to test different prices and see what happens. You can do this by running promotions or by manually adjusting prices for individual products or categories.
Walmart Pricing Strategy Frequently Asked Question
What is a Walmart Repricer?
A Walmart repricer is a tool used by sellers on Walmart Marketplace to automatically adjust product prices based on factors like competitor pricing and sales trends. It constantly monitors competitor prices and follows predefined rules to set prices strategically. The goal is to win the Buy Box and stay competitive. Repricers can make real-time adjustments and help sellers manage inventory effectively. They track performance to optimize pricing for profitability.
What is Walmart Dynamic Pricing Strategy?
Dynamic pricing is a savvy pricing approach that revolves around the flexible adjustment of your product prices in response to ever-changing market dynamics. This strategy empowers sellers to swiftly adapt their prices following shifts in demand, supply levels, and competitive forces. By embracing dynamic pricing, businesses can effectively maintain their competitive edge and optimize their earnings.
What are Walmart price guarantees?
Walmart offers several price guarantees, including:
The Ad Match Guarantee: Walmart will match the price of any identical product advertised by a local competitor.
The Rollback Guarantee: Walmart will refund the difference if a customer buys a product at Walmart and then finds it advertised at a lower price at Walmart within 14 days of purchase.
The Everyday Low Prices Guarantee: Walmart guarantees its prices are among the lowest in the market.
Conclusion
Walmart’s way of setting prices, which focuses on everyday low prices, special discounts, and making customers happy, is a big help to sellers on Walmart Marketplace. Using Walmart pricing approach, sellers can get more attention from shoppers, build trust, and compete better. If sellers follow Walmart pricing strategy, they can do well online and benefit from the vast opportunities Walmart offers.
Trusted by 300 plus brands, eMarspro is a full service Amazon agency that enables eCommerce brands to prosper in a competitive situation.If you require additional advice or services regarding selling on Walmart Marketplace, then feel free to contact us.
