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This is a short thread about Amazon's fulfillment moat vs. @Walmart and @Shopify who are both building out their own fulfillment networks.
It looks like it's about a single children's toy, but I think it has big implications for how this e-commerce battle shakes out.
It looks like it's about a single children's toy, but I think it has big implications for how this e-commerce battle shakes out.
We were given early access to WFS, which is Walmart's Fulfillment by Amazon competitor.
They store your inventory near where it is likely to be ordered so they can offer 2 day shipping to the entire United States.
They store your inventory near where it is likely to be ordered so they can offer 2 day shipping to the entire United States.
When you store your inventory in amazon's FBA fc's you get a huge bump in sales, so I was optimistic that the same would be true for us as we were selling quite a few Brain Flakes every day (okay not that much, but a lot for a non-Amazon channel, see our walmart orders below!).
So we shipped in about 250 units, rather optimistically, and we were even able to lower our price from $18.99 to $15.99 because our shipping cost when from about $9 to $5 and change.
We should be crushing it right?
We should be crushing it right?
Uhhhh...not so much.
We went from selling 1-2 per day to selling 1 every 3 days.
And this is despite us lowering the price from $18.99 to $15.99!
We went from selling 1-2 per day to selling 1 every 3 days.
And this is despite us lowering the price from $18.99 to $15.99!
But why would this happen? Surely people would appreciate faster shipping and a lower price? The problem was that Walmart added a $5.99 shipping cost for orders under $35, which is the same thing that Amazon does. So why does that matter for Walmart, but not Amazon?
Well, because no one actually has a Walmart + membership, whereas there are 150 million prime members. So the cost went from being $18.99 with free shipping to $15.99 + $5.99 = $21.98 for most people.
See how Brain Flakes looked before we had WFS vs. now
See how Brain Flakes looked before we had WFS vs. now
This is important because it shows that Amazon's e-commerce moat isn't just that it has 50x as many fulfillment centers as Walmart. It also has Amazon prime psychological and ACTUAL shipping lock-in.
Who is going to have a W+ and prime membership? https://twitter.com/Molson_Hart/status/1379291275631935489
Who is going to have a W+ and prime membership? https://twitter.com/Molson_Hart/status/1379291275631935489
What should Walmart do?
GROCERY
It's walmart's only hope. Sign people up in droves for grocery delivery with W+ and then leverage those deliveries to angle your way into Amazon's turf for regular durable non-perishable good e-commerce.
GROCERY
It's walmart's only hope. Sign people up in droves for grocery delivery with W+ and then leverage those deliveries to angle your way into Amazon's turf for regular durable non-perishable good e-commerce.
