Walmart's Marketplace Grew Nearly 50% as Brands Multi-Channel for Holidays

Walmart's third-party marketplace grew close to 50% year over year during the quarter ending April 30 — its fastest growth rate in years, according to Marketplace Pulse. That figure frames this holiday season's central challenge for brands: more marketplaces mean more customers, and more operational complexity to master before Black Friday.

Amazon remains the default channel for brands selling through third-party marketplaces. But brick-and-mortar retailers are building alternatives. Walmart is posting record marketplace growth. Target is recruiting brands to Target Plus and wants to turn the marketplace into a $5 billion business by 2030. Best Buy, Sephora and Ulta all launched on TikTok Shop this year, learning marketplace operations themselves.

What does marketplace success come down to?

Inventory management, according to brands and agencies. Sellers must avoid stockouts during the fourth quarter, when volume spikes. They must also understand each marketplace's promotional mechanics and reconcile those deals with the margins the brand needs to hit.

"Part of it is working with each channel, seeing what the opportunities are, and then kind of figuring out a plan," said Monil Kothari, founder of jewelry brand Haus of Brilliance.

Until about 2021, Haus of Brilliance relied heavily on Amazon. Amazon still accounts for roughly 15-20% of its business. Kothari has since diversified, selling through Target and Costco among other marketplaces.

The operational burden goes beyond stock counts, said Elizabeth Marsten, vp of innovation and growth for commerce media at Tinuiti, a performance marketing agency.

"There's just a sheer amount of logistics" involved with launching on a new marketplace, she said. Returns are the hidden cost: "The business of returns is this massive cost that we don't talk enough about." Fulfillment speed adds another layer, because each marketplace sets its own shipping-level agreement dictating how fast a brand must deliver.

With the exception of Walmart and Amazon, most marketplaces do not offer their own fulfillment services. A five- or six-day shipping agreement works for a brand with its own warehouse. But a brand with a single warehouse that needs East Coast distribution may have to add third-party logistics providers (3PLs, independent warehouse and shipping operators) as it adds channels. "That's when the economics of a marketplace can start to get challenging," Marsten said.

How do sellers keep inventory counts honest?

Haus of Brilliance was built for multi-channel from the start. The brand launched in 2019 selling through Amazon and dropshipping through Overstock.

"Having a really good operational foundation goes such a long way, especially when you have two-day ship times and incredible volume," Kothari said. "We might have 10 units of a piece on Black Friday — nine might sell, and if your inventory doesn't update and reflect that it's now one, it shows another 10 units available. … Our systems move very fast."

Kothari joked that much of the brand's infrastructure relies on "duct tape." The core ERP (enterprise resource planning software) is off-the-shelf but extensible. Third parties handle the EDI channels, the standardized data-exchange format used by large retailers, and an in-house team built API connections to manage inventory and order fulfillment.

Gorilla Commerce, the home goods brand behind the Gorilla Grip slip-resistant bath mat, takes a similar approach. It launched on Amazon in 2014, added Walmart's marketplace two years ago, and in July placed its bath mats in more than 2,600 Walmart stores.

CEO CJ Bilangino called inventory levels a "Goldilocks situation." Too much product in Amazon or Walmart fulfillment centers triggers excess storage fees. Too little risks stockouts at key moments.

"We spend a lot of time really trying to understand demand, and then making sure that not only do we have the right amount of inventory in that particular channel at any given point, … but we also create staged opportunities through warehousing," Bilangino said. The company stages inventory near Walmart and Amazon warehouses through a network of 3PLs, so "if all of a sudden we see things are trending a lot faster during the holidays, we can quickly go and get that inventory to a distribution center at Amazon or Walmart to quickly flow it through."

How do the two brands play Black Friday differently?

Gorilla Grip sells everyday essentials — door mats, dog food bowls, cheese graters, can openers — so the fourth quarter is not a major sales period. Sales are "pretty consistent month to month," Bilangino said, and only a few products get a "light discount" on Black Friday. "It's very rare that you would see a very deep discount, like 30% or more on one of our products," he said, though the company does see a "halo effect" from Black Friday traffic.

Haus of Brilliance does around 50% of its business between November and December. Kothari's team is deciding which discounts to run, on which products, on which marketplaces.

"Everyone has different Black Friday, Cyber Monday-like deal setups," he said. Only the brand's top 20 items can be selected for Amazon's Lightning Deals, and "the rest of the catalog in the Black Friday-Cyber Monday promotional period doesn't get as much exposure compared to something that has a Lightning Deal." Nordstrom, by contrast, "might reach out to us and say, you know, whatever items that you do at this much minimum discount, if you can opt in, you'll get that Black Friday-Cyber Monday coverage," he said.

Price ceilings also shape channel strategy. "Target doesn't want anything over $500. So that [channel] just becomes a focal point on our lower price-point items," Kothari said.

His closing principle is partnership: "I want customers to see the whole breadth of our assortment, and I want our partners to be able to showcase everything that we can possibly sell during the holiday period, because Christmas only comes once."

As Walmart, Target and TikTok Shop court sellers, the brands already winning are those with warehouse networks, fast inventory sync and channel-specific pricing plans in place before the season starts.