Walmart isn't the type of company that makes surprising announcements, but on Monday, its partnership with Shopify was exactly that. The two companies said they will now make it possible for companies using Shopify to access Walmart's Marketplace at Walmart.com.
This matters for a few reasons. The first is that as online shopping has surged in the past few months with retail shops closed, big companies like Walmart (and Amazon) are betting that trend will continue. Amazon recently announced that it would offer 125,000 temporary workers hired since March full-time positions moving forward as it adjusts to the shift in how consumers are shopping.
The more important piece is that this partnership represents an alternative to online retailers who have, until now, essentially had to choose between going it on their own or selling their products on Amazon, which, thanks to the size of its customer base, is a very appealing option.
Amazon is also the third-largest advertising platform, allowing small businesses to promote their products to a huge audience. At the same time, the platform has frustrated sellers in recent years with rising costs and fees and by competing against popular products by selling and promoting its own versions.
The other option is to build your own online storefront and market it on your own. In many cases, that has meant using a site builder platform like Shopify. In that case, businesses have far more control over their online store, but have to compete for customers with far bigger businesses like Amazon.
Now, however, those businesses have another option, at least if they're using Shopify.
According to Bloomberg:
The world's largest retailer aims to add 1,200 Shopify sellers this year, Walmart executive Jeff Clementz said in an interview. The company's marketplace site, which already offers more than 75 million products, grew at a faster pace than Walmart's overall web business in the first quarter, and third-party sales are typically more profitable as the sellers pay a fee when a sale is made and often shoulder the delivery costs.
Shopify had already announced a partnership with Facebook to power its new shopping feature. Now, its customers will have access to millions of new shoppers on Walmart.com's platform. It's a pretty big deal considering that Amazon and Walmart are fierce competitors in the online retail space, even though Amazon's e-commerce business is still far larger.
Walmart's online business grew 74 percent last quarter with the surge in online shopping resulting from stay-at-home orders across the country. The company said that third-party sales grew faster than its own sales.
If you're a small business, anything that makes it easier for you to reach your customers is generally good news. By that measure, this is a huge win, not only for Walmart and Shopify, but for the small businesses that just got another option for reaching their customers.