Walmart is established as one of the leaders in ecommerce, and one of the largest online retail platforms. Recognized by National Retail Federation (NRF) as top retailer in the US by sales, Walmart operates about 4,700 stores nationwide.
Its marketplace is a growing ecosystem, featuring thousands of sellers and continuing to expand rapidly. Walmart’s online sales saw increases of 21% in 2024, showing that customers aren’t window-shopping but actively adding items to online carts.
With a vast network of retail locations, distribution hubs, and an even larger customer base, the marketplace provides strategic openings for sellers. Becoming part of Walmart Marketplace fosters business expansion, aiding brands both immediately and over time.
To sell on Walmart Marketplace, there are two popular ways: first-party (1P) and third-party (3P) sales. Both choices have its benefits and downsides.
In this article, we will explore distinctions between 1P and 3P sellers, evaluating advantages and disadvantages to assist in making informed decisions for your business.
Walmart 3P (Third-Party Marketplace Seller)
To join Walmart as a third-party (3P) seller, you must meet certain business criteria and go through an approval process. Once approved, you gain full control over your inventory, pricing, and listings. You’ll manage your product listings directly on Walmart’s marketplace through Seller Center or by using a third-party tool like Zentail.
This means creating, optimizing, pricing, promoting, and shipping your products independently—unless you choose to partner with fulfillment services like Deliverr or Walmart Fulfillment Services (WFS) for support with some operations.
Walmart benefits by expanding its product offerings while reducing inventory risk and collecting a commission fee from your sales. Walmart maintains high standards for performance, content quality, and ethics to protect the customer experience, which all sellers are expected to meet.
Advantages
The 3P model provides sellers with maximum control. You decide your pricing, manage your inventory, and set return policies and shipping options. For brand owners, this approach is especially beneficial as it allows you to directly manage your brand’s representation across all your listings.
Disadvantages
Handling all aspects of the selling process—from listing to after-sales—requires significant effort. As a new 3P seller, you’ll start from scratch and need to strategize to make your products stand out, generate positive reviews, and improve your listing rankings against competitors.
Additionally, you’ll need to monitor factors like inventory levels and shipping standards. If you’re not prepared to manage the demands and costs of this sales channel, it can become quite challenging.
Walmart 1P (First-Party Seller)
In a first-party (1P) arrangement with Walmart, you sell products in bulk to Walmart at wholesale rates. These items appear on Walmart’s site with the “sold & shipped by Walmart” label, as Walmart manages all aspects of listing, marketing, and delivery for your product.
As a 1P seller, you have a responsibility to send inventory to Walmart’s fulfillment centers, where it is stored and distributed. Your items are available for purchase on Walmart.com, not in physical Walmart stores, you don't need to handle direct shipping to customers.
Advantages
This setup is similar to a traditional wholesale arrangement: once Walmart buys your inventory, it becomes theirs. After signing a contract and delivering your products, you’re relieved of shipping expenses, performance metrics, and margin reductions if Walmart decides to discount or promote your items.
Disadvantages
One major downside is the limited control over pricing. Walmart, as a cost-focused retailer, may reduce your product’s price to remain competitive. This could impact your brand’s perception and lead to pricing inconsistencies across other platforms, like Amazon.
Amazon, for instance, may penalize you if your product is available at a much lower price elsewhere, risking your listings or even account suspension if you don’t match prices. Walmart also controls the product messaging, which might lead to inconsistent branding if you sell on multiple platforms.
Another cautionary point: numerous Amazon 1P sellers have learned that over-reliance on wholesale relationships can be risky. Amazon has been known to suddenly halt purchase orders, impacting sellers overnight. Whether on Walmart or another platform, it’s wise to avoid relying heavily on one channel for your business’s success.
Which option is right for you?
When deciding between selling as a 1P or 3P seller on Walmart, several factors come into play. First, assess your eligibility for each program. Becoming a third-party seller, for example, can be challenging if taken on yourself. You can always enlist the help of marketplace integration software like ours to do the heavy lifting for you.
Here are some key questions to consider:
- Does one option align better with your ecommerce strategy?
- Are cost-effective shipping solutions accessible to you?
- Can your business support Walmart’s competitive pricing model?
- Is your business prepared to scale to meet the demands of 3P?
Let’s explore each of these considerations in depth.
Consideration #1: Your ecommerce strategy
How much control do you want over your brand or product? Do any current or potential operational gaps influence your choice?
If your business focuses on high-volume sales rather than brand-building, the 1P model may be ideal. With this approach, you can quickly move inventory without the need to manage branding.
However, if building your brand and retaining control over pricing, marketing, and branding is essential, the 3P option is more suitable. As a 3P seller, you can shape your brand’s image on Walmart and other channels.
Check out 5 reasons you should be selling on Walmart marketplace with bonus practical tips from our marketplace experts.
Remember, transitioning to Walmart as a 3P seller isn’t a simple copy-paste from other marketplaces. Walmart’s unique ranking algorithm requires that listings be tailored specifically for their platform.
Consideration #2: Shipping capabilities
Managing ecommerce fulfillment can be challenging, especially as ecommerce grows. Many sellers opt for the 1P model to avoid handling the complexities of fulfillment.
That said, third-party logistics providers (3PLs) or Walmart Fulfillment Services (WFS) may be viable options if you plan to scale.
Walmart prioritizes fast shipping, particularly with its TwoDay program. Choosing a 3PL that meets these standards, such as Deliverr (Walmart’s official fulfillment partner), is critical. Keep in mind, though, that Walmart does not allow Amazon MCF for orders fulfilled on their marketplace.
Ultimately, you’ll need to ensure your shipping approach is efficient and meets Walmart’s standards for 3P sellers, who must offer quick, cost-effective delivery. DSV sellers face similar challenges, while 1P sellers only manage wholesale shipments.
Consideration #3: Pricing
Walmart’s reputation for low prices extends to its marketplace. All sellers are expected to keep prices competitive, if not the lowest available. Before selling on Walmart, it’s wise to research how similar products are priced.
If Walmart finds your product listed at a lower price elsewhere (including the combined item and shipping cost), they may take corrective action.
If you opt for 3P, consider whether you can still compete on price while investing in tools to stay competitive. For DSV or 1P sellers, are you comfortable with Walmart potentially reducing your prices? And how will this impact your pricing compliance on other platforms like Amazon?
How ChannelEngine can help
At ChannelEngine, we provide powerful tools designed to simplify Walmart marketplace management for 3P (third-party) sellers, with future support for 1P (first-party) sellers on the horizon. Our platform helps with inventory management to keep stock levels accurate across all channels. With dynamic pricing strategies, you can stay competitive while maintaining healthy margins, and our performance tracking tools deliver real-time insights into sales metrics.
These features streamline the complexities of Walmart integrations, enabling you to efficiently manage listings, optimize pricing, and meet Walmart’s high standards. With ChannelEngine, you can maximize your business’s growth potential on Walmart’s platform, as a 3P seller.
We’re also excited to announce Vendor Hub - a new part of our solution that helps 1P sellers as we continue to expand. At the moment, we only offer support for Amazon, but in the future, we do plan to support businesses that are ready to leverage Walmart’s marketplace as vendors.
Concluding thoughts
Choosing between 1P and 3P on Walmart is a strategic decision that depends on your business’s specific needs and goals. While 1P offers a hands-off, wholesale-style arrangement with limited control, 3P provides maximum autonomy but requires hands-on management.
Reflecting on your ecommerce strategy, shipping capabilities, and pricing flexibility will help you make the right choice. By carefully assessing your objectives and using the tools we offer, you can leverage Walmart’s marketplace to enhance your brand’s presence and drive growth.
