Shopify Inc. is upping the ante in its battle against Amazon.com Inc. by aligning itself Walmart Inc. in its fight with the Seattle online retailer.
The Ottawa-based e-commerce giant, whose software powers online stores for more than one million companies, on Monday announced the partnership, which will allow U.S. merchants to sell their products on Walmart’s website.
By the end of the year, Shopify expects 1,200 of its merchants to be selling products through Walmart’s marketplace, which is visited by more than 120 million Americans every month.
Amazon had more than 2.01 billion visits in February alone and is the most visited e-commerce property in the United States, according to Statista. Walmart holds the number two spot.
The partnership is their latest swing at Amazon, a behemoth that has revolutionized the world of e-commerce with its online marketplace, massive warehouses and speedy delivery services.
Amazon has been eating into Walmart’s low-cost model by enticing customers with equally affordable prices and the added convenience of quick delivery.
Asked whether the Walmart deal was signed with Amazon in mind, Shopify’s vice-president of product didn’t single out any one company. “Anything that reduces the barrier to entrepreneurship is good for merchants, good for consumers, and good for Shopify,” said Satish Kanwar.
His company, however, tweeted a graphic on Monday based on an image used with a recent story in the Guardian newspaper about the Shopify-Amazon rivalry. Shopify animated the graphic to zoom in on a frowning character apparently made of Amazon boxes that was being towered over a shopping bag bearing Shopify’s logo.
Walmart has been trying to keep up with Amazon, which has undercut retailers with its algorithms and in-house brands and hastened the speed of online shopping, sending competitors scrambling to keep up.
“If you have a common enemy then the idea of forming an alliance to try to counteract your common enemy makes a lot of sense,” said David Soberman, a University of Toronto marketing professor.
“Shopify doesn’t benefit from the growth of Amazon. The stronger that Amazon is, the less likely it is that an independent merchant wants to set up an online store with Shopify.”
The Walmart-Shopify partnership could work well, Soberman said, because it matches Walmart – still the world’s biggest retailer – with one of Shopify’s strengths: inventory management.
Lisa Hutcheson, managing partner at consulting firm J.C. Williams Group, said the two are also a good fit for each other because Walmart is keen on digital growth – an area where Shopify has long focused.
Walmart.com’s sales surged 74% in the first quarter of its fiscal year as the brand experienced increases in demand for curbside sales and online orders during the pandemic’s early days, when details of the Shopify partnership were being worked out.
But even together, Walmart and Shopify are unlikely to beat Amazon, Hutcheson said.
“Amazon is always one step ahead of everyone in terms of where they are going to pivot next,” said Hutcheson.
“I think (Shopify) will be able to give it a run, but not catch up.”
Shopify, which temporarily topped RBC as Canada’s most valuable publicly traded company earlier this year and counts among its customers Kylie Cosmetics, Budweiser and Nestle, has been in more direct contention with Amazon since last year, when the company announced plans for a network of fulfilment centres meant to help merchants lower shipping costs and ensure timely deliveries.
The centres will focus first on the U.S., one of Amazon’s strongest markets, with the door open to expansion in other regions.
The Walmart partnership comes a month after Shopify teamed up with Facebook Inc. to allow merchants to create a customized online storefront for Facebook and Instagram.
Walmart is getting out of the vaping business.
The nation’s largest retailer said that it will stop selling electronic cigarettes at its namesake stores and Sam’s Clubs in the U.S. when it sells out its current inventory.
The retailer said the move is due to “growing federal, state and local regulatory complexity” regarding vaping products. It also comes after several hundred people have mysteriously fallen ill after vaping, and some have died.
Walmart’s decision is the latest blow to the vaping industry, which has tried to position its products as healthier alternatives to smoking cigarettes, which are responsible for 480,000 deaths a year, according to the Centers for Disease Control and Prevention.
But the industry has come under increased scrutiny after the deaths and illnesses – along with a surge in underage vaping.
President Donald Trump has proposed a federal ban on flavoured e-cigarettes and vaping products. Michigan banned the sale of flavoured e-cigarettes this week. In June, San Francisco became the first major U.S. city to ban the sale of electronic cigarettes.
The bulk of e-cigarettes are sold through vape shops, which number about 115,000 nationwide, with additional outlets including drug stores, grocery stores and tobacco outlets, industry experts say.
E-cigarettes represent a very small part of Walmart’s nicotine business, which also includes traditional cigarettes, smokeless tobacco and nicotine gum, so the impact on the retailer will be small.
But, it will be difficult for vaping companies to replace that access to shoppers given Walmart’s size, said Greg Portell, global lead partner in the consumer and retail practice of A.T. Kearney, a strategy and management consulting firm. Walmart operates more than 5,000 stores under its namesake and Sam’s Club in the U.S.
“Walmart’s size and scale makes their decisions about what products to carry meaningful for the impacted products,” Portell said. “Vaping companies will be especially challenged given the lack of direct consumer access.”
The Vapor Technology Association, a trade group, was quick to slam Walmart’s move against vaping products while keeping cigarettes on its shelves.
“The fact that Walmart is reducing access for adult smokers to regulated vapour products while continuing to sell combustible cigarettes is irresponsible,” Tony Abboud, executive director of the association, said in a statement. “This will drive former adult smokers to purchase more cigarettes.”
More than 500 people have been diagnosed with breathing illnesses after using e-cigarettes and other vaping devices, according to U.S. health officials. An eighth death was reported this week. But health officials still have not identified the cause.
In July, Walmart, which is based in Bentonville, Arkansas, raised the minimum age to purchase tobacco products, including all e-cigarettes, to 21. It also said then that it was in the process of discontinuing the sale of fruit- and dessert-flavoured electronic nicotine delivery systems.
The moves come as Walmart is trying to become a better corporate citizen. It has adopted measures to become more environmentally friendly. It thrust itself in the country’s gun control debate after a mass shooting at one of its stores killed 22 customers in August. Earlier this month it decided to discontinue sales of certain gun ammunition and requested customers no longer openly carry firearms in its stores, even where state laws allow it.
“Increasingly, consumer companies are blurring the line between business and social decisions,” Portell added. “As the risks associated with new categories like vaping become more well known, we would expect retailers to make decisions on what role they want to play in those risks.”
Target says it doesn’t sell electronic cigarettes. CVS Health got out of the cigarette business five years ago, and says it doesn’t sell any vaping devices.