Walmart seller fees can significantly eat into your earnings if not properly managed.
From referral fees to storage costs, these charges can accumulate and take a substantial bite out of your profits.
Thankfully, there are strategies you can employ to help reduce these fees and keep more of your hard-earned money.
With a focus on boosting your profitability, we’ll examine the various Walmart seller fees, their influence on your bottom line, and highlight practical strategies to keep these charges in check.
Understanding Walmart Seller Fees
Walmart, like many online marketplaces, has fees that sellers must pay in order to sell their products on the platform.
Here is a breakdown of the different types of fees and how they impact a seller’s profitability:
1. Referral Fees
This is the primary fee that Walmart charges sellers, and it varies depending on the category of the product being sold.
The fee generally ranges between 6% to 20% of the item price. Obviously, the higher the referral fee, the lower your profit margin on each sale.
2. Fulfillment Fees (for WFS users)
If you opt to use Walmart Fulfillment Services (WFS), you’ll also pay for storage and fulfillment.
The storage fee depends on the size of your products and the time of year, while the fulfillment fee is based on the size and weight of your product.
These costs can add up, but they can be offset by the savings in time and resources that WFS provides.
3. Shipping Fees
If you handle fulfillment yourself, you’ll need to consider shipping costs. These costs can vary widely depending on the size, weight, and destination of the product.
Offering free shipping might boost sales but will eat into your profits, so it’s a balance.
4. Return Fees
For items sold through WFS, Walmart will handle returns and reverse logistics. They charge a returns processing fee per item.
For seller-fulfilled returns, you bear the cost of return shipping.
5. Storage Fees
If using WFS, storage fees apply for the space your inventory occupies in Walmart’s fulfillment centers.
Rates vary based on the time of year and the volume of your products.
6. Advertising Fees
While not mandatory, Walmart Sponsored Products can enhance visibility and increase sales.
The cost of advertising on Walmart will depend on your budget and strategy.
These Walmart seller fees can significantly impact your profitability on the Walmart marketplace.
It’s important to factor in all of these costs when setting prices and forecasting potential profits on the platform.
Every business model is different, so sellers need to consider their individual costs, margins, and sales velocity. In some cases, the increased sales volume on Walmart might more than makeup for the associated fees.
In the following sections, we’ll explore strategies to reduce these fees, enabling you to make the most of Walmart’s Fulfillment Services without breaking the bank.
Strategies For Reducing Walmart Seller Fees
We’ve established the fact that Walmart seller fees are here to stay; whether you want to go the seller-fulfilled route or the WFS route.
The next line of action then is, how can we reduce these fees? Below are some strategies you can employ:
Effective Inventory Management
Effective inventory management is vital for minimizing Walmart seller fees. Striking the right balance in your stock levels helps to avoid costly storage fees.
If you store excess products in Walmart’s warehouses, storage fees can accumulate quickly. These fees become particularly significant with long-term storage.
To avoid such costs, it’s crucial to accurately forecast demand and avoid overstocking items. This forecasting involves studying past sales data, current market trends, and using inventory management tools.
For example, with seasonal items like holiday decorations, stocking up during off-peak seasons will lead to unnecessary storage costs and potential depreciation losses.
Moreover, overstocking can result in unplanned markdowns when you need to clear the excess inventory, impacting your profitability. Regularly reviewing and updating your inventory levels helps avoid such situations.
If a product is selling well, you might need to increase stock levels to meet the demand. In contrast, if an item isn’t moving as expected, reducing future orders can prevent overstocking and save storage space.
Choose Profitable Products
Choosing profitable products plays a significant role in reducing Walmart seller fees. One way to do this is to focus on items that have high demand.
The popularity of these products can lead to larger sales volumes, which helps distribute fixed costs like listing or storage fees over more units. As a result, the cost per item decreases, making the product more profitable.
Another aspect to consider is selling niche products that come with lower referral fees.
While it might be tempting to target broad categories with a large audience, selling in specific niches with lower referral fees can decrease the amount you pay per sale.
However, it’s essential to ensure that these niche products also have enough demand to enable volume sales.
Selling higher-priced items can also be a strategy to offset seller fees.
These items typically come with larger profit margins, which can help absorb the impact of fees and maintain overall profitability. This doesn’t mean that you should only sell expensive items, but having a mix of higher-priced items in your inventory can be beneficial.
Lastly, focusing on products with low return rates can save you from potential return shipping and restocking fees. Product quality, accurate descriptions, and clear images can help reduce return rates.
Use Light Packaging
Packaging is a key factor that directly influences the costs associated with selling on Walmart, particularly when it comes to shipping.
Shipping costs are often calculated based on both the weight and size of the package – this is known as dimensional weight.
The lighter and smaller your packaging, the lower your shipping costs will be.
When a product is packaged using smaller, lighter materials, the overall weight and size of the package is reduced.
This directly translates to lower shipping costs as carriers like FedEx, UPS, and USPS charge less for transporting smaller, lighter packages.
But it’s not just about choosing smaller, lighter packaging. It’s also crucial to ensure that the packaging adequately protects the product.
If the product is damaged during transit due to inadequate packaging, you may face return and refund costs, which can further erode your profits.
Additionally, for sellers using Walmart Fulfillment Services (WFS), storage fees are based on the size and weight of the product, including its packaging.
Therefore, optimizing your packaging can also help reduce these storage fees.
By reducing the physical footprint of your products in the warehouse, you can store more items for the same cost.
Bundle Up Products
Bundling products can effectively cut Walmart seller fees by reducing the pick-and-pack units.
Each unit product packed and shipped from Walmart’s warehouses incurs a certain cost. By bundling products together, you reduce this cost significantly
Consider this example: You sell beauty products, and you have a facial cleanser, a toner, and a moisturizer.
Instead of selling these as separate items, you could bundle them into a “Complete Facial Care Kit”. Now, instead of three pick-and-pack fees for three items, you only incur one fee for the bundled unit.
Bundling not only reduces fees but can potentially increase average order values, as customers often perceive bundled deals as more valuable.
However, ensure your products are complementary and appeal to a similar customer base for maximum effectiveness.
Investing strategically in Walmart Sponsored Products can help to optimize your advertising budget, thereby indirectly reducing your overall Walmart seller fees.
These sponsored ads appear on Walmart’s search results and product pages, giving your products increased visibility and potentially higher sales.
Choosing the right type of ad depends on your goals and the products you’re selling. Product Collection Ads, for instance, are perfect for showcasing a range of products, such as a new clothing line or a collection of tech accessories.
These ads appear on the search results page and can direct customers to your Walmart storefront, promoting your entire product range and building your brand.
Search InGrid Ads, on the other hand, are ideal for promoting specific items such as a limited edition electronic gadget, a highly rated beauty product, or a seasonal clothing item at a competitive price.
They appear in the search results along with organic listings, giving your product a prominent placement.
To spend wisely, you should prioritize your best-performing products or those with the highest profit margins for sponsored ads. These are more likely to provide a good return on ad spend (ROAS).
Furthermore, regularly review your ad performance and make necessary adjustments. If an ad isn’t performing well, it might be better to divert that budget to a more successful product or try a different type of ad.
Check out our informative guide to understanding Walmart sponsored ads to learn more about advertising on the marketplace.