Walmart: The Blue Ocean of eCommerce Store Building
Walmart is the blue ocean of building an eCommerce store. You may read this and wonder what the term “blue ocean” even means in a business context. Blue ocean is an entrepreneurship industry term used to describe a particular market space.
In this post, Optimyze Digital explains blue ocean, blue ocean vs. red ocean strategy, and how this all applies to Walmart’s eCommerce platform: Walmart Marketplace.
Enter the Blue Ocean
Coined by business school professors W. Chan Kim and Renée Mauborgne in their 2005 book, “Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant,” the term “blue ocean” refers to a new market with little competition and relatively few barriers preventing entrepreneurs from entering it. The ocean is blue because it is untouched: Think about the opposite of a saturated market.
Blue ocean strategy is the pursuit of value innovation — low cost and differentiation — in order to create new market space. Innovators and entrepreneurs tend to favor blue ocean strategy because of the flexibility that it allows. Blue ocean markets also confer first-mover advantages, like being able to build brand awareness and customer loyalty before competitors try to do the same.
An example of a firm that used blue ocean strategy to its advantage is video game company Nintendo. In developing the Nintendo Wii, the company decided to forgo some of the functionalities that were present in most consoles and reduce the graphics quality. While this may seem counterintuitive, it allowed Nintendo to cut costs. It also gave the company the chance to introduce something that customers hadn’t experienced before: the wireless motion controller.
In entering the blue ocean, Nintendo was no longer competing against Xbox or PlayStation. It was creating a new market that united gamers and non-gamers alike.
Blue Ocean vs. Red Ocean
At this point, it may seem like blue ocean markets are the only ones worth pursuing. But it’s important to remember that neither red nor blue ocean strategy is the best option for everyone.
Red ocean strategy means competing in an established market space, capitalizing on existing consumer demand, and choosing between low cost and differentiation. In a red ocean, the demand is already there, so you don’t need to expend as many resources trying to validate that customers even want what you’re selling. Similarly, there are tried-and-true processes in place to guide companies through the red ocean.
Since the blue ocean is unexplored, it inherently carries more risk. The manual hasn’t been written yet, so it will be hard to convince potential investors that they’ll receive a return. Ultimately, though, companies that pursue value innovation over existing market space often end up being the most lucrative and memorable.
Why Walmart is a Blue Ocean for eCommerce Sellers
Where does Walmart come into play here? You could very well find success selling on popular eCommerce platforms like Amazon, Shopify or eBay. But competition in those marketplaces is fierce, whereas less than 10% of sellers use Walmart Marketplace. Along with being one of fewer sellers, you’ll be partners with the largest omnichannel retailer in the world.
Michael Ugino, co-founder and Chief Marketing Officer of Sellbrite, listed four great reasons to set up shop on Walmart Marketplace: the ability to offer free two-day shipping, the option to outsource fulfillment (similar to Fulfillment by Amazon), the benefit of Walmart’s branding and the flexibility to integrate tools you’re already using onto the platform.
What’s more, Walmart announced in June of 2020 that it would be launching a Shopify integration, effectively allowing Shopify sellers to join the Walmart Marketplace. The move was positioned as a way to give more small- and medium-sized businesses access to the high traffic on Walmart.com. In other words, Walmart is still a blue ocean for eCommerce sellers, but we don’t know how much longer it will stay that way. Get in while you can.
Are you ready to dive into the blue ocean of building an eCommerce store? Reach out to Optimyze Digital to plan your next move.