Walmart set its sights on ecommerce success a few years ago. Its goal? To be a major competitor with none other than Amazon. And they’re succeeding.
While not as large as Amazon, Walmart is growing at a noteworthy pace and offers many valuable services and opportunities for sellers willing to invest in this growing marketplace. That being said, sellers entering the marketplace may start to see diminishing returns compared to previous years, which naturally come with growth and increased competition.
Competition Increased and So Did CPCs
Increasing CPCs (Cost-Per-Clicks) can indicate that advertising campaigns are less efficient. This can be attributed to ineffective strategies, reduced consumer interest, changes in the ad auction, changes in targeting and relevancy, or higher competition. CPCs represent the cost of each click on an ad. The lower, the less you pay, and therefore the further you can stretch your budget and higher your ROAS can be. Inversely, higher CPC is an indication to review your strategies and improve your efforts.
Now, why have we seen these trends on Walmart Connect? Walmart Connect had spent previous years greatly overhauling their services and ad programming to the benefit of sellers. With that effort, CPCs were artificially decreased due to easier conversions and smaller competition. As the data has accounted for these changes and more sellers are entering the marketplace, these increases are expected for Walmart as the marketplace continues to grow.
Key Statistics You Need to Know
Walmart’s CPC increased by 37% in 2023, showing that more sellers are vying for space on their marketplace. In fact, this was a foreseeable trend, as the highest CPC in 2022 was during December at $0.42. This height was the result of incremental growth that was kickstarted during Q4. The trend remained throughout 2023, reaching a high of $0.54 in 2023.
While 37% is a significant increase, this does not mean Walmart is a less fruitful marketplace for newer brands, regardless of their size. Because Walmart is still a smaller ecommerce platform in comparison to Amazon, any increase will appear to be bigger than it is. Walmart’s increase in CPCs is a natural leveling out of the ecommerce ecosystem. Walmart Connect had spent previous years greatly overhauling their services and ad programming to the benefit of sellers. With that effort, CPCs were artificially decreased due to easier conversions and smaller competition. As the data has accounted for these changes and more sellers are entering the marketplace, these are expected numbers for Walmart.
What Next?
These benchmarks underscore how focusing on constantly measuring meaningful performance data, with the capability to change your tactics and strategy as that data indicates, is the bottom line for success on Walmart. Use the data from our full Walmart Benchmark Report to measure your performance against competitors and the market as a whole and as a primary foundation for educating your strategy in the year ahead and expanding into new marketplaces.
