On Monday, Walmart faced a barrage of criticism as shoppers noticed that a wig cap sold by a third party seller on its marketplace used a racial slur to describe the item’s brown color, according to several news reports, including USA Today, and a social media storm.
In a statement emailed to Retail Dive on Tuesday and posted on Twitter on Monday, Walmart said: “We are very sorry and appalled that this third party seller listed their item with the description on our online marketplace. It is a clear violation of our policy and has been removed, and we are investigating the seller to determine how this could have happened.”
The maker of the wig caps, U.K.-based Jagazi Naturals, posted a banner saying that neither the listing nor even the item had anything to do with them. “We woke up this morning to the news that someone has used our name JAGAZI to list an item,” the banner reads. “Please beware that we are reporting this to as many people as we can and trying to get all the listings pulled down. The real JAGAZI is a 100% black company for black people. People have often used our brand name to try and sell their products. Please be aware. Very sorry for all the distress this has caused. We are feeling the pain here as well. Most shocking!”
We agree this is appalling. pic.twitter.com/ZpB4t9ceas— Walmart (@Walmart) July 17, 2017
Marketplace popularity is on the rise — among consumers and retailers — but clearly poses some risks.
Consumers have come to prefer marketplaces because they offer competitive prices and a deep catalog of merchandise, according to research from Forrester commissioned by marketplace platform company Mirakl and e-commerce solutions firm ChannelAdvisor. More than 70% of consumers said they appreciate the ability to view prices from various sellers on marketplaces, and 56% said they seek marketplaces that offer a variety of products and services, that research found.
After running its third-party marketplace as an afterthought for years, Walmart picked up the pace following its $3.3 billion acquisition last year of startup Jet.com, (itself a marketplace). The retail giant hasn't broken out sources for e-commerce sales, but in its most recent quarter online sales (including the marketplace) ballooned 63% with an attendant 69% rise in digital gross merchandise volume.
While Walmart has a vast network of distribution centers and a massive brick-and-mortar footprint that also provides fulfillment (including new incentives for in-store pickup of online orders), the retailer has a ways to go to match the advantages of Amazon's Marketplace, including the Fulfillment by Amazon program that opens Prime membership to participating sellers.
The marketplace approach introduces new responsibilities and risks that were evident in the lamentable display of both racism and fakery in the offending Walmart marketplace listing. Running a marketplace entails both cultural and technological change, according to Brett Wickard, founder and president of “lean retail” analytics firm Fieldstack.
“At first glance, adding a marketplace seems like an easy way to extend your brand, your reach and your base,” Wickard said in an email to Retail Dive earlier this year. “However, it is ridiculously more complex than it seems at first glance. Customers don’t disconnect a merchant’s brand from their experience with third-party sellers on your marketplace — problems with marketplace orders bubble up to the marketplace owner. While data shows this, you can easily see for yourself with public data. Look at almost any item on Amazon — customers of marketplace vendors often conflate their shipping or marketplace experience with the quality of the item itself.”
With this incident, Walmart also risks adding to the perception that it's a less progressive retailer than, say, rival Target. It's a legacy that stems in part from its high-profile labor troubles, reputation for low wages and anti-union efforts, and even its decision last year to sit out the controversy surrounding the use of bathrooms and fitting rooms for transgender people.