Amazon foes Walmart and Shopify team up to take on common rival

The retailer is looking to add smaller businesses to its marketplace to keep challenging Amazon.

Walmart’s online marketplace has a new partner in its quest to better compete with Amazon in the e-commerce wars: Shopify.

Some 1,200 companies that sell online using Shopify’s tech will be able to sell on Walmart’s U.S. marketplace by the end of the year, the companies announced Monday morning. The news was first reported by Bloomberg News.

The partnership comes at a time when Walmart’s marketplace, first opened in 2009, is finally finding momentum, but it needs to expand the variety of products available for sale there, which currently number 75 million. During the first quarter, its growth outpaced Walmart’s overall 74% increase in U.S. online sales, spurred by a pandemic-fueled surge.

“This integration will allow approved Shopify sellers to seamlessly list their items on Walmart.com, which gives Walmart customers access to a broader assortment,” said Jeff Clementz, vice president of Walmart Marketplace.

In recent years, Walmart CEO Doug McMillon expressed disappointment with the marketplace’s performance and last year named a new executive, Jeff Shotts, to run it. He’s also made it a priority to improve e-commerce’s economics: While Walmart has established itself as a solid No. 2 to Amazon in U.S. e-commerce, the $22 billion business loses money. However, third-party sales on a marketplace are typically more profitable as the sellers pay a fee to list items and often bear the delivery costs.

Under Marc Lore, CEO of Walmart’s U.S. e-commerce division, the company has mimicked Amazon’s efforts to boost third-party sellers by offering shipping services and giving them access to its logistics infrastructure, which includes its 4,700 stores. As Lore put it at Walmart’s annual investor day this winter: “We need to start playing offense.” At that same conference, McMillon said that the company hadn’t done enough “to support marketplace sellers in terms of the tools and services that we have available.”

For Shopify, the deal is a way to offer its sellers a much bigger potential client base and bolsters Shopify’s value proposition that sellers don’t need to turn to Amazon: Walmart’s website gets about 120 million visits per week. The tie-up follows a partnership with Facebook, announced last month, that incorporates Shopify customers into the social media company’s new Shops e-commerce effort.

Shopify merchants in the U.S. will have to apply to sell through Walmart.com. If approved, they’ll connect their Shopify store to their Walmart Seller Account, which will sync their product catalogs and create product listings on Walmart.com. This will keep inventory and order management, as well as listings, on their Shopify supported site and Walmart.com harmonized.

Shopify told Fortune last month that the number of new stores using Shopify’s e-commerce platform rose 62% in the first six weeks of the lockdowns begun in March, compared with the six prior weeks, as many small retailers were unable to operate their stores and were compelled to go online.

By providing such companies, as well as larger brands, with state-of-the-art tech to handle orders, logistics, and financial management challenges, Shopify has grown from a quiet Canadian tech company to a major Amazon challenger with a market cap of nearly $100 billion. The Walmart partnership aims to build on that.

“Our expertise in multichannel commerce, combined with Walmart’s reach, will allow us to create better online shopping experiences for merchants and consumers alike,” Satish Kanwar, Shopify’s vice president of product, wrote in a blog.

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