Walmart Makes Push to Sell Online Goods at $10 and Up to...

Walmart Makes Push to Sell Online Goods at $10 and Up to Capture Elusive E-Commerce Profit

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A man talks on his mobile phone in front of a Wal-Mart store in Sao Paulo
A man talks on his mobile phone in front of a Wal-Mart store in Sao Paulo, Brazil, February 16, 2016. REUTERS/Nacho Doce

By Nandita Bose
(Reuters)

Walmart Inc is asking vendors to supply it with more merchandise priced at $10 and up, as part of a major push to finally turn a profit at its online business, according to four people with knowledge of the matter

The new focus at the world’s largest retailer is on dry grocery products such as sauces, soaps and general merchandise items such as toys and home furnishings, the sources said.

Walmart’s goal is to see higher profit margins selling these more expensive items given the built-in cost of delivering goods purchased online, according to the people familiar with Walmart’s new strategy.

Shipping Gillette Mach 3 Disposable Razors at $6.97, for example, costs the same as Gillette Fusion5 ProGlide Men’s Razor Refills at $12.97.

 

 

In meetings last week with suppliers including Procter & Gamble Co, Unilever PLC, Kimberly-Clark Corp and Clorox Co, Walmart’s e-commerce chief Marc Lore said Walmart.com wants to focus on merchandise priced at least $5 and preferably, more than $10, the people said.

Walmart has started to understand it cannot make money if they offer the lowest prices online on every item and then spend $4 or $5 trying to ship it over,” said one supplier present at the meetings. “It is not sustainable and more importantly their shareholders won’t allow it.”

 

Walmart’s directive to suppliers marks a shift in strategy. The retailer for years has squeezed suppliers for pennies to drive the lowest prices for shoppers, both online and at its brick-and-mortar stores

Walmart will continue to press for bargain-priced items to sell at its 4,700 stores. But in addition, it will now implore suppliers to provide it with more expensive goods for sale online.

This new emphasis on more higher-priced goods at Walmart.com comes after the retailer acquired Jet.com in 2016 and is investing billions of dollars to make its online business more competitive.

 

 

Walmart declined to comment on the meetings, but affirmed its commitment to “Every Day Low Prices” and offering the best prices online.

“We are constantly looking for opportunities to expand our assortment with new items, and want to ensure that the items we add to the assortment are a great value but also make economic sense for the channel,” a Walmart spokeswoman said.

Two people present at the Walmart meetings in Bentonville, Ark. – who were not authorized to speak on the record – said Walmart wants to avoid selling products online at a loss like rival Amazon.com Inc, where there is much less of a focus on retail profit.

 

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