Walmart is starting to court higher-priced items and brands for Walmart.com in an effort to avoid selling items at a loss.
- Walmart is asking its vendors for more items that would sell online for at least $5, according to Reuters.
- This is part of an effort to avoid selling lower-priced items online.
- Selling cheap items online can result in a loss that is typically absorbed by big sellers like Amazon.
Walmart is going big online— but it’s doing it in its own way.
Not content to sell lower-priced items at a loss, Walmart is asking its vendors to supply it with higher-priced items and brands to stock online, Reuters reported, citing people familiar with the matter.
The retailer told some of the world’s largest consumer-goods producers — Procter & Gamble, Unilever, Kimberly-Clark, and Clorox — that it would prefer to sell items that cost at least $5, and ideally, more than $10.
The move comes as Walmart becomes more concerned about the costs of selling items online. It would prefer to sell things that have a larger margin online, in order to better cushion the larger built-in costs of e-commerce.
“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,” one supplier who attended meetings with Walmart told Reuters. “It is not sustainable and more importantly their shareholders won’t allow it.”
This doesn’t change Walmart’s budget assortment in its stores. Still, the larger platform and unlimited shelves online allow it to offer a wider assortment of differently priced products there.
Walmart also dove headfirst into the murky water of free shipping, awarding the perk to every order $35 or over and allowing it to better compete with Amazon’s two-day free shipping benefits for Prime members. Unlike Amazon, however, there is no membership fee that would cushion the blow for items that must be shipped at a loss.
In lieu of an order minimum, Amazon restricts some smaller, cheaper items to “add-on” only — which can be purchased only with an order of at least $25 — to try and avoid some losses. Still, there’s no doubt that some of Amazon’s shipments lose money for the company — a cost Amazon seems to be willing to bear if it increases customer loyalty.
Walmart’s latest move seems to be part of a broader plan to move upmarket online and provide a broader assortment of goods. Last year, it announced a partnership with Lord & Taylor to offer higher-priced designer apparel and accessories on Walmart.com.
Source: Pulse. Ng