Walmart Inc. has asked vendors to supply them with more merchandise that has prices of $10 and higher, as part of its big push to finally make a profit at its e-commerce business, said those with knowledge of the situation.
The shift in focus at the largest retailer in the world is for dry grocery products like soaps, sauces, and general merchandise, such as home furnishings and toys, said the sources.
The goal of Walmart is to have profit margins that are higher, selling the items that are more expensive given built in costs for the delivering of goods bought online.
Shipping a package of Disposable Gillette Mach 3 razor blades for less than $7.00 costs the same price as selling Gillette’s Fusion 5 razors that sell for $13.00.
Last week during meetings with its suppliers that included Unilever, Proctor & Gamble, Clorox, and Kimberly-Clark, Walmart’s chief of e-commerce Marc Lore told them that Walmart.com wanted to focus on merchandise that was priced at a minimum of $5 but preferred over $10, said those in attendance.
One supplier present for that meeting said Walmart has begun to understand it will not be able to make money offering the lowest prices on the web on every item then have to spend between $4 and $5 shipping it. The supplier added that it was not sustainable and even more important, shareholders would not allow that.
The directive by Walmart to suppliers marks a big shift in its strategy. The retailer for several years has been squeezing its supplies for any penny it can to push the lowest prices to its shoppers both at its stores and online.
Walmart is continuing to press for its bargain prices goods at its more than 4,700 brick and mortar locations, will also be imploring its suppliers to provide more expensive items to sell online.
The new shift to higher priced items at its online store comes after the discount retailer purchases Jet.com two years ago and has been investing billions of dollars into making its business online much more competitive.
Walmart would not comment on its meetings with vendors, but did affirm the commitment it has for its “Every Day Low Prices” as well as offering the best online prices.
Two people that attended the meetings said that Walmart wants to avoid the selling of products online at a loss similar to what Amazon has done.