Retail giant Walmart Inc. has reportedly requested suppliers to provide it with higher-priced items, as part of its new plan to generate more income at its online business.
Sources familiar with the matter stated on Thursday that the Arkansas-based company wanted to sell products priced at least $5 and if possible, $10 and up on Walmart.com.
Walmart’s meetings with suppliers were believed to have included Procter & Gamble Co., Kimberly-Clark Corp., and the Clorox Company.
The new strategy is meant to boost the retailer’s online profit margins, given the built-in cost to transport merchandises bought online.
Shipping Gillette Mach3 Disposable Razors at $6.97, for instance, will have a similar price to the Fusion5 ProGlide Men’s Razor Blades of $12.97.
One supplier said that Walmart came to realize it would not be able to make money if they keep offering bargain-priced goods online and then pay a $4 or $5 shipping fee, adding that it is unsustainable and their shareholders will not allow it.
The company has long been urging suppliers to push the lowest prices for customers, both online and at its brick-and-mortar stores.
Walmart will continue to push for low-cost items at its stores, but it will now ask sellers to supply it with pricier products for sale on Walmart.com.
Walmart.com already started to raise prices on some merchandise last year. Carrying out the new strategy means the retail giant is taking that plan another step further.
However, the main risk of this approach would probably be Walmart losing a significant number of buyers. Offering more than $10 goods online could discourage bargain shoppers to purchase items on the site, pushing them to look for low-cost products somewhere place else.
The company on the other hand, seemed to have a solution for that, as it has been making an effort to draw a slightly more affluent audience to Walmart.com.
Walmart’s plan came after it bought American e-commerce group Jet.com for $3 billion in 2016. It is also investing billions to further strengthen the competitiveness of its online business.
Walmart Reportedly Plans on Buying a Big Stake in Flipkart
Walmart might just be having another investment, as the retailer was believed to be planning on taking a big stake in e-commerce company Flipkart to take on major online retailer Amazon.com Inc. in the US and across the globe.
People with knowledge of the matter stated that talks between Walmart and Flipkart involved several options, such as acquiring stakes from the Indian company’s early shareholders.
The brick-and-mortar retailer was reportedly planning to spend somewhere between $5 billion to $10 billion to purchase the stake.
While Amazon remained true to its commitment to the Indian market, for Flipkart to outperform competition, it will likely need to team up with big businesses, such as Walmart.
If the offer finds favor with Flipkart, it would double the e-commerce group’s valuation at $18 billion to $20 billion. It would also be one of the largest cross-border deals in India.
Japan’s telecom company SoftBank Group Corp. currently holds the largest stake of about 23.6 percent in Flipkart, followed by investment firm Tiger Global Management LLC with 20.5 percent and media group Naspers with 13 percent.