Walmart’s Low-Price Strategy Breaks Down Online | RetailWire

Walmart is known for its commitment to low prices, but the company is discovering that shipping the lowest-priced products is making it tough to turn a profit with e-commerce. So, the chain has begun encouraging consumer package goods vendors to provide higher-priced items to sell on Walmart.com.

Earlier in February, Walmart eCommerce CEO Marc Lore informed big-name CPG companies like Proctor & Gamble and Unilever that Walmart.com wants to focus on selling items that cost at least $5 and preferably more than $10, according to Reuters.

The rationale is that if a customer orders, for example, a $15 bottle of shampoo, it will provide the company with a decent profit after the cost of shipping is factored in, whereas those costs exceed the value of a $1 bottle of the same size.

Walmart is notorious for demanding ultra-low prices from suppliers to keep prices low on its store shelves. Just last year, vendors expressed frustration that Walmart had grown even more demanding on pricing over the previous 18 months. Suppliers reported not being allowed to increase prices despite being able to demonstrate rising costs on the manufacturing side.

But Stephen Needel, managing partner at Advanced Simulations, pointed out that Walmart will still aim to have lower prices on its higher-priced e-commerce goods.

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Walmart’s Low-Price Strategy Breaks Down Online.