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Walmart Strategy To Generate E-Commerce Profit Is Focus On Push At Selling Online Goods At $10 And Up


02/08/2018


Walmart Strategy To Generate E-Commerce Profit Is Focus On Push At Selling Online Goods At $10 And Up
As a part of its strategy to generate a profit for its online business, Walmart Inc has directing its suppliers to supply products that are priced at $10 and more, according to sources as reported in the media. 
 
The sources reportedly said that the focus of the largest retailer of the world is on general merchandise items like home furnishings and toys and on dry grocery products such as sauces, soaps.
 
The media quoted people with knowledge of Walmart’s new strategy that the company wants to cover the cost of delivering products purchased online and for this purpose, it wants to sell these costlier products so that the company is able to generate higher profit margins from its online business.
 
Sources also reported the company intends to concentrate on goods that are priced at least $5 and over $10 preferably. This was communicated by the Marc Lore, chief of Walmart’s e-commerce wing, to its major suppliers including Procter & Gamble Co, Unilever PLC, Kimberly-Clark Corp and Clorox Co in series of meetings earlier this month.
 
“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 present at the meetings reportedly told the media. “It is not sustainable and more importantly their shareholders won’t allow it.”
 
This is a shift in the strategy of Walmart. For years now, the company had forced suppliers to supply products at the lowest possible cost for its brick-and-mortar stores as well as its online platform. For its 4,700 physical stores, the company still focuses on bargain-priced items. But for its online platform. Walmart would press its suppliers for providing more expensive goods for sale.
 
The retailer is now expending billions of dollars to create a better and more competitive online business and has been under pressure ever since it acquired Jet.com in 2016.
 
Mo comments were made by Walmart. The company however told the media about its commitment to “Every Day Low Prices” and best price offering on its online platform.
 
“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.
 
Unlike rival Amazon.com, Walmart does not intend to sell products online at a loss, according to sources quoted in the media. Amazon.com is not completely focused on making retail profits. There are a number of factors like price-matching, an order’s size, shipping speed and other factors that determine Seattle-based Amazon making profits on some of its transactions.
 
The retail losses at Amazon is typically offset by a diverse range of profitable businesses which include commissions charged from third-party sales being done on its site and advertising sales. The company also makes profit from its cloud computing business for large enterprises.
 
According to digital research firm eMarketer, while Walmart’s accounted for 3.6 percent of U.S. e-commerce sales in the 12 months to October 2017, Amazon accounted for 43.5 percent. In the last one year, there has been a three-fold increase in the sale of its items to reach 70 million by Walmart. However, that number is still far from the 300 million products for sale put up by Amazon and Walmart has targeted that number.
 
(Source:www.reuters.com)