Walmart Presses Suppliers In Mexico On Pricing, Some Forced To Leave Amazon: Reuters

Those Mexican based food companies who supply grocery to Amazon have been penalised by the Mexican unit of Walmart. The extent of the pressure form Walmart has been such that some of the companies have been forced to withdraw their products from the largest e-commerce platform of the world, claimed a news report published by Reuters quoting sources.

This strategy, according to the sources, is driven by the growing completion between the companies in one of the most important foreign markets for them. Currently, the Mexican market is dominated by Walmart.

The report, quoting sources, claimed that last year Walmart demanded that those companies whose products were found to be placed at a lower price on the Mexican website of Amazon.com Inc should give it a discount. The suppliers however did not have any role to play in the strategy of Amazon in lower pricing of those products compared to Walmart’s.

The Reuters report further claimed admission from two suppliers of them swiftly moving their products and brands from the Amazon’s platform as they were not ready to jeopardise their links with Walmart de Mexico. More than half their supermarket sales in Mexico is accounted for by Walmart, said the companies who are suppliers of common pantry goods.

Walmart refused to discuss or divulge anything about its rivalry with Amazon in Mexico nor about the allegations made by the supplier when contacted by Reuters, the report said. The retailer said that it does not give any direction to its suppliers about with whom they should do business. The largest brick and mortar retail chain of the world however acknowledged that it always tries to get the lowest possible price form its suppliers in case a lower price is being offered on similar products by rivals.

“We could never tell anybody that they can’t sell to someone else,” Ignacio Caride, Walmart Mexico’s e-commerce head, told Reuters. “If we think there’s an opportunity to lower our prices, because we see better prices at other retailers, we’re going to negotiate for that access,” he said. In a statement the company further said that its aim to offer the lowest possible price is geared to ultimately benefit the consumers but does not follow a policy of subsidising losses for some products by taking out revenues from others.

There was no comment available from Amazon.

Almost 60 percent of the supermarket sales in Mexico is owned by Walmart and thereby is the largest retailer of the country. it operates through its Walmart stores Superama, Sam’s Club and Bodega Aurrera stores. The company also has a growing online sale channel but currently it accounts for just 1.4 per cent of the total revenues as reported last year.

Amazon started business in Mexico in 2015 with the launch of its Mexican website and is currently the largest online retailer in the market. but it was just last year that the company began selling grocery in the market.

(Adapted from Reuters.com)

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