After making headlines for raising employee wages earlier this year, Walmart will also be raising fees for its vendors.
The discount retail giant started notifying suppliers last week about the upcoming changes to its supplier agreements, which will also include amended payment terms, Reuters reported Tuesday (June 23).
It looks as though vendors will ultimately feel the brunt of Walmart’s battle with higher costs from wage hikes. The changes are estimated to impact 10,000 suppliers to the company’s U.S. stores, Reuters confirmed.
In the letter to suppliers, a copy of which was seen by Reuters, the company said the changes are expected to bring “consistency to the collection of allowances related to the growth of our business and suppliers’ use of the Walmart supply network.”
“It is not the way Walmart has done business in the past,” Kurt Jetta, head of consumer and retail analytics firm Tabs Group, told Reuters. “This approach suggests that they are seeking areas to offset their increased investment in wages, as well as offset their lack of organic revenue growth.”
A company spokeswoman confirmed such fees were not applied uniformly in the past, but that some (not all) vendors were charged.
The new agreement may see a much larger number of vendors starting to pay fees, subsequently absorbing some of the retailer’s costs. But the details on which suppliers will be receiving what charges — and how much they will be expected to pay — are still unclear.
According to a copy of the amended terms seen by Reuters, a food supplier may be charged 10 percent of the value of inventory shipped to any new stores and warehouses, both of which would be one-time charges. But a charge of 1 percent of the value of inventory would be required in existing warehouses.
The company sees the fees as a way of sharing the costs of growth and ensuring prices remain low, Walmart spokeswoman Deisha Barnett told Reuters: “The changes we have outlined will help us ensure that we are operating at everyday low costs that yield everyday low prices.”
To check out what else is HOT in the world of payments, click here.