Retail

Why Walmart’s eCommerce Expansion Is Facing Resistance From Premium Brands

Walmart

To bring higher-end products to its website, Walmart had courted brands like water-filtration company Katadyn for months. As part of its efforts, the retailer gave some brands the opportunity to determine how outside sellers on the its website price and display their products. But Walmart’s efforts, amid its wider eCommerce push as it inches into Amazon’s territory, have met some resistance from the very brands that Walmart wants to sell on its site.

Sports bag supplier Deuter and trekking equipment provider Leki, among other brands, have requested that they be taken off of Walmart’s website. According to The Wall Street Journal, the retailer has complied with such requests. These brands are objecting because of pricing. They believe that, by having their products listed on the eCommerce retailer’s website, the price of their products would be driven lower. Walmart is not the only company under pressure in the matter: Rival retailers have “told brands they would stop selling their products if they remained on the site,” The Wall Street Journal reported.

Katadyn North America’s president, Shawn Hostetter, said that retailers competing with Walmart “were very frustrated by our decision” to offer products through Walmart’s website. As a result, some retailers planned to stop selling the Katadyn’s offerings. In the end, Katadyn “made a decision that this time is not the right time to be on [Walmart’s site].”

In comparison to the typical Walmart brick-and-mortar store, the its website offers an exponentially larger selection of items. While the retailer offers roughly 100,000 items in its Supercenters, it offers over 70 million products online. And, despite its efforts to bring high-end products to its website, Walmart is faced with the constant tension for balancing its brand image of “everyday low prices” with the need for premium brands to maintain their premium pricing.

Moving Into The Outdoors

In an effort to bolster its eCommerce offerings, Walmart has been on a bit of an acquisition spree. To that end, the retailer purchased fast-growing outdoor gear retailer Moosejaw for $51 million in 2017. The deal came on the heels of the retailer’s acquisitions of online footwear store ShoeBuy and six months after its purchase of Jet.com. Before its acquisition, Moosejaw was a relatively small retailer with 10 stores and a popular website.

Much like the deal with Jet.com, Walmart was to allow Moosejaw to continue to operate its website and stores as a standalone brand and remain based in its Michigan location. However, there was to be website integration for things like hipping rates, credit card fees and transaction processing fees. Walmart’s online growth has re-accelerated in the last two quarters after a slow preceding eight. To that end, Walmart.com spokesman Ravi Jariwala told Fortune, “[Walmart has gained] the experience of another well-established eCommerce player, this time in the active outdoor category.”

Opening Curated Shops

More than a year after its acquisition of Moosejaw, Walmart brought the company further into its eCommerce fold by announcing a new premium outdoor shop in August. In a press release, Eoin Comerford, general manager of outdoors for Walmart U.S. eCommerce and the CEO of Moosejaw, said, “It’s kind of an honor, since this is the first time that Walmart is creating an online store on its flagship site curated by one of its acquired specialty retailers.” But the move wasn’t well-received by all brands — and the retailer it found itself on the receiving end of a cease and desist letter from one brand that was asking to be removed from the shop.

That brand, climbing gear company Black Diamondreportedly asked Walmart to stop using its name and trademarks “in a manner likely to confuse consumers into believing that Walmart is an authorized dealer of Black Diamond or that the new outdoor Walmart.com site is otherwise associated with or sponsored by Black Diamond.” In a statement, President John Walbrecht of Black Diamond said that the brand “remains committed to [its] specialty retail partners and [does] not plan on deviating from this strategy.”

Walmart, for its part, has taken down all Black Diamond products and images, and a Walmart spokesperson told RetailDive that the company “would never activate a brand without their permission.” How will Walmart balance its desire to expand its eCommerce catalogue, while meeting the needs of high-end brands? That remains to be seen, but at the same time, Walmart has been at work to bring new brands to the platform, in effect, replacing the ones that have left.

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