Walmart in Mexico is demanding discounts from food firms that also supply Amazon, and some are pulling their products from Amazon for fear of adversely affecting their relationship with Walmart, according to a report by Reuters.
The two retail giants are fighting for control of the market in Mexico, which is one of both companies see as among their most important markets. Walmart is currently ahead, the news outlet reported.
When Walmart discovered last year that some businesses’ grocery products were cheaper on Amazon.com, they asked retailers to discount the products for them as well. The fact that those retailers didn’t have a say on how Amazon priced items didn't concern Walmart, according to the report.
Fearing the potential of damaging their relationship with Walmart, two of the suppliers completely pulled their products from Amazon. Both companies sell pantry goods, and Walmart makes up more than 50 percent of their business.
When Reuters asked Walmart about the situation, the firm said it doesn’t talk about Amazon or being in competition, and that it doesn’t tell vendors how to do business. The company did, however, say it always wants to find the lowest prices for customers and that it wants shoppers to always feel like they’re getting the best deal.
“We could never tell anybody that they can’t sell to someone else,” said Ignacio Caride, Walmart Mexico’s eCommerce head. “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.”
The company said it doesn’t make up for losses from one product with revenue from others. Amazon did not comment for the piece.
The vendors said they felt like they were caught in between a war between the two companies, and that their wholesale prices were the same for both. It was Amazon, they said, that chose to discount the items to be more affordable.
The vendors said that instead of lowering its own prices, Walmart took the difference in retail price out on them, docking payments by an amount equaling the price difference multiplied by the amount of inventory stock, a move that cost the vendors tens of thousands of dollars.