Walmart Canada: Digital Shoppers Cause For New Supplier Fees

The CEO of Walmart Canada and another top executive are publicly defending the chain’s new assessment on suppliers of a 1.25 percent fee on all goods, and an additional 5 percent fee on eCommerce sales, Canada’s Financial Post reported.

The fees have generated pushback from groups representing businesses such as farms that supply Walmart Canada, according to the report. The executives made the remarks quoted by the Financial Post in response to legislative efforts to impose new government controls on such arrangements.

“I’m not for [government controls],” Walmart Canada CEO Horacio Barbeito said, the Financial Post reported. “There’s healthy competition in the market. I think the rules are clear. This is common practice in commerce. You have suppliers and retailers in general just thinking about the customer and the ways to serve them.”

He said, per the report, that there are more digital shoppers because of the pandemic, and they cost more to serve.

Walmart Canada’s chief merchandising manager, Kieran Shanahan, added per the report: “We’re making these big investments. They certainly benefit our supplier partners.”

Representatives of suppliers argue, however, that Walmart’s ability to impose the fees is proof the current regulatory scheme fails to contemplate Walmart’s market power, the report stated.

Food, Health and Consumer Products of Canada CEO Michael Graydon said in the report that the fees indicate not “a competitive marketplace,” but “a consolidated marketplace where you have the power to be able to do that. The manufacturing community has no choice. If they wish to sell to that particular retailer, they’ve got to follow the line.”

In an annual report for fiscal year 2020, Walmart stated that Walmart Canada net sales for the fiscal year fell to $18.42 billion from $18.61 billion in fiscal year 2019. While not breaking down eCommerce sales by country, Walmart reported that for all countries outside the U.S. combined, they grew to $11.8 billion in 2020 from $6.7 billion in 2019.

During the fourth quarter of fiscal year 2021, Walmart reported, Walmart Canada posted “eCommerce sales growth driven by strength across all categories” and an increase in eCommerce net sales of 229 percent.

Walmart Canada executives had already spoken publicly about the controversy prior to this past week, stating it is reasonable for a company spending $3.5 billion over five years on modernization in a country to expect suppliers to help underwrite the cost.

Walmart Canada states in promotional materials that it has 90,000 employees working at 400 stores in the country, and its eCommerce site, walmart.ca, is visited by 900,000 Canadians per day.