What are retailers and suppliers to do when caught between Amazon and Walmart?
What goes around comes around, they say.
For decades, chain supermarkets and independent grocers have objected to what they have perceived as a playing field tilted to the benefit of Walmart. Walmart and consumer packaged goods suppliers, it was alleged, worked out deals that smaller rivals were not able to access. Some independents would shop their local Walmart to buy items at prices lower than they could get from their suppliers. The Robinson-Patman Act was, many said, a joke.
With this as a backdrop, it has been interesting in recent years to see reports of Walmart exerting pressure on suppliers as it begins to see itself being undercut on price by Amazon.com. Reuters reported yesterday that a small number of suppliers in Mexico have stopped doing business with Amazon over concerns it could cost them Walmart’s business.
On CNBC’s “Squawk on the Street” show, host Jim Cramer recently said that his sources believe Walmart management isn’t paranoid; Amazon is out to get their business.
“They hate, hate, hate Walmart. Walmart is the biggest grocery chain in the country,” Mr. Cramer said. “Amazon will stop at nothing to take away the share that Walmart has gained.”
In the U.S., reports in recent years have shown Walmart and other large retailers have pushed trucking company vendors and technology providers to ditch Amazon. The issue of tech vendors using AWS has been a particularly thorny issue as many retailers see Amazon’s hugely profitable cloud business underwriting the price cuts on its retail marketplace.
- Mexico’s Walmart pressures suppliers on pricing, forcing some to ditch Amazon – Reuters
- Cramer: My sources at Amazon indicate to me they’ll do whatever it takes to undercut Walmart – CNBC
- Should Walmart restrict carriers from working with Amazon? – RetailWire
DISCUSSION QUESTIONS: Do retailer complaints about rivals getting better deals from suppliers point to an anti-competitive current in the industry today? What is the solution for retailers and vendors if such a situation exists?