Walmart Aims to Take On Amazon by Subsidizing Vendors

It seems as though the holiday online shopping competition is already revving up. Walmart will soon release a new program to compete with the Amazon marketplace, which boasts 40 percent control of the U.S. e-commerce market. On Walmart’s own marketplace site, vendors pay a fee to list goods. Soon, the prices of some of these goods will temporarily lower, but the vendors will still be paid in full with Walmart subsidizing the difference, according to a description of the plan obtained and reported by Bloomberg

This new strategy will be called the Competitive Price Adjustment program, according to Bloomberg.

“It’s a no-brainer,” said Juozas Kaziukėnas, founder of data tracker Marketplace Pulse. “They give up some revenue, but it buys them sales instead.”

Walmart’s new strategy is close in nature to past Amazon approaches, including one called “Discount Provided by Amazon,” which cut prices to third-party products for a limited time, with Amazon making up the difference.

“Weeks ago, Amazon introduced ‘Sold by Amazon,’ a system where sellers give Amazon permission to slash the price of their products at will in exchange for a guaranteed payout to help protect their profit margins,” explains Bloomberg.

Just this past summer, Amazon rolled out a program that allowed it “full control to set prices of third-party products sold on its marketplace — in return for a minimum payout. Amazon has also come under scrutiny for increasingly leaning on vendors to ensure that their products aren’t offered for a lower price on Walmart.com or any other rival website.”

That scrutiny has led the Federal Trade Commission to start looking into Amazon’s business practices, speaking with such third-party vendors to understand if the e-commerce giant has been taking steps to stifle competition.