Supply Chain

Walmart to Hit Suppliers with Hefty Fees

The move, which applies to 10,000 suppliers, is meant to compensate for higher labor costs.
Katie Kuehner-HebertJune 25, 2015

Walmart is trying to compensate for higher labor costs with plans to charge stocking and warehousing fees to nearly all of its suppliers, Reuters said Tuesday.

The changes, which also include amended payment terms, will affect 10,000 suppliers to the company’s U.S. stores, according to a letter Walmart sent to suppliers that was obtained by Reuters. In one example, Walmart is seeking to charge a food supplier 10% of the value of inventory shipped to new stores and new warehouses, “both one-time charges,” and 1% to hold inventory in existing warehouses. The document doesn’t specify whether the “one-time charges” apply only to the initial shipment or cover a certain period of time.

Previously only some suppliers were charged fees. The changes would bring “consistency to the collection of allowances related to the growth of our business and suppliers’ use of the Walmart supply network,” company spokeswoman Molly Blakeman told Reuters.

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This is not the way Walmart has done business in the past, Kurt Jetta, head of consumer and retail analytics firm Tabs Group, told Reuters. “This approach suggests that they are seeking areas to offset their increased investment in wages, as well as offset their lack of organic revenue growth.”

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