To retain its dominance in the highly lucrative Mexican market, Walmart is reportedly now implementing some tough negotiating tactics on its various suppliers in the country.
According to reports, which cited sources close to the matter, Walmart is apparently now trying to force suppliers to pull out their products from its rival Amazon, through a series of demands and low-key threats of possibly ending its contracts.
According to the suppliers themselves, Walmart has apparently been sending demand letters to companies who had been found to be selling their products at lower prices on Amazon's website.
Several of the suppliers reportedly pulled their products from Amazon's website, fearing that they might lose their business relationship with Walmart de Mexico.
Most of the companies heavily rely on sales generated from their relationship with Walmart, leaving them with no other choice. Despite huge sales potential on Amazon's platform, some companies still dropped their products simply because they couldn't afford to lose their biggest customer.
Some suppliers have mentioned that they were merely caught in the crossfire between both retail giants. Two companies had told reporters that they actually sold their products at the same price to both retailers.
However, Amazon just chose to sell their products cheaper than Walmart. Instead of matching Amazon's prices, Walmart instead chose to go after its suppliers demanding that they sell their products at a cheaper price.
Amazon launched its Mexican website in 2015 and has continually been growing as an online retailer in the country ever since. Last year, the company started to sell its groceries online.
Walmart currently dominates the retail market in Mexico, with over 2,400 Walmart, Sam's Club, Bodega Aurrera, and Superama stores in the country. The company currently has the lions-share of Mexico's supermarket sales, currently standing at around 60 percent.
Amazon is slowly cutting into Walmart's shares, which likely has led to the company's tough tactics.
Walmart did not immediately comment on the allegation made by its suppliers, but it did mention that it did not in any way dictate whom their suppliers can do business with.
The company also stated that it always aims to get the lowest possible price from its suppliers, especially if its competitors are giving shoppers a better deal. Walmart Mexico's e-commerce head, Ignacio Caride, mentioned in a statement that the company will always negotiate for better prices if it sees that other retailers are selling the same products at lower values.
In the United States, Amazon quickly overtook Walmart in online grocery sales. Walmart likely does not want a repeat of that in Mexico, which it considers to be its second-largest overseas market after the UK.
