Walmart wants to sell more expensive stuff through its online operation, according to a Reuters report.
Per that report, the company is asking its suppliers to provide more things it can sell at $10 and up. Here’s why.
Walmart wmt has put a lot of money into its e-commerce business, most notably through its $3 billion Jet.com purchase, and its sales are booming—the last quarterly results showed they were up 50%.
However, Walmart.com is not yet profitable, and a big part of the reason for that can be found in delivery costs. As the operation tries to do battle with Amazon amzn , this will prove to be a crucial factor.
A cheap item costs the same to ship as something the same size and more expensive. So it makes more sense to push on the expensive side, where shipping comprises a smaller proportion of the total cost.
According to Reuters, Walmart e-commerce chief Marc Lore last week told suppliers such as Procter & Gamble, Unilever, and Kimberley-Clark that the online operation wants to be selling things that are worth at least $5, and preferably twice that.
“We are constantly looking for opportunities to expand our assortment with new items, and want to ensure that the items we add to the assortment are a great value but also make economic sense for the channel,” a spokeswoman told Reuters, without offering comment on the meetings themselves.
But a Walmart.com supplier told Reuters that the company has “started to understand it cannot make money if they offer the lowest prices online on every item and then spend $4 or $5 trying to ship it over.”