Attention Walmart Vendors: Your Shipping Costs Are About to Spike

Walmart executives will ask vendors to deliver more merchandise on time or face fines, in an effort to keep their shelves stocked and compete with its rival, Amazon.

Executives want large suppliers to deliver full orders within a one- or two-day window 85 percent of the time, a jump from the previous 75 percent threshold, Walmart chief merchandise officer Steve Bratspies told The Wall Street Journal. The window for smaller suppliers will also increase to 50 percent, from 33 percent. Vendors that miss the mark will be fined 3 percent of the cost of the late items starting in April. Walmart executives plan to announce the changes at the annual conference for suppliers this week.

“This is not a ‘Hey, let’s see how unreasonable we can be,'” Bratspies told the Journal. “We need the product that the customer wants when they want it.”

While the new rules are intended to keep Walmart’s shelves stocked, they put the onus on vendors to invest more in the supply chains. At a time when freight costs are already rising, as suppliers and manufacturers race to find transportation for speedy deliveries, the new requirements are bound to hit with a thud.

“Trying to find a truck in today’s environment is next to impossible,” Cathy Roberson, an analyst with Logistics Trends & Insights LLC, told the Journal. “Fuel surcharges are going up and the suppliers are going to have to pay all of this.” Indeed, the costs attached to last-minute deliveries have increased 20 percent compared with winter of last year.

Walmart executives told the Journal that precise delivery thresholds allow the company to better predict the flow of products while keeping shelves stocked. Walmart first introduced fines for late delivery last year in the hopes of battling against online retailer heavyweights like Amazon.

This article was originally published on www.inc.com viewed 5th February 2018.