What is Walmart's Price Parity Rule?
Walmart's price parity rule is one of the most important policies for third-party sellers on its marketplace. The rule has been in place since 2011, when Walmart marketplace advertising was launched. This blog post will explain what the policy says and how it works. We'll also look at some recent enforcement actions taken by Walmart against vendors that violate it.
So you’re wondering what the price parity rule is, and how it works?
Well, here’s some background on the rule:
- Walmart has used its own version of the price parity rule since 2011. The goal is to ensure that suppliers and vendors offer the same prices to Walmart as they do to other retailers.
- In 2019, Walmart has been enforcing the price parity rule more aggressively than ever before. In January 2019 alone, Walmart cut ties with at least 50 suppliers for not complying with its terms and conditions in regards to pricing.
The rule says suppliers must offer a lower price to Walmart than they do anywhere else.
A price parity rule is a condition with which suppliers agree to abide, requiring them to offer Walmart a lower price than they do anywhere else. This ensures that products cost the same in stores across the world and keeps competition fair between retailers.
Here's how it works: if you sign up to sell your product at Walmart, they expect you to abide by their terms—the most important of which is their demand for lower prices on your products. If another retailer has offered you more money for your product than Walmart account management does, then you're expected to honor that agreement and sell through them instead (unless there's some kind of exclusivity clause).
If not abiding by this rule means losing out on billions of dollars in business each year, suppliers will usually choose to comply rather than risk losing out on sales altogether.
If a supplier violates the rule, it could face fines or be kicked off the platform altogether.
Walmart's price parity rule is a big deal that could affect your business. If you violate the rule, Walmart will kick you off the platform entirely. This is much more severe than just paying a fine. A supplier being kicked off the platform means losing revenue and exposure to a large market—it's not something most suppliers want to risk.
Walmart has been aggressively enforcing the policy in 2019.
In 2019, Walmart has been enforcing its price parity rules more aggressively than it ever has before. According to The Wall Street Journal, some vendors have been kicked off the e-commerce site without warning for violating the policy.
The crackdown comes as Walmart competes with Amazon for third-party sellers on their marketplaces. Amazon's marketplace is now hosting nearly half of all online sales in the U.S., according to NPR, and many merchants who previously sold through Walmart have moved their products over to Amazon in order to reach new customers at lower costs and higher margins.
Some third-party vendors have been booted from the platform without warning.
You might have heard about Walmart's price parity rule and wondered what it means for your own business. After all, the company isn't the only retailer that enforces this kind of policy—it's very common among retailers, in fact.
In 2019, Walmart has been enforcing their policy more aggressively than usual. This is because they are trying to prevent price wars from happening on their platform and protect their brand from being devalued by third-party sellers who undercut them with prices that they can't match themselves with.
When a seller sets a low price on an item and then sells out quickly, it gives consumers a poor impression of Walmart as a whole; if consumers see products priced low elsewhere on the site, they may think those products were priced improperly by Walmart itself (when really they were just sold at such low cost due to third-party sellers). Since Walmart doesn't want to lose its customers' trust by allowing any deals that seem too good to be true on its platform, it has instituted strict rules against undercutting pricing among non-authorized sellers—and will sometimes kick them off without warning if necessary!
The crackdown comes as Amazon and Walmart compete for third-party sellers on their marketplaces.
Walmart's new price parity policy comes as the retailer tries to compete with Amazon, which has a reputation for being more developer-friendly and welcoming of third-party sellers. In fact, Walmart announced its policy change on the same day that Amazon held its annual seller conference in Las Vegas.
At the same time, both retailers are competing for third-party sellers on their respective marketplaces: Walmart launched a new tool called Vendor Express two years ago that helps smaller companies manage their inventory and sales, while Amazon just this month introduced Seller Fulfilled Prime (SFP), which lets U.S.-based merchants ship products from their own warehouses via Prime shipping to customers who pay $99 per month for Prime membership benefits.
Walmart's price parity rule should be taken seriously by 3rd party sellers and vendors
You can be assured that Walmart is serious about enforcing this rule. If you sell on their marketplace, and your prices are not in line with the price parity policy, you will receive an email warning from Walmart letting you know that your listing has been flagged for review. The seller will then have 48 hours to adjust their pricing before they risk being removed from the platform altogether.
If a seller receives a warning email and ignores it, they will first be warned by an account manager at Walmart who can explain how to adjust their prices according to the rules of sellers within 24 hours of receiving the initial email warning. In cases where sellers do not comply with requests made by these account managers within 24 hours, their listings may be deleted and/or suspended pending further review by senior management at Walmart or Amazon Seller Support teams (whichever company currently owns them).
Sellers have also reported receiving phone calls from representatives as well as emails from representatives who are attempting to help them understand why they were sent initial warnings and what steps need to be taken in order to fix any issues found during initial reviews done internally by Walmart's anti-price parity teams."
In the end, it's important to take note of Walmart's price parity rule, especially if you're a third-party vendor or supplier. As noted above, the policy can have serious consequences in terms of your ability to sell on Walmart's marketplace or even stay on board with the company as a whole. It's also worth noting that Amazon has similar policies in place for its sellers and suppliers that require them to offer lower prices than anywhere else in order for their products to be eligible for sale on its platform. If this sounds familiar, it should: these are very similar tactics used by other retail giants like Costco and Best Buy when dealing with vendors who want access to their customers' wallets through their stores.