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Why Walmart Wants to Sell More Stuff for $10 and Up

February 8, 2018, 12:01 PM UTC

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 purchase, and its sales are booming—the last quarterly results showed they were up 50%.

However, 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 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.”