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Retailers Fining Suppliers For Late Deliveries

Large retailers who are fed up with late deliveries and supply chain problems ahead of Xmas are moving to fine suppliers who fail to deliver on time, and it could catch on in Australia.

Stores such as Target, Kmart, and Walmart in the USA along with Amazon are getting tough after the lifting of COVID bans with anything less than exact compliance result in potential penalties from fines to losing shelf space when contract negotiations come up.

Some observers claim this will be a challenge for small brands that often have limited resources to scrutinize shipments

The issue is not just about late delivers it also involves manufacturing “stuff ups”.

US supplier Marta Cros, who owns a natural skincare company experienced firsthand after Walmart started selling some of her products last year.

A mishap with the barcodes on an order of lip balms triggered penalties and delayed payments that led to about $200,000 in losses, she said.

She recouped roughly 90% of that, but only after about 10 months of back-and-forth with the retailer.

“You need to be very conscious about what you’re getting into,” said Cros, who doesn’t blame Walmart.

“You can freak bankrupt your company if you’re not very careful.”

In the USA Target is beefing up the team in charge of policing orders, according to a person familiar with the matter.

The number of companies levying supply-chain charges also is growing, said David Friedler, managing partner at consumer-goods consultancy Simpactful with Walmart recently rolled out extra levies for suppliers.

Walmart is telling suppliers that their shelf space will be reviewed more frequently than in the past, a person familiar said, and that vendors with persistent out of stocks could see their products quickly replaced.

According to Bloomberg, the retailer also is looking to capitalize on trends, including those sparked by social media, by quickly swapping items in and out.

Walmart said its goal is ensuring items are in stock.

“The customer is at the centre of everything we do and one of the best ways we can help them save time and money is by having the products they want, when they want them,” the company said.

“We appreciate our suppliers and the work they are doing to help ensure their products more efficiently through the supply chain to our stores — and ultimately to more of our customers.”

Some suppliers said they’ll start raising prices to recoup the new charges.

Amazon.com sellers vowed as much when the firm levied a 5% fuel and inflation fee on online merchants that use the Companies delivery network.

“There are companies that are literally saying, ‘we’re paying Walmart more in fines that we made on this invoice,’” one observer said.



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