Walmart is subsidizing merchants to offer lower prices on its e-commerce marketplace - Business Insider

reports. The initiative, called the Competitive Price Adjustment program, only lowers merchants' prices temporarily, and sellers cannot request to be part of it.Walmart's move is likely a reaction to Amazon's recent initiatives that enable it to better compete on price.

Sold by Amazon, which launched in August, gives Amazon the ability to control the prices of third-party goods on its marketplace. Merchants can voluntarily join the program, and they receive a guaranteed minimum payout so that they're not impacted by Amazon's discounting, per . This allows Amazon to ensure its marketplace prices are as competitive as possible, and it can leverage its tremendous revenue to afford to offer steep price cuts if it wants to. free next-day delivery for inexpensive items, even if the transactions cost it money because of shipping expenses.

Keeping up with Amazon on price, though extremely difficult, is key to competing with the e-commerce titan given price's influence on purchase decisions.

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