A senior Welsh Labour member said it is "disappointing" the party has no ethnic minority general election candidates.
Shavanah Taj, vice-chairwoman of the party's BAME committee, said the party should consider all-BAME shortlists.
The Welsh Liberal Democrats have three BAME candidates, Welsh Conservatives have two and Plaid Cymru has one. The Brexit Party said it did not record candidates' ethnicity.
Welsh Labour said its ambition was for candidates to represent "modern" Wales.
The two BAME Conservative candidates and one Liberal Democrat are fighting seats where their party finished second last time.
'Get with the programme'
Ms Taj said seeing the Welsh Conservatives and Welsh Lib Dems select BAME candidates in key seats puts the matter in sharp focus for Labour.
Wales has never had a black or Asian MP.
"It's that moment where you've got to wake up and smell the coffee," she said.
"Because those two parties, as much as I disagree with their politics, the fact of the matter is that they have clearly put something in place that has encouraged more people to come forward.
"And we need to get with the programme, we need to actually accept that if we are going to win elections, we need to have a wider pool of candidates who are much more reflective of the type of Wales that we are."
Ms Taj said all-BAME shortlists should be considered by the party, adding: "I think we should definitely explore that opportunity.
"We've got the assembly elections, then we've got the council elections coming up. We've got a lot of work to do.
"I'm not saying that it's impossible because both the leaders of UK Labour and Welsh Labour are committed, but we need to see a big step change."
'An English story'
Sunder Katwala, director of think tank British Futures, said he had seen a big increase in ethnic diversity in the past 10 years in the House of Commons.
"Go back 10 years and there were just 10 ethnic minority MPS. That's one in 40. It was 52 in the last parliament. It will go up, depending on the results, but it will go up to 60 this time," he told Radio Wales Breakfast.
"We're looking at one in 10 in England from an ethnic minority background.
"It's very much an English story. It hasn't been the case in Wales at all. It's been very, very rare for there to be ethnic diversity in the House of Commons [from] Scotland as well."
Welsh Labour said it wanted candidates to "represent modern Wales in its full diversity".
It said 57% of its candidates were women and 13% identified as LGBT+.
A spokesman added: "Over the past year, our new future candidates programme has begun supporting BAME party members to stand for election and we are reforming our structures to ensure BAME representation throughout Welsh Labour.
"Welsh Labour is the party of equality and we will redouble our efforts to ensure that is reflected in our elected representatives.
"As it currently stands, political parties are not permitted by law to have all-BAME shortlists."
A Welsh Conservative spokeswoman said: "We try to encourage people from all communities and walks of life to engage with us and get involved with the Welsh Conservatives."
A Brexit Party spokesman added: "Candidates weren't required to give information about their ethnicity when applying and were picked on merit rather than characteristics such as age, religion, gender, ethnicity etc."
The deadline for candidate selection is Thursday.
You can see more on this story on Wales Live on Wednesday at 22:30 GMT on BBC One Wales