Via Ad Jab, we see how hard it can be for vendors to get on Wal-Mart's shelves:
Getting into Wal-Mart is an entrepreneur's equivalent of making it to Broadway. Even a short run on the shelves there can help transform an invention from niche product to household name. And while Wal-Mart certainly isn't the only retail path to commercial success, nor the right outlet for every product, for mass-market merchandise at a certain price point no other bricks-and-mortar retailer reaches so many shoppers. Today the company has 5,300 outlets world-wide, and gets more than 138 million customers a week.It takes 6 months to a year to become a new Wal-Mart supplier with a purchase order; is that a strength or a weakness for WM?But as with Broadway, there's more than enough talent to fill the stage. Last year about 10,000 new suppliers applied to become Wal-Mart vendors. Of those, only about 200, or 2%, were ultimately accepted. "We just don't have very many empty shelf spaces," says Excell La Fayette Jr., Wal-Mart's director of supplier development.
Posted by Kevin on September, 21 2005 at 03:44 PM
Bobby wrote:Strength. I go to Wal-Mart to load up on all of my staples. I guess I am not a very curious shopper, though. I know what I want and I want it cheap. Kind of glad not to be distracted by a bunch of new fangled doilies slotted in here and there throughout the store. Just give me my mac and cheese. And my tp and my laundry detergent and all that good stuff! :)
-- September 21, 2005 09:09 PM ∞
Kevin Brancato wrote:I go to Wal-Mart or Target when I need a variety of household and automotive goods. But I actually go to Costco (across the street from my workplace!) for laundry detergent, fruit, tp and mac and cheese. For a Wal-Mart blogger, that's a truly damning self-incrimination!
I don't know where you live, (I'm right outside of DC), but it seems that in many rural areas, Wal-Mart is by far the dominant retailer. Would there be a more worthwhile role for those rural stores as "experimenters"?
Tangentially, how does WM determine which stores should be the test locations for new products?
-- September 22, 2005 09:09 AM ∞
Matt wrote:I think that the article is a little misleading. While it is difficult for a smaller vendor, acting alone, to get in as a supplier, there are easier ways of going about it.
Within a stones throw of my office, there are at least ten companies that do nothing but take on multiple manufacturers and present their products to Wal-Mart. WM used to be opposed to dealing with manufacturers reps, but later realized that they could get better prices from them. If every little company had to employ a sales force, analysts and the rest of the support team you'd need to coordinate keeping WM in stock, it would have to drive the price of their products up. By paying the rep a percentage of the Wal-Mart PO, they avoid the extra costs. they also avoid having to go through the full vendor agreement process.
As to the testing of new or regional products, local managers and DM's do have some leeway, especially when you get into highly ethnic areas. If you go to a store in Louisiana, you'll find quite a few local products you won't see anywhere else in the country. They are generally delegated a certain amount of shelf space to test these products.
-- September 23, 2005 12:44 PM ∞
