Thursday, March 19, 2015

Walmart and Its Relationship With Suppliers

Walmart is by far the largest retailer in the world. It has based its supremacy first by dominating small US markets where large retailers at the time did not want to invest, but then developped main assets such as a strong supply chain management thanks to information system, a highly effectif approach of category management and cost killing, and then a strong power of negociation.

I read a very detailed and interesting post of the Fast Company about the relationship Walmart has with its supplier. Obviously, it pictures an oger willing to eat of its supplier. I don't really want to take side in this article as I am part of the trade, but obviously, you can see why it really matters to have great relationship between a retailer and its suppliers. The reason why I share with you this article is that it is difficult to find information on how Walmart proceed in terms of negociation, and it may be by far the most documented article I found.

It highlights there are positive aspects about having Walmart as a client:
- The raise of sales, and market shares
- The ability to reach by far the largest number of people on the planet
- The ability to be leaner and more efficient as a supplier, by killing costs wherever they are

And some side effects:
- Lowering the % of margin and earning market shares at Walmart also implies less margin at its competitors
- It may have a social impact as some suppliers have hard time keeping on the pace.