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Comment by notatoad | Hacker News Reader

ruthless. they handle so much more volume than any other retailer that suppliers are willing to sign anything just to be a part of it. all losses are passed back to the suppliers, which enables wal-mart to take huge risks.

the sibling comment to mine references a huge volume of pop-tarts being shipped to florida in preparation for a hurricane. if during mid-shipment the weather changed, wal-mart would call up the supplier, cancel the order, and all the trucks would return the pop tarts to their suppliers at no cost to wal-mart. with pop tarts it isn't such a big deal because they don't spoil, but farmers who supply wal-mart will get shipments of spoiled produce returned to them if wal-mart decides they don't need quite as much volume that week. and they just have to deal with it, because they can make more money getting screwed by wal-mart than they can selling to ethical companies.

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If they make more money this way why are they getting screwed?

I'm not a Walmart hater, but as I understand, the company requires their suppliers to open their books for the inventory they sell to Walmart. If the company "makes more money", Walmart will squeeze them to lower their wholesale cost, but that won't necessarily be passed to the consumer.

Essentially, if you get in bed with Walmart, you will make the money you want in the short term, but eventually, if you want to keep that money coming in, you will lose control of your pricing.

This doesn't even get into exclusivity requirements for products, etc.

See Snapper lawn mowers, for some insight to this process.

Make a deal with the devil... and you'll end up at the behest of the devil.

>the company requires their suppliers to open their books for the inventory they sell to Walmart.

They do. And they'll start making demands about how you run your business (e.g. "stop buying this local, you need to buy it from China and here are a list of companies we recommend you use"). You will have lots of sales through Walmart but you have to be careful that they don't destroy your business on a whim. See Dill Pickle Co for an example.

See what? I can't find what you're referring to.

It's referring to the anecdote of Vlasic, a pickle manufacturer, and it's woes of being a supplier to Wal-Mart. Basically, Wal-Mart negotiated hard with Vlasic to provide gallon(!) jars of pickles at at much lower margins than the company was used to.

That nationwide Wal-Mart "every day low price" cannibalized sales of smaller pickle units at other stores and Vlasic saw it's profits on pickles fall 25%.

In unrelated news, Vlasic filed for bankruptcy a few years later.

The entire tale is told in much better narrative by a 2003 Fats Company article: http://www.fastcompany.com/node/47593/print

Generally what happens is that the company wants the volume from Walmart, and thinks it will lead to lots of profit, but Walmart ends up making most of the profit, and the company spends a lot of money and then is overextended and can't even stop selling to Walmart without taking a big loss, since there is no replacement volume out there.

But any company making a deal with Walmart should know this by now, so who is really to blame?

One story that I think can help explain why many companies are stuck selling to Walmart is this one: http://www.fastcompany.com/node/47593/print

The issue quickly becomes a "damned if you do, damned if you don't" issue. If you supply them, they quickly drive your margins to the point where you have to offshore to stay in business. If you don't supply them, you get cut out of the largest retailer in the US and lose that way. Either way, you are screwed.

As I mentioned earlier, if you replace your ERP system (or upgrade it past a certain dollar point), you have to modify it so that Walmart has direct access to the internals. This means that they're placing (and cancelling) orders directly in your system without intervention (if you aren't careful, this can foul up your staffing). This also means that they know your costs, expenses and margins. You aren't going to have any negotiating power when it comes time for them to lower your prices.

In other words, Wal-Mart requires that you use efficient, modern production techniques and they will help you implement them. But if you don't, they will find a competitor who will. Brilliant.

Your comment is fiction. Suppliers love walmart because walmart doesn't play those games with them, and walmart pays immediately, not after 90 or more days.

Do a little research next time.

The only people who really hate walmart are unions. Both consumers and suppliers love them. Small businesses have mixed feeling - yes walmart eats some of their business, but having a store near a walmart is great for them.

I certainly don't know for sure, but I've seen several documentaries with convincing footage, and read several forum posts, with corroborating replies from a variety of people, that indicate that WalMart does in fact screw over its suppliers, at least sometimes.

Calling the idea of this "fiction" is a bit disingenuous, imho.

I read from the fingers of a farm owner about Wal-Mart regularly doing things like committing to buy all of a farm's output of some crop, setting a pickup date, then being days late and refusing to pay for what spoiled in the crates waiting for the truck that didn't come.

How can this be "regularly" happening? Wouldn't farmers stop selling to walmart if this happened even once?

And if they "committed" to buying all the output, why weren't there repercussions from breaking that commitment?

It's not like huge customers for your crop are necessarily easy to get. And Walmart did buy all the non-spoiled output; they probably had the contract well-written to let them get away with what they did.

The employees never seem happy to me, and as far as customers go, I think most of them see Wal-Mart like the phone company or Facebook--the offering is too good to refuse, but "happy" doesn't really describe the experience.

That's the kicker for me with any store. Walmart employees seem dispirited and miserable. Trader joe, target, whole foods, costco, all seem to have pretty happy employees.

You make a post this ignorant and then tell others to do research? Amazing. I worked at Walmart head office for years and I can tell you that vendors deal with Walmart because they have no choice. Walmart is a horrible place to do business with and various vendors quit them because of their behavior (e.g. Snapper).

And it's Walmart who hates unions. Their profit depends on exploiting human labor as much as possible, so they don't like anything that gives workers a fairer shake.

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