Why won't small firms work with Wal-Mart?
Customers shop at a Walmart Neighborhood Market store on August 15, 2013 in Chicago, Illinois.
For some companies, scoring a contract with Wal-Mart can seem like hitting the lottery — we're talking business bucket list.
Mark Goldstein is CEO of Scott’s Liquid Gold, a medium sized company which expects to make almost $30 million in revenue this year.
“They have been just the best and finest people to deal with,” he says.
Scott's Liquid Gold sells just under a third of its product line, like air fresheners, to Wal-Mart.
“They help companies like us to be more efficient in manufacturing and transportation,” says Goldstein.
Not all companies feel that kind of affection for Wal-Mart.
Victor Lund, a partner with Wav Group Consulting, used to own WOW, a small company that sold cookie cutters to Wal-Mart.
“Working with Wal-Mart can be a great experience but it’s very, very difficult,” says Lund.
No matter how small you are, he says, if you want to work with Wal-Mart, you have to follow the same requirements that Fortune 100 companies do.
“They have a vendor booklet, that talks about what their requirements are, that was eight inches thick,” Lund says.
With fewer than 20 employees, and less than five million dollars of revenue a year, Lund says WOW was really small,which made dealing with Wal-Mart challenging.
“Making sure that you’re working with a manufacturer in China that’s going to support you in being compliant with Wal-Mart’s rules and regulations is very, very important but it is also drives up costs tremendously,” he says.
And for some companies working with Wal-Mart is just too difficult. In Lund’s case WOW’s vendor agreement with Wal-Mart became more valuable than the company itself. So he sold it.