Why won’t small firms work with Wal-Mart?

Sally Herships Aug 14, 2014
HTML EMBED:
COPY

Why won’t small firms work with Wal-Mart?

Sally Herships Aug 14, 2014
HTML EMBED:
COPY

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.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.