Alignment
Walmarts Approach to Supplier Innovation
October 27, 2014
Alex Short
2 minutes

Walmart recently launched a supplier innovation program called “Get on the shelf”. The program aims to encourage suppliers to come forward with new ideas that Walmart can stock. They are not only looking to give companies, that do not normally get a chance, an opportunity to showcase their skills, they are also involving the general public who vote for their favourite ideas and decide what they want to see in shops. This video describes the process in more detail…

This drive for supplier innovation is a win-win scenario for both Walmart and the suppliers taking part, as highlighted in the articleWalmart opens up its business model to suppliers”. To quote this article: “Essentially…‘Get on the Shelf’ allows suppliers to use Walmart as a prefab for their own business model”. In this prefab model Walmart has filled in a couple of building blocks. These are:

 

  • Customer relationships: promoting suppliers’ products through existing Walmart marketing
  • Channels: distributing suppliers’ products through the Walmart distribution and outlet network

 

So, all that is left for the suppliers to do is fill in the missing spaces with what they are good at. What I have found incredible about this scheme is that Walmart are wholly committed – it is not just a flash in the pan idea. This commitment is shown by the fact that Walmart are providing access to a range of key resources, which include help with marketing and scaling up production to meet their needs.

This hands-on approach will benefit the supplier. It is a great opportunity to amplify their position and products, while Walmart will be able to meet the needs of their customers. Suppliers should be jumping at this opportunity, as it is not every day that you get a chance to communicate with the end user, if ever!!

Bart Doorneweert asks a fascinating question at the end of his article, which I would also like to know the answer to: “The big question remaining is how the prefab model impacts suppliers’ cost structure and revenue streams, with Walmart probably taking a cut in both”.

The big question remaining is, how the prefab model impacts suppliers’ cost structure and revenue streams?

If you have an answer to the above, whether it is a personal theory or based on previous experience, I challenge you to leave your explanation.

Walmart is larger than Europe’s Carrefour, Tesco and Metro AG combined. It is a massive beast with nearly 10,000 stores worldwide and it does not intend to stop growing anytime soon. It is safe to say that over the years supermarkets have not earnt the best reputation for their work with suppliers. The general approach is notoriously aggressive and cut-throat. However, ‘Get on the Shelf’ shows a different approach from one of the biggest household names in the world. This change of approach can be seen further than just their supply chain.

Walmart recently opened a think tank lab which has contributed to many of their new innovations. According to one article, the “Silicon Valley innovation lab feels more like an outpost of Google or Facebook than like any part of a global retail corporation”.

Walmart Labs is a crucial part of Walmart’s plan to expand its internet retail business and catch up with e-commerce giants such as Amazon. With more people buying products on the web and using smartphone apps to make lists, find deals, and comparison-shop, the world’s largest retailer knows it needs a broader online reach.

Silicon Valley innovation lab feels more like an outpost of Google or Facebook than like any part of a global retail corporation

It is safe to say that Walmart is not standing still. Let’s see how they and others in the market progress…

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Alex Short is Founder of Old St Labs he is passionate about building the next generation of business software. He is recognised as one of procurements thought leaders.
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