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While your premise is true, any supplier giving Walmart seconds has their days numbered. Walmart runs such a tight ship around their supply chain that it'd neit

by cosmie 6y ago

While your premise is true, any supplier giving Walmart seconds has their days numbered. Walmart runs such a tight ship around their supply chain that it'd neither go unnoticed nor unpunished. What appears to be Walmart getting factory seconds is usually Walmart demanding a custom variant of a product. Walmart uses their own consumer research and sales (and just as importantly, returns) data to form strong opinions on optimal price points, margins, feature requirements, warranty periods, materials, etc for a given product/category, and they'll use their volume to get a manufacturer to create a custom variant of a product with what Walmart considers an optimized design/bill of materials. It's true the "Walmart version" of a product is likely less robust than the non-Walmart version, but that is the result of explicit and precise demands formed from actual consumer behavior. Manufacturers then have to consistently and reliably fulfill Walmart's orders to those exacting demands; that's rarely achievable by binning seconds to Walmart. Especially so for product variants that require actual BOM changes. Rather, it usually entails dedicated production runs, with all of the level of care and QC as the original product's manufacturing.

bredren 6y ago
While this worked before, I think this is going to get wrecked by the efficiency of Amazon’s process. Where a generic product like a selfie light ring smartphone holder is improved by various merchants until a winning design and price point is clear. THEN Amazon selectively considers making their own version and pricing it. Or Amazon just keeps pulling their fees. If IP protection prevents an Amazon Basics version, Amazon doesn’t have to create a version in cooperation with the brand—-it just promotes it to compete with the brand’s own e-commerce. With Nike, it is only recently the checkout and delivery came anywhere near what Amazon would do for the same shoes, same price.
- cosmie 6y ago
  That's a bit of a different topic. There's the type of generic/private label stuff you mentioned, which both Amazon and Walmart do. Amazon originally had a major competitive advantage here in that they could leverage insights from their own sales and third party sellers in order to inform decisions for AmazonBasics (and their other private label brands). But Walmart also introduced third-party sellers to their ecommerce platform. Amazon's sheer volume of third party sales still gives them a leg up over Walmart in this area, but the type of risk-free consumer intelligence Amazon gets from third-party sales data is no longer something only they have. Then there's retailer-specific SKUs of branded products, which is what I was referring to before. Amazon does this as well, but they take a fundamentally different approach to it that doesn't really impact the effectiveness of Walmart's approach. Amazon-specific SKU variants will likely have the "same" product as the standard SKU, but have unique packaging that's optimized for shipping. Walmart-specific SKU variants are optimized to sell the greatest volume possible while being considered "good enough" by consumers, and usually result in actual product changes in order to meet the price point, reliability, and feature set Walmart deems necessary to do so. Because they have different optimization functions in their approach to retailer-specific SKUs of branded products, Walmart's approach is likely to continue working for Walmart, at least for their B&M sales. They'll start to have some of the same optimization concerns as Amazon as their ecommerce sales grow, but will be able to benefit from all the experience manufacturers and packaging companies are currently gaining from their current work with Amazon.
sukilot 6y ago
That's a long way of saying that Walmart is complicit in the brand scam.

by cosmie 6y ago

bredren 6y ago

While this worked before, I think this is going to get wrecked by the efficiency of Amazon’s process. Where a generic product like a selfie light ring smartphone holder is improved by various merchants until a winning design and price point is clear. THEN Amazon selectively considers making their own version and pricing it. Or Amazon just keeps pulling their fees. If IP protection prevents an Amazon Basics version, Amazon doesn’t have to create a version in cooperation with the brand—-it just promotes it to compete with the brand’s own e-commerce. With Nike, it is only recently the checkout and delivery came anywhere near what Amazon would do for the same shoes, same price.

cosmie 6y ago
That's a bit of a different topic. There's the type of generic/private label stuff you mentioned, which both Amazon and Walmart do. Amazon originally had a major competitive advantage here in that they could leverage insights from their own sales and third party sellers in order to inform decisions for AmazonBasics (and their other private label brands). But Walmart also introduced third-party sellers to their ecommerce platform. Amazon's sheer volume of third party sales still gives them a leg up over Walmart in this area, but the type of risk-free consumer intelligence Amazon gets from third-party sales data is no longer something only they have. Then there's retailer-specific SKUs of branded products, which is what I was referring to before. Amazon does this as well, but they take a fundamentally different approach to it that doesn't really impact the effectiveness of Walmart's approach. Amazon-specific SKU variants will likely have the "same" product as the standard SKU, but have unique packaging that's optimized for shipping. Walmart-specific SKU variants are optimized to sell the greatest volume possible while being considered "good enough" by consumers, and usually result in actual product changes in order to meet the price point, reliability, and feature set Walmart deems necessary to do so. Because they have different optimization functions in their approach to retailer-specific SKUs of branded products, Walmart's approach is likely to continue working for Walmart, at least for their B&M sales. They'll start to have some of the same optimization concerns as Amazon as their ecommerce sales grow, but will be able to benefit from all the experience manufacturers and packaging companies are currently gaining from their current work with Amazon.

sukilot 6y ago

That's a long way of saying that Walmart is complicit in the brand scam.