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Walmart will also do this intentionally to their vendors, or engage in what I call temporal arbitrage. It hurts Walmart as a business very little to stop selli
by AaronFriel 4y ago
Walmart will also do this intentionally to their vendors, or engage in what I call temporal arbitrage.
It hurts Walmart as a business very little to stop selling Vendor X goods on their shelves when there are substitutes available. However, for Vendor X it's often the case that Vendor X cannot adjust their output as quickly as Walmart can take the product off shelves. That action, taking them off the shelves for even a short period of time while Walmart presses for renegotiating terms can result in layoffs, loss of revenue could result in lines of credit drying up. It's an existential threat to a company because they can't scale up and down at the speed Walmart demands.
If I recall correctly there's a record of this happening with Rubbermaid, and they responded to Walmart's demands for prices by cutting costs, cutting corners with quality, and ultimately sullied their brand name.
- cptskippy 4y agoThere's a book called The United States of Wal-Mart that details a lot of the damage that Wal-Mart has done. I wouldn't be surprised if there's a follow up for Amazon. https://www.amazon.com/United-States-Wal-Mart-John-Dicker/dp/1585424226 https://www.amazon.com/United-States-Wal-Mart-John-Dicker/dp...
- fckgw 4y agoI often think about the pickle story about how Wal-Mart can bully companies and their quest for always low prices have ripple effects. https://www.barnesandnoble.com/readouts/the-wal-mart-effect-how-the-worlds-most-powerful-company-really-works-and-howits-transforming-the-american-economy-2/ https://www.barnesandnoble.com/readouts/the-wal-mart-effect-...
- ComputerGuru 4y agoThanks for linking that. I’ve heard horror stories and this is just another nail in the coffin.
- canjobear 4y agoAm I supposed to feel sorry for Vlasic here? The upshot is that I get cheaper pickles.
- seafoam 4y agoCheaper pickles that taste like vinegar and rubber.
- gaoshan 4y agoYou also get lower quality pickles.
- cosmodisk 4y agoYou should, because this kind of behaviour ripples through so many companies, that I wouldn't be surprised if you actually not on the receiving end of things. Retailer lowballs the manufacturer. The manufacturer then needs to lowball someone too, probably starting from its employees. Also the supplier who can be anything from local hardware store to some IT giant.
- AaronFriel 4y agoI think another upshot is that it ends up making all consumer products "lowest common denominator" consumer products. It's a vicious cycle: Step 1: Company has a great product. Walmart begins stocking it nationwide, perhaps promoting it to increase their marketshare. That product's revenues explode, they expand, everything seems great. Step 2 to N: Then Walmart threatens to pull from shelves unless they can meet the cost of $substituteGood. The company cuts costs to make it work. Rinse and repeat. Step N+1: The product is no longer great. This is exactly what has happened with Rubbermaid and with countless other consumer goods.