We’re excited to host Kenji Gjovig, former Director of Supplier Development at Walmart Global eCommerce.
Kenji left Walmart in September 2014 to form High Tide Consulting with the express purpose of game changing how Manufacturers approach Walmart Stores Inc.
Kenji provides best-in-industry support for Manufacturers and Suppliers to help them optimize their partnership with Walmart:
Visit hightide-consulting.com , or reach out to Kenji direct at kenji@hightide-consulting.com
Kenji’s presentation stoked a fantastic discussion with retailers interested in selling into Walmart. We had time for the following viewer questiosn. We’ve transcribed Kenji’s responses below.
What role does minority certification play in trying to sell the Walmart? Is this something that is worth the effort in getting when trying to get into big box retailers?
Kenji: It really is. I would say it depends on the retailers. Again most of my answers and my discussion are based on my experience at Walmart. I will tell you from Walmart and Sam’s Club is it’s huge. Is it the golden ticket that’s going to get you in the door? No, absolutely not. You have to have all the other things or the product, the supply chain, etcetera. It is absolutely something that you should have in your leading presentation.
Walmart to be specific on this, Walmart has massive initiatives around minority suppliers. They have a particularly large program around women owned businesses or from women owned suppliers. My suggestion is absolutely pursue those certifications. One copy that I would give you is that the certification, NMSDC and we banked to become certified is not easy. It costs money, it takes some time.
I highly recommend you do that because that is the industry standard. That being said, Walmart also has a version where you can self-certify and get credit for it either as you’re working on those industry certifications or in lieu of so you can actually self-certify at Walmart and they’ll accept that.
It’s important, it helps a lot. Customers are diverse and so products need to be diverse. We want to have the best companies representing Walmart and selling to Walmart and Sam’s Club and so having diverse supplier base is critically important too. Definitely pursue it.
What form of contractual agreements are common and what are some interesting outlier contract cases that you have negotiated?
Kenji: Walmart basically has a standard templatized contract. You can find it at Walmartstores.com.
It has all the information about the supplier agreement. That’s actually something that I got to work on a lot at Walmart. They basically have one version of it. It’s a three step process. It is a bear. It is really difficult to get through frankly, unfortunately, but it’s robust. There are basically no other versions. You can’t use your own contracts. Walmart has a very templatized one. It’s all online based so it’s very specific that way.
It governs more than just the business terms. It has the insurance requirements, has product information, it also has the terms of the business such as payment terms and discounts, allowances and things like that but that’s over the course of the several steps. It eases you into it in the first step and the second step is more about the UPCs and insurance and the third step is the business terms.
When moving from contracts with higher end, smaller specialty online retailers to Walmart, what are the operational differences that companies should be expecting?
Kenji: Walmart wants to go direct, for example, as opposed to going through distributors because it gives them the lowest cost. Distributors have their markup and, in some cases, not necessarily a value added service. Walmart wants to go direct as much as possible. For the most part, Walmart can pick up the product directly at your facility. Whereas all retailers may not have their own internal supply chains for you to pick up and would require you to ship products, you may have to use a distributor in order to get the right volumes to then ship it to a retailer. Whereas Walmart for the most part has shipping lanes locked up all over the country. If you have a plant someplace, Walmart can probably decent rates where they can just pick it up right at your dock. They can do the collect program in that perspective.
That’s one thing I would say. The other thing is to talk out of the other side of my mouth from what I was referring to earlier about supply chain where Walmart won’t want to overextend things. What I will say is that once you and Walmart commit to doing business together, they’re not very flexible. For example, if you commit to doing business with them in 300 stores and the sales are what they expected or a little bit higher and you run out of stock because you were not managing your inventory or your supply chain well, Walmart will be very unhappy.
As much as Walmart will be forgiving in terms of not going too big or beyond, they won’t be forgiven if you commit to doing something and then can’t fulfill that. As you’re doing your analysis on what you can do, what your supply chain capacity is, make sure that you have some safety stocks and some wiggle room built in because if for some reason your products are amazing and fly off the shelves, Walmart will want you to keep them in stock because that’s how they drive sales.
I would say that’s a couple of things. The third thing is Walmart has for the most part recently disciplined requirements around managing accounts as I talked about. Buyers are busy. They don’t want to have to spend time holding their hand saying, “Okay. The next thing you need to do is this.”
Make sure that you understand what to do, have a broker, somebody that can help you guide you through, provide thought leadership to guide you through those steps because you want to make sure you put your best foot forward with Walmart because they’re forgiving to only so much. You want to make sure that you’re always putting your best foot forward with them so that way they have no excuses to delist or discontinue your products.
How does Walmart feature products online to their larger customer base?
Kenji: In the first hand are the promotion online. Online activation can be in some cases very different from in store. In store needs a lot of physical media, print materials or maybe radio or TV or something like that or displays in store, etcetera.
With dotcom it’s really all virtual. It’s marketing in the digital space. They have things like you can buy the main POD on the website, or you can do email marketing. Also search engine marketing is a big thing that they have. Partnerships with Google where they want to work with you. If you want to, for example, pay to have High Tide Consulting be in your product keyword for example, Walmart would want to partner with me to just split that cost so that way, I’m not paying for High Tide consulting and Walmart’s paying for High Tide Consulting. We then compete against each other for example.
Lots of different ways to market and to promote products in the digital space. It’s using digital property. Social media even for example.
Is it possible to set up to a geographic boundary for products, for example US only.
Kenji: The supplier has unlimited control of that. For example if you said I only want my product to be sold on Walmart.com and not in a store, that’s fine. There’s a large maybe supplier who had that conversation with Walmart and said I don’t want to be in a store. I don’t want to be in some Walmart store in the middle of nowhere where the associates are not going to treat my brand right. They’re going to make it look bad. I can’t be a premium brand in a store but I can control the selling environment with good digital content online.
You can control that and you can tell them I only want to be online. I don’t want to be in store. The same is true for Sam’s versus Walmart. In fact, Sam and Walmart have different buying teams so if the Walmart buyer buys you, it doesn’t mean you’ll get into Sam’s as well.
Then US versus others is the same. You have control of that. In fact, there are different buying for Canada, from Mexico, from Argentina for example. Yes, you as a supplier have a) control over that but then b) you also have to then via the next person to get you into the other markets because the buyer you talked to for Walmart Stores US is not the buyer for a Walmart.com, Sam’s Club US, Walmart Canada and Mexico, etcetera.
How much does Made in USA influence product selection decisions.
Kenji: It matters a lot. It’s like the minority certifications. I would say it’s not the end all be all but it is important. If you search around for Walmart’s website and in the media, they’ll see a lot of this conversation of domestic manufacturing made in the USA. They’re actually starting to do badged items on packaging, on web pages, etcetera, item pages to show that it’s made in the USA.
Walmart has based and made some public commitments around how much of an increase in domestically manufactured products they will have over time. The big commitments there, it’s a big initiative. Yeah, it definitely matters. I would definitely highlight that — and be ready to defend it as well.
What is the most direct path to meeting with buyers?
Kenji: The best way to get a buyer is to contact them directly. Frankly, they try to hide a little bit because Walmart buyers tend to have lots of people calling them because in any brand who can get the Walmart account is going to take their brand from half a million dollars to ten million.
At the end of the day the best way to get to a buyer is to go directly to them. There are basically two ways I would say. The least efficient way is going to Walmart.com to the supplier tab. Basically the way you become a supplier at Walmart is submitting through what they call the online product submission or the OPS. That is a system that you will eventually have to use but when I was a buyer, I received submissions through the online product submission blind, cold calls. I eventually deleted every single one of them because I had no contact support whatsoever.
Some people might say try that and I would say don’t bother with that. That’s the least efficient initially. You will eventually have to use that system. That is the entry point but don’t do that initially.
I would say find the buyer. You can contact the buyers directly. They all have phone numbers. They have all email addresses. You have to get a foot in the door. I don’t want to be sales-y on this call because that’s not why I’m here but as a broker one of the things that I can add value is I can open doors.
I’ve worked at Sam’s Club so I know virtually every buyer at Sam’s Club. I know a lot of the buyers at Walmart. What I’ve learned in my short time doing this is that make or break thing is having the right relationships to unlock the doors.
Find a partner that can help you unlock the doors. Whether it’s a broker like myself or another partner, a board member, an investor, just a colleague or something like that. You’ve got to get a foot in the door, and the way to do it is to have the right relationships.