Saturday, February 26, 2005

Winning against WalMart ..............................

Seth Godin's recent post got me thinking (which is always a dangerous thing!)

WalMart is often portrayed as the evil empire... selling at such low cost that it hurts suppliers as well as the local retailers that try to compete with WalMart. So, in my most humble fashion, I will now provide the answer to each of these problems (and maybe shine some light on the "WalMart experience" that consumers everywhere have made number 1).

WalMart Suppliers:
Don't become a supplier to WalMart and assume that you will operate "business as usual". WalMart will require you to cut your costs, improve your quality and delivery your products in a manner that suits their distribution system (e.g. RFID labels and inkjet barcodes). In exchange, you will get unit volumes beyond your wildest dreams! Of course, this sounds like the classic "deal with the devil", but it doesn't have to be. You can use the volume to drive a more cost effective organization which will help you deliver other products, perhaps to WalMart, but certainly to other retailers and grow your business. Get out of the mindset that you must get 20%, 30% or 40% margin to be successful. Focus on providing value while controlling costs and you will have a stronger business at 10% margin. This takes courage, but if you want to play the "WalMart game", you are going to have to "suck it up"!

WalMart Competitors / Retailers:
WalMart sells the mass market, high volume products. There are few companies that are going to be able to compete with them directly simply because of their incredible distribution reach and buying power. It is more important to be DIFFFERENT than to be less expensive.

Target is a good example of this. Compared to WalMart, Target offers (some) products that are more stylish and unique while still providing products at a reasonably low price. They have sidestepped the WalMart express and are doing well for their customers.

What about the small retailers, who can't even come close on price? You have to be even MORE DIFFERENT! What can you do that WalMart can't? Can you find new products that particularly suit your customers? How about taking your strongest niche (i.e. different and unique) products and extend your reach to the rest of the world via the internet?

I recently read that the number of books that you must sell to be considered a "best seller" is going down due to the wide selection of books. offers so many books that they have become a completely different entity than the "online version of a local bookstore" that everyone originally thought it would be. And, in the process, they have made it possible for niche books to be sold around the world!

In addition, Amazon is expanding beyond books into almost anything that you can imagine. (I exaggerated a bit, but you get the idea.) Clearly there are more opportunities out there ... if you are willing to find them and go after them!

You might ask, "How does this relate to your note card business?"
Well, I am not going to be selling to WalMart, or any other "mass merchant". I have made the conscious decision to sell my limited edition note cards only via the web and specialty retailers. This is not exactly unproven territory. Ty sold BeanieBabies through small shops with legendary success and if I can grow to even 1/10th of that size I will probably be happy.

Well, maybe not completely happy. There always needs to be another challenge !

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