3/13/2005

Wally's Price Control

Alright, here’s the deal. Wal–Mart has been rated one of the countries most admired company’s because of their “low prices”. Well recently an article named, One Nation Under Wal-Mart explained what a vendor has to go through to get the big contract to sell their product through Wal-Mart. The process consisted of a seven by ten foot room with thirty minutes to give your pitch (if you’re the vendor). The article continued to explain the strong urge these vendors have to get Wal-Mart to carry their product. It seems that because Wal-Mart is so big that when a vendor gets the contract that they would probably settle for a lower price than what they where considering because Wal-Mart can sell the product by mass quantities. This is interesting because it shows that Wal-Mart can continue to keep their low prices through bargaining with vendors because Wal-Mart can sell so much.

8 comments:

Jim said...

Correct me if I am wrong, but I have heard sometimes Wal-Mart goes after a vendor instead of the vendor after Wal-Mart. Would this change the price control?

Bart said...

I've heard that some vendors say that getting the Wal-Mart contract is the best and worst day. Usually they have to really cut their prices, but they also get huge volume.

June said...

I guess if you want to sell to Walmart it would be good to do whatever they want. I suppose some vendors think that they have made it once their product is taking up part of the shelf at the local Walmart.

Walmart has become the largest company in the world based on its ability to drive prices down. That is why people shop there. If the vendors don't like that fact, they can find other market outlets for their product. People do actually shop places other than Walmart, providing there are other places. That doesn't say much as far as Cedar City goes.

kenny said...

I am happy Wal-Mart is able to bargain so hard for low prices, it helps me and every other customer that shops there. Because of Wal-Mart I am able to by more and have a greater quality of life.

C-Dizzle said...

I’ve also heard that Wal-Mart often goes after vendors. A marketing professor told me that when Wal-Mart does go after a vendor, it often sets the price it will buy the product for and if the vendor doesn’t like the price, too bad! If the vendor wants the contract, it’ll have to do what it takes to cut the prices down to what Wal-Mart wants. Often, this cut in prices comes from the quality of the product.

Vincent said...
This comment has been removed by a blog administrator.
Vincent said...

This is true; Wal-Mart is so dominant in its sector that it can “urge” vendors to settle for a lower price. This was not always the case, in Wal-Mart’s infancy it had to avoid carrying the diversity of products it shelves today. Wal-Mart could only afford generic products. Now that it has a competitive advantage and uses it Wal-Mart is looked at with such distain. I by no means love Wal-Mart but this must be mentioned Wal-Mart helps keep inflation down and by doing so helps all of us.

Dr. Tufte said...

-1 on Tom's post for a spelling error.

Everything here is OK (other than Jim's use of "price control", which has other meanings).

I'm a little curious though, why anyone should care about vendors unless you are one? Having said that, obviously some students in this class might end up being a vendor to Wal-Mart some day. But, for the rest of us, Wal-Mart is acting like a buyer's agent that is meeting our expectations for low prices. What's wrong with that?