Don’t Buy Walmart

I’ll go through my experiences with Walmart as a supplier as well as an updated look at Walmart’s valuation.

Selling to Walmart (WMT) as a wholesaler to their Walmart.com division has opened my eyes to the scope of their distribution and supply chain management.

You don’t think of supply chain management as a money driver, but in Walmart’s case, it’s their bread and butter.

To put it simply;

Let me backtrack a bit. While I’ve been running Old School Value, my wife has built a great business designing and selling her goods. That’s how we know the ins and outs of the Amazon (AMZN) ecosystem, and now we are diving into the deep pool with Walmart.

By Walmart, I’m referring to Walmart.com division. We do not have our products in the brick and mortar stores, but supply goods to the Walmart.com as a wholesaler.

Overwhelming: the hundreds of pages of documents, guides, webinars and emails that we need to go through as a smaller business is mind-boggling. With Amazon, it’s a piece of cake. With Walmart, it’s a monster. But this leads directly to…

Efficiency: once you know the system and the process, the operations are streamlined and extremely efficient. So efficient, that make changes is difficult, but if there are no issues, you know exactly what is going on.

Stark contrast to Amazon, where entire cases of shipments are lost, inventory counts are constantly wrong.

As an investor, I can see how much money Amazon is leaking compared to the operating efficiency of Walmart.

Money Generator: While tough on suppliers, if shipment deliveries are early OR late, or there are errors with the shipment, suppliers are fined.

This is extra hidden revenue.

Big brands end up having to eat 3% of the invoice price if they fail to meet certain metrics.

There’s a KPI called OTIF which mandates 75% accurate deliveries within the allocated window.