There is one Wal-Mart practice, that I think has been tried and found legal, that is certainly unethical and definitely not a good supply chain partner practice. Let's say the cheapest supplier price for an 32" LCD TV in $450 in large volumes. Wal-Mart will go to a supplier and say, "We want a 32" LCD TV with these features, and we want to pay $375 apiece for it." Because getting that product into Wal-Mart almost ensures significant sales volume, the supplier will do its dead-level best to make it for that price. It usually crunches the profit margin of the supplier, and some suppliers have refused to do business that way. It does creates a new product that is typically good for the consumer and that product is usually sold to other marketers, but it's a little shady to say the least.
Why is this shady though? It's a partnership - as a supplier, you get access to a massive market. Walmart, as the market, gets a price advantage. It's just a larger scale of volume purchasing. If the supplier wants access to Walmart's distribution chain, that's the cost. It seems to me that both sides benefit from it; if one doesn't, they just won't partner up. Is it ideal for the supplier? Not at all. But a price is a negotiation between two parties and it just seems part of the negotiation. I own a coffee shop. If Whole Foods were to carry our coffee, I would offer them a lower price because of the benefits I get from that. Similarly, Starbucks can get coffee cheaper than I can because they purchase it in such large quantities. I don't see that as anything unfair of Whole Foods to demand a lower price or Starbucks to be able to have lower costs.
Man, I love walmart. They have the cheapest prices of any store around and they make my life way easier. I fail to see how it improves my life to pay more to support my local retailers, plus drive to 3 different stores for what i need instead of just one. if they want to compete, lower the prices. Maybe im just short-sighted, but I'm pretty sure 98% of walmart shoppers think the same thing.
Because Walmart coffee would sell the type of coffee your coffee shop is serving at the 15-20% difference they managed to wring out of the general suppliers. Plus, because Walmart suppliers don't profit as much as before while sustaining quantity or quality, they're forced to other cost cutting measures such as reducing employee benefits or offshoring their operations. There's been corporations that have had their arms broken from Walmart only to be taken over or have an entirely new management that emphasize less on quality and more on that rock bottom price. I disagree that Walmart is some next evolution of capitalism if Costco has been managing to wring out profits while maintaining altruistic management practices and keeping up their size and scale at the same time.
It may crunch the margins of the supplier, but it will increase the volume so in the end the supplier still does well.
If they are more efficient than me, why is that a bad thing? If they buy 50,000 pounds of coffee instead of the 50 that I buy, I would expect them to get a discount. If a customer buys 500 pounds of coffee from me instead of a 1 pound bag, I'll probably work out a discount with them too. Isn't this part of competition? The suppliers don't profit as much per item, but they get to sell a ton more volume. It's not like they HAVE to supply Walmart. They choose to do it because it's beneficial for their business. So? If consumers want to buy the higher quality stuff, then someone will continue to produce that stuff. If everyone prefers the cheaper, lower-quality stuff, why is it bad that Walmart can provide that? It's just different methods for achieving the results. Costco's not nearly the size of Walmart/Sams, nor does it generate anywhere close to the same amount of profits, serve the same amount of customers, employ the same number of people, or anything else. I don't see why the fact that Costco exists makes Walmart somehow evil.
Larger doesn't mean more efficient. The amount of products Wal-Mart offers allows them to rotate pricing battles with certain items against their competitors. The myth of their rock bottom prices has made customers assume that Wal-Mart is cheaper on the whole. OTOH, if they were to choose a higher quality item in that rock bottom price category, there's not much of a difference compared to a competitor. Well it's beneficial or else, so the notion of a partnership is like saying ref Donaghy was a beneficial partner with his mob friends. But I understand your point. Some companies like to produce for the sake of producing even if profits don't match the old values for various reasons. If their gamble doesn't pay off, it forces them to make even more and cut more corners, such as ordering lead laden toys from their foreign subsidiaries. I guess it's more of a nostalgic point of a time when American products were known for quality and at a price that couldn't be matched by its competitors. Now most products are internationally made with American branding. I personally don't have a problem with offshoring as the potential for Americans to assume the leadership position in that global chain is enormous, but I'm still old enough to remember the time of American manufacturing dominance. Costco's existence does not make Walmart evil. Instead they pose an alternative to assertions in this topic and by some economists or Wall Street analysts that Walmart's practices have to be enforced by mulitnational companies of scale. I toed around claiming Walmart being evil in my reply, but I definitely hate them in terms of their hiring practices (illegals, scabs, antiunion firings), employment practices (locking in employees, under cutting market wages, part time workers w/ full to overtime hours, denying health plans through the part time status), and the practices mentioned above. Yes, it's true that other companies have or are planning to adopt these practices like Best Buy or Home Depot, but that doesn't excuse or exclude my growing hatred of them.
hey, theres nothing bad about walmart. i took a business class which basically focussed on walmart. the reason people think walmart is bad because of the way it exploits other companies. for example, the company rubbermaid was screwed by walmart because they wouldnt wanna be a part of walmart. walmart also forces other companies to lower their prices or they find a cheaper substitute. in a way they control the pricing system. also, the way they treat the employees is also considered to be very bad. it seems there is a very low growth rate in walmart. it is a huge corporation, i believe what they are doing is right for themselves and the company. its just that people just take it a bit too seriously about it. walmart is not too much of a problem. also, walmart uses foreign products a LOT which is many times cheaper than the american products thus making the life of an average american labor harder. they use foreign labor too. price gouching and other methods are also tried to be used there in walmart. well, i tried to explain whatever i can, i hope it makes sense.
Walmart becomes bad if it becomes so big that it sets the market. That is, if they control who lives and dies and companies can't exist without dealing with Walmart. It that sense, Walmart begins to violate the anti-trust laws, then it is unfair business practice. I don't think they are at that point. But forcing businesses to deliver inferior quality is a bit disturbing. Is it because these businesses would go out of business, or are they just trying to squeeze extra bucks? It's a trickly rope to walk. Personally, I think you shouldn't expect quality from Walmart knowing this, and the buyer beware should always be applied. But you can't debate their business model - it's a success. And the consumer benefits big time. Who knows how much of an anti-inflationary role Walmart has played?
