Here's how Walmart cleverly extracts margin from its vendors: 1. They give you a giant order 2. You build high fixed cost infrastructure to support the volume 3. They tell you to reduce price or fuck off 4. You reduce price or take big losses on investment to support their scale
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This seems like a strategy what would benefit
$WMT competitors as well. A capacity glut should bring down prices for all retailers of a particular good.
I don't think so. Suppose you have extra supply/capacity. It takes some time to make a sale happen at Target (or whatever other buyer who'd compensate for your lost walmart business). By that time, you're bust.
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I suppose it would depend on the stability of the supplier and the size of the order as a % of sales. If I were a supplier, I would try to mitigate this by requiring advance notice of renewal (e.g. 90 days) and offering a portion of the discount as a rebate earned at renewal.
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Right, they (Walmart or any bigbox) require their suppliers keep stock on hand for them. Suppliers finance their stock.
End of conversation
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