WalMart opens up its’ business model for supplier innovation
by Bart Doorneweert
Supermarket retailers don’t exactly have a good reputation when it concerns collaborating with suppliers. You either supply according to their specs and pricing, or you can take your business elsewhere. Now I recently stumbled upon a business model innovation in the most unlikely of cases, namely WalMart. This mega-retailer, which passed the astronomical billion-dollar-a-day turnover ratio some years ago, has launched an innovation program called “Get on the Shelf”. The program encourages small suppliers to showcase their ideas for new products, and provides the most compelling ideas with the opportunity to bring them to market through the WalMart promotion and placement channels. Have a look at the video below, which explains the program:
From a business model perspective this is very interesting for small suppliers. Essentially “Get on the Shelf” allows suppliers to use WalMart as a prefab for their own business model. In this prefab model, WalMart has filled in a couple of building blocks, namely:
- Customer Relationships: promoting suppliers’ products through existing WalMart marketing
- Channels: distributing suppliers’ products through the WalMart distribution and outlet network
What’s then left for suppliers is to plug their value proposition - customer fit into this prefab model. Interestingly, WalMart will not only work together with suppliers in building the marketing half of the business model. WalMart also offers the possibility of helping suppliers to achieve scale with their business, providing access to key resources and building key partnerships. In all, “Get on the Shelf” is a tremendous opportunity for suppliers to amplify their value proposition.
For WalMart itself, this initiative creates a double edged sword. There are good ideas out there, which stem from suppliers’ own experiences in combination with their personal WalMart customer experience. These experiences might help the retail giant come up with new innovative offerings for their store. “Get on the Shelf” creates just that business model innovation space, which might bring forward the new business models that could drive retailer competition in the future. At the same time, the initiative helps WalMart build relations with customers, through the people who are participating in the initiative and promoting the WalMart brand. Just type in WalMart and get on the shelf on youtube, and you will be treated to an interesting (and entertaining) array of value propositions.
Lastly there is of course the issue of the bottom line. The big question remaining is how the prefab model impacts suppliers’ cost structure and revenue streams, with WalMart probably taking a cut in both. Keen to look into some of the contracts if you can share them