This article was originally published on LinkedIn on October 1st, 2018.
I write this letter today to the top management of Walmart with the hopes that I can convince them to reimagine the way Walmart does business. I believe there is one fundamental change that Walmart can make that will propel them ahead of all competitors, while also having a huge impact on people’s lives across the US and the world; Walmart needs to finally embrace small businesses.
Yes, Walmart is a juggernaut, but Amazon is now a trillion dollar company. Amazon is winning and Amazon will continue to win because it’s obvious that Walmart has still not figured out why Amazon is always ten steps ahead.
In the news recently I saw that Walmart’s latest move to beat Amazon is to team up with Microsoft. The headlines say, “Watch Out Amazon!”
Seven months ago the big news was that Walmart formed a strategic relationship with Google. Again it was, “Watch Out Amazon!”
Walmart teams up with FedEx. “Watch out Amazon.”
In Japan, Walmart teamed up with Rakuten. In China, Walmart teamed up with JD.com.
“Watch out Amazon…”
But Amazon is not quaking. Every move that Walmart makes demonstrates that the company is still doing business the way it has for 68 years.
WALMART NEEDS TO CHANGE THE WAY IT THINKS.
Since its conception, Walmart destroyed the competition by being a powerhouse of leverage. The bigger they got, the more buying power and capitalistic might they could bring to bear. But Walmart has used this leverage only for its own interests.
Yes, suppliers who met their demands had the opportunity to make a lot of money, but what about other manufacturers? What about small entrepreneurs who haven’t had a chance of getting their products in the door? If your products aren’t on Walmart’s shelves, at best you are nothing to them; at worst, you’re their competitor.
Amazon has out leveraged Walmart by using their resources in a different way. From the beginning Amazon created an ecosystem for others to become successful. Instead of locking out suppliers who don’t make the cut, Amazon gives them a platform and access to all of the visitors on their site. Amazon empowers hordes of bloggers who have become affiliates, allowing people to make a great living at home. Amazon gives small businesses full access to their amazing logistics system, and they’ve opened up their powerful computing power to anyone who wants to use it.
AND THIS IS THE SECRET THAT WALMART HASN’T FIGURED OUT YET…
Amazon became successful by making others successful! Amazon succeeds because it has properly leveraged small businesses. For as strong as Walmart’s leverage is, it simply cannot compete against the army of entrepreneurs making money on Amazon.
Yes, Walmart allows businesses to put products on their site and they have an affiliate program, but these are weak, me-too programs. Walmart has failed to truly embrace small businesses. They continue to demonstrate that they don’t care about small businesses nor do small businesses play a major part in Walmart’s strategic plan moving forward.
Until Walmart figures how to tap into the power of small business, they will always be following in Amazon’s footsteps and they will fall further and further behind. If Walmart wants to win, they must to COMMIT to a completely different way of doing business.
CREATE AN ECOSYSTEM THAT HELPS SMALL ENTREPRENEURS MAKE MONEY.
Walmart must figure out how to use their leverage to help make other people successful.
It can’t be just a tactic or feel-good marketing campaign. Rather it must become the driving force behind everything Walmart does, from its stores, to its website, logistics system and the corporate culture. Using its leverage to make other’s successful must become Walmart’s core value. It must seep through every level of the business. It must become Walmart’s guiding light.
This small-business ecosystem should become more important than Walmart’s current core business of buying and reselling products. In the new paradigm, Walmart doesn’t try to control the marketplace, it accelerates it. It doesn’t pick winners and losers, it becomes a platform that allows businesses to thrive (or fail) on their own merits.
If Walmart became serious…
WALMART COULD SURPASS AMAZON WITH AN ENTREPRENEURIAL ECOSYSTEM.
Amazon has gotten slack in its support for small businesses because there has been no competition in this regard. This gives Walmart an opening to come in and become the champion for small business. Here are just a few ways that Walmart could do this:
- Help inventors develop products. This is an area where Amazon falls short.
- Provide design, marketing, sourcing and packaging advice to designers.
- Create prototype shops in local markets where inventors can go to develop their products. These prototype shops could have regular meetings where people come and collaborate on ideas, and Walmart would be first in line to discover and support the next big ideas.
- This collaboration could even be turned into a crowdfunded product development platform, like what Quirky tried to do. Give these products their own brand, make it fun and make developers feel like they belong to something pretty awesome. (People love to belong to something special). Also give these products their own section on Walmart.com.
- Devote a section in Walmart stores to showcase proof-of-concept products, where local product developers can sell-test their ideas. Successful products can then be accelerated through the Walmart distribution network.
- Dedicate space in local Walmart stores for local entrepreneur meeting centers, where online marketers and inventors can network, design products, and meet with suppliers or even investors. Online sellers could meet to collaborate or get training on the latest and greatest sales tools that Walmart.com is rolling out. Leverage those brick and mortar stores to help entrepreneurs and small businesses.
- How can Walmart solve the major obstacle to buying clothing online? People want to try on clothing to see if it fits properly. So, work with clothing companies to have small inventories in each store for people to try on. Then deliver selected clothing directly to the customer’s home from the distribution center within a few hours. Give ANY AND ALL small clothing companies access to this mechanism.
- Create opportunities for products that need demonstration or education prior to a sale. Some products don’t sell well in a retail store business model in which you just put something on the shelf and wait for people to buy it. Some products need to be explained and sold. Create a QVC-like business that has a number of different channels for different interests and different markets, so entrepreneurs can actually sell their products.
- Even better, create a platform that allows people to create their own QVC-like shows with Walmart-supplied products, and support these show-creators with product suppliers and back-end support. This could be an entire new way of doing business! There could be countless QVC-like “channels” on Walmart.com.
- Watch Amazon like a hawk and see where it fails to support entrepreneurs, then pounce! A while ago, Amazon changed how it works with used book sellers, and it upset the resellers. Walmart, had it been ready, could have moved those resellers to its platform.
- Amazon has pulled back on its affiliate program and made it less attractive to affiliates. How could Walmart improve on this and make affiliates want to promote products on Walmart instead of Amazon?
- Consider if there are ways to help entrepreneurs fund tooling costs, or presell their products.
- Work with the top Amazon sellers to see exactly what they need, but don’t stop there. Talk to entrepreneurs of all types and figure out how Walmart could help them be successful.
- Have a local delivery system that delivers within hours. But, and here’s the key, this delivery solution should also help other local businesses.
- Determine how to help make the export process as easy as possible so product designers can sell their products throughout the world with ease.
- Become the champion of small business. Go to bat for small businesses. Discover what small businesses need help with from a legal perspective and use Walmart’s lobbying might to fight for those things.
WALMART MUST EARN THE TRUST OF SMALL BUSINESSES.
If Walmart wants to beat Amazon, it needs to earn the trust of small businesses. Walmart must go all in. If Walmart creates a fantastic ecosystem, small businesses will latch on and propel Walmart higher than it could ever go on its own.
It’s a fantastic opportunity for Walmart, but it will require a significant change in thought process. Which is why Walmart will need to…
ATTRACT NEW THINKERS.
Walmart’s entire corporate structure, culture and infrastructure is designed for its current way of thinking, while Amazon is lead by one of the most visionary business leaders ever.
In my humble opinion, while some people within Walmart may be able to change their thinking, many will not. Walmart needs to hire visionary thinkers who aren’t so bogged down by the complicated past that they cannot redesign the company from the ground up. And these innovators must be supported from the highest levels. Get rid of executives and even board members who don’t adopt this way of thinking.
Before Kodak died, there were two opposing camps within the company; the ones who wanted to move forward and adapt to the changing times and the ones who hunkered down and resisted change. The group that resisted change won, and the company lost.
THERE IS ANOTHER CHANGE THAT WALMART MUST MAKE…
It’s so painfully obvious that I want to scream it to anyone who will listen: CHANGE YOUR NAME TO WALMART.COM! Every store, truck, bag, hat, blue vest and commercial should tell people to go to Walmart.com. The name “Walmart” should simply not exist without “.com”. Etch the “.com” into people’s brains. I can’t fathom why this hasn’t been done yet, other than some archaic idea of protecting the brick and mortar stores.
The fact is, when people shop online they think of Amazon. Walmart.com is not even in their thought process. Walmart MUST change this. Walmart must do everything it can to get people to shop online or it will never attract affiliates and small businesses to join them.
ONE FINAL POINT…
Why do I care about whether Walmart figures this out?
Because if Walmart finally figures out that their key to success is directly tied to helping small businesses become successful, we all win. Such a change would have a huge impact on business across the US and the world. It will spur creative growth and will benefit consumers everywhere.
If Walmart starts properly competing with Amazon in this way, Amazon will be forced to improve its support for small businesses. Other large companies in different sectors will be reminded that “the company that best leverages capitalism, wins”, which will create greater success and prosperity throughout other sectors.
Success and prosperity do not come from the government, but rather from individuals and small businesses. Small businesses are more important and more powerful than large corporations. They are the driving force.
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