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Can This Be True Of Wal-Mart?


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February 04, 2007

Can This Be True Of Wal-Mart?

Bruce Nussbaum

I print this comment about cameras and digital products sold by Wal-mart by a reader because it is so astounding. Please send in any of your own experiences. And Wal-Mart execs, I hope you are taking notes and making changes in the way you do business. The clock is ticking.

Here goes:

">Here's a cautionary tale for anyone thinking of making a purchace at walmart or sams based on price comparison.

I wanted an inexpensive digital camera for my daughter. After finding one with the basic features I wanted, I went to sears, target and walmart to check prices. All 3 stores sold the a camera with the exact same model number. Sears -$119 target -$109 walmart - $99 . I bought it at the manufactures online store but when the camera was delivered it DID NOT have all the features that the Sears and Target salesperson had shown me (couldn't get help at the Walmart store). I contacted the factory store and asked them if perhaps the one I got was an older version of this camera since the model number on the unit was the correct. The customer service agent apologized and said I must have gotten one of the "WALMART" cameras. These units were manufactured just for them with the same model number but with reduced features. So while the price was a little lower at walmart, the value was worse since it was a stripped down version.

When I told this story to some friends, they were surprised because they had similar tales. One had purchased a computer printer and couldn't get some of the features she wanted to work. When she called the factory, the first question they asked her was if she bought the printer at SAMS. When told that she did not, they were able to guide her through her set up problems. At the end, however, she asked them what SAMS would have had to do with it. The answer: that model, when sold at SAMS, was a stripped down version without the features she wanted.

Another friend wanted a computer. Being a very tech-savvy consumer, he heavily researched all the different model numbers on the brand he wanted so he could compare prices across the different Chainstores. WalMart and Sams were similar BUT slightly unique numbers, which his research led him to believe had inferior internal components, stripped down software and were loaded with WALMART spyware. I cant comment on the veracity of his technical observation - just that he felt that the general public was being misled into thinking they were a better deal than they really were.

This is just one of many reasons why my entire family and circle of friends now boycott Walmart."

02:50 PM

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I have often felt this to be true even though I don't have any documentation. Volume purchases alone by Wal-Mart or Kmart or Home Depot can not always account for the lower prices. For a manufacturer of lawnmowers, as an example, it would be easy to reduce the gauge of the metal of the deck (without the need to change tooling) or to use a lower quality screw, or slightly lower gauge of wiring, maybe even one less coat of paint. This would not affect the look, or the general function of the product and it would not be something a consumer, or a buyer at the discounter could tell -- it would however reduce the manufacturing cost and therefore the wholesale price of the product. The product may even be within the original specifications of the product but at the lower end. It would be interesting to purchase 2 products and compare them part for part and process for process. I think sometimes you actually do get what you pay for.

Posted by: Dan Lewis at February 4, 2007 10:00 PM

It’s probable that manufactures will dedicate process lines for Wal-Mart supplied products, considering the large throughput required. This dedicated process line may even be located at a completely different manufacturing site and produced under a different operating structure. However, a manufacturer’s model spec-sheet and the actual product should correlate. This post may be an eye opener to the manufactures. Is it possible that Wal-Mart is unknowingly being infected with cheap knock-offs? Managing two SKUs under the same number but with different features would be a manufacturing, accounting and marketing nightmare.

Posted by: Rich at February 5, 2007 05:38 PM

I expect that it likely is true, at least based on my experience consulting to a supply chain group a computer manufacturer a few years ago. They wre pressed very hard for price by Wal-Mart, but did this clever thing called "postpoment" where they would agree on the price, but not the exact features on the computer, so they would be shipping a machine that had the best blend of parts (because the costs of things go up and down), but still hit Wal-Mart's tough price point. And when the couldn't do postponement, they would often just have to agree to on the Wal-Mart computer, which had somewhat cheaper parts and fewer features. So although Wal-Mart -- with its huge volume -- often does sell the same stuff for less, at least based on my experience, I have hints that they also drive down prices by buying cheaper stuff.

Posted by: Bob Sutton at February 5, 2007 06:14 PM

Whoa. The most surprising thing to me about this story is the manufacturers' customer service agents who openly admit their firm sells inferior products through Wal-Mart and Sam's Club. I bet the Wal-Mart boys are none too pleased about that.

If true that Wal-Mart is selling stripped down versions of products with the same product numbers, packaging, etc., that seems tantamount to consumer fraud. Surely this camera's packaging listed features on the box. Did the Wal-Mart box list fewer features? I agree with Rich that this arrangement sounds like a logistics/accounting nightmare, but probably one that many suppliers are willing to endure to stay in Fayetteville's good graces.

Posted by: jason at February 7, 2007 08:25 PM

I’d like to hear about an actual measurable case so I can go into my local Wal-Mart and validate the discrepancy for myself. Does anyone have brand and model number?

Posted by: Rich at February 8, 2007 05:14 PM

This practice is illegal. It is price gouging. A manufacture can not sell the same product for different prices. They can price products for volume discount though and they would need to follow some sort of plan to consistently discount other buyers from other stores as well. Usually there are specific model numbers created when being sold to stores for special prices this is the legal way. Otherwise they cant be bought anywhere else.

Posted by: George at February 13, 2007 05:45 PM

Weekly I peruse the Walmart electronics department and compare items with other sources. Sometimes I buy from Walmart and sometimes not. After purchasing 20+ items from Walmart like video cards, cable modems, wireless routers, many printers and several digital cameras, I have never had the experience described. HOWEVER, I bought an HP camera (model 733) with a slightly different model number than other stores (735), that lacked a few features but same optical specs at a much lower price. Same for a unique model video capture card by ATI. Slightly different model number, similar specs, but much lower price. No deception here IMHO, just semi-custom manufacturing for a better value.

Posted by: Jay at February 17, 2007 01:29 AM

I clearly recall feeling the stripped naked effects of his Wal-Martizing when I was handling the branding work for a small-appliance mftr. The pressure to cut costs to get the Wal-Mart order routinely meant starting with the already bare bones discount version of a product and stripping something more out to get the cost down another x-percent. Lifespan was one sure casualty. And the bitch of it was, you were damned if you did it and damed if you didn't, cuz once you got on the Wal-Mart teat, you almost had to be willing to fold up your tent to get off.

Ahhhh, those were the days.

Posted by: Crawford at February 17, 2007 02:52 AM

When i was buying a nail gun at home depot and Canadian tire I saw that they looked like the same nail gun but the one at home depot was cheaper. Going back to Canadian tire I told them this but they said it's not the same gun and sure enough, both the UPC code and the model number were slightly different. I agree with Jay, it's up to the customer to be savvy. Although after reading this article I will be more careful in the future.

Posted by: Jay2 at March 21, 2007 04:46 PM

Today I talked to a Tramontina, a maufacturer of cookware (pans) I had purchased. The purchase price was $79.97 for a 10 pc. stainless steel set.

I was familiar with this brand of cookware because I had an old set from this same manufacturer. In researching the web to see if I got a good price and consumer feedback about this product, I could not find this particular set. So, I called the manufacturer and YES, I discovered that this set is manufacturered to WALMART'S mandated specifications. They were manufactured with a lower gage of steel (pans were lighter), the bottom is a separate bottom that is triple plied clad vs the more expensive pans with an all-clad bottom (made in one solid mold).

I was told if I bought a comparable set directly from Tramontina, it would cost about $100 more, but it would be made with the higher specifications. I re-stated to the Tramontina customer service representative, "Then you are telling me that the quality of the pans at Walmart are less than what your standard is." The rep emphasized, they are not lesser quality, they are just a different specification (basically cheaper).

She said there is no way they could sell the pans that are ordered directly from the company for the same prices as Walmart.

I have also been told by two reputable individuals in the vitamin industry that Walmart's vitamins and supplements are not the full strength and on some of the products, you can compare the ingredients which reflects differences.

Posted by: K. Sullivan at March 22, 2007 03:01 AM

This is a logical outcome resulting from Wal-Mart’s tactic of squeezing suppliers for a 5% price cut each year for the privilege of having their products on Wal-Mart shelves.

Dealing with Wal-Mart is like making a deal with the devil.

Its up to shoppers to beware of false economy!

Posted by: George Zullich at March 29, 2007 03:25 PM


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