Scaling the Wal

Entrepreneur, Jan, 1998 by Karen Axelton

Shouldn't landing other retail accounts be a snap once your product has passed the Wal-Mart test? That's conventional wisdom, and in some cases, it's true. "Being able to say, 'Hey, we're in Wal-Mart now' is certainly a door opener," says Wurzel. "It's that 'me too' mentality - if people see it doing well in Wal-Mart, they'll want it in their stores, too."

But not always. "Once I got into Wal-Mart, many other [retailers] shunned me," says Steve Kendall. "I went back to Kmart [and other mass merchandisers] I had approached before, and they said, 'If your product is in Wal-Mart, then why do people need to buy it from us?'"

How can you avoid this Wal-Mart backlash? One solution is to diversify. If you have several products or product lines, you can sell one to Wal-Mart and others elsewhere.

Another idea: "Get Wal-Mart to put its private label on your product," says Kendall, who did just that with the Cutting Edge Opener System. "Then you can still sell it under your own label elsewhere, and it won't be directly comparable to the Wal-Mart item." Kendall uses this strategy to sell his product via the Internet.

* LEARNING CURVE

Whether you can leverage the Wal-Mart cachet to boost sales elsewhere is not necessarily the point. The real benefits of working with Wal-Mart go deeper than that. "The exciting thing is that in dealing with Wal-Mart, you become a better company," says Charles Monte. "You learn how to sell to a mass merchandiser, and that's a benefit some companies may not recognize."

Whether their products succeed or fail in Wal-Mart, entrepreneurs who have worked with the retailer value the education they've gained. "One thing we learned from [our experience with] Wal-Mart was to focus on our marketing plan," says Paul Cantrell. As a result, he's changing the company's distribution focus from mass retailers to automotive stores: "That's where our customer shops."

If you see Wal-Mart as the pot of gold at the end of the rainbow, or the finish line at the end of the race, you're thinking's all wrong. Instead, think of it as training for a marathon. You may win first place, or you may drop out halfway through. But however far you get, you'll likely be in better shape when the experience is over than you were before you began.

"Wal-Mart is a learning experience, and we're still learning," says Charles Monte. "It's a challenge, and we choose to rise to it."

RELATED ARTICLE: STEP BY STEP

To become a Wal-Mart vendor, start by calling corporate headquarters in Bentonville, Arkansas, at (501) 273-4000. Operators will refer you to the appropriate department for the information you need. Or visit Wal-Mart's Web site (www.wal-mart.com) for step-by-step instructions on preparing and submitting your application package.

In addition to following these steps, you must have your financial information listed with Dun & Bradstreet, apply for Universal Product Code (UPC) Identification Number(s), meet applicable liability and workers' compensation insurance requirements, pass quality assurance testing, and meet packaging and labeling requirements.