Recently I bought some Gilette Mach3 razors at a WalMart. The checkout lady was shocked at the price – almost $ 28 after taxes for the 12 pack of razors. She came close to asking – so I will ask for her - what exactly are my sourcing colleagues doing? I should have been smart enough to let her reaction make me drop the item from the shopping cart. Because when I got home, I I found I could have ordered the exact item from amazon at $ 16 without tax or shipping charges – so 45% cheaper.
Another WalMart store, another conversation with the cashier – Oh, I find Publix cheaper for many items. Even with her employee discount? Yes.
Stories abound of how WalMart used to decompose products it bought and return to the suppliers the torn-down product and say “your production cost is X. We will pay you X + 20%”.
I mean Mach3 is a nice razor, but it has been out since 1998, and P&G has long recouped its R&D and grown it to phenomenal economies of scale. Besides prices of most stainless steel grades have dropped 50% since early 2008. So over $2 a replacement cartridge is generous to say the least.
And what happened to old Sam’s tradition of competitive shopping? I mean if your employees are personally shopping somewhere else that should be an early warning?
So I read today WalMart is embarking on elaborate surveys which ask its suppliers all kinds of sustainability and traceability questions. My initial reaction was don’t the category sourcing folks know their suppliers pretty intimately?
John Fleming, Chief Merchandising Officer explains ““The questions aren’t complicated but we’ve never before systematically asked for this kind of information. The survey is a key first step toward establishing real transparency in our supply chain.”
I sure hope it also gives Walmart newer transparency into the economics of its suppliers and that it acts on the data. Because, otherwise, his employees and his consumers will be shopping more and more at Publix and amazon.
