When Selling at Wal-Mart is Bad for Business

What does it take for a company to decide that selling their product through Wal-Mart’s chain might hurt their business? This excerpt of an excerpt from Fast Company might give you a clue, as a vice-president at lawnmower company Snapper explains to Wal-Mart why he can’t continue to offer his product in their stores:

“Now, at the price I’m selling to you today, I’m not making any money on it. And if we do what you want next year, I’ll lose money. I could do that and not go out of business. But we have this independent-dealer channel. And 80% of our business is over here with them. And I can’t put them at a competitive disadvantage. If I do that, I lose everything. So this just isn’t a compatible fit.”

The Wal-Mart vice president responded with strategy and argument. Snapper is the sort of high-quality nameplate, like Levi Strauss, that Wal-Mart hopes can ultimately make it more Target-like. He suggested that Snapper find a lower-cost contract manufacturer. He suggested producing a separate, lesser-quality line with the Snapper nameplate just for Wal-Mart. Just like Levi did.

(Thanks, Danilo!)