12 criteria to become a supplier for Walmart, Target and other mass retailers?
Business History – Have the company done business with mass retailers previously? If no, then it is a good start. If yes, then why the relationships discontinued? Has the company or its manufacturing factory been in the black list with any of the mass retailers? If the supplier has been in a bad relationship and the issue has not been resolved with one of the retailers, the chance to be qualified as a supplier for any other mass retailers is limited.
DUNS Number – Supplier needs to have DUNS number for mass retailers to verify company’s credit history, size of company, risk factor, and payment practice. If supplier does not keep a good healthy credit rating with D&B, the retailers won’t take the risk to have business relationship.
TIN (Federal Taxpayer Identification Number) – All US company has TIN to operate. If you are a foreign company, you are encouraged to establish a company in the US and have the Federal Taxpayer Identification Number. From the mass retailers point of view, it is much easier to have business relationship with US company because both supplier and retailer will be under the same governing laws.
Insurance – All suppliers are required to carry Commercial General Liability insurance. Depending on products offered, $2M to $10M coverage are needed and some other insurance policies may also be required.
EDI (Electronic Data Interchange) – The Electronic Data Interchange capability is required to receive purchase order, submit invoice, and ship merchandise.
GTIN (Global Trade Identification Number) – GTIN is required for company and product identification for doing business with mass retailers.
Product compliance – All products be complied or exceed with all required governing manufacturing and quality laws and regulations. Most of times, the regulations set up by mass retailers have tougher standard than Federal or State Governments.
Profit margin and payment terms – Suppliers need to know that mass retailers require higher profit margins and longer payment terms than regular distributors or retailers. Suppliers must analyze their financial burden for doing business with mass retailers.
Manufacturing facilities – Suppliers need to disclose their manufacturing facilities, local or international, to mass retailers. The costs of production will be increased for a facility to pass all the requirements as a mass retailer qualified factory.
Extra cost of Sales – There will be predetermined defective charges, tougher return policy, selling price mark-down support, distribution/logistic charges, and all sort of “Charge Back”. Suppliers should take extra care of these unexpected costs.
Marketing Supports – Depending on product offered, the retailers will require you to market your products through licensing, advertising, and promotions to attract consumers to their stores. If your product cannot generate a certain selling rate per store, you will be expecting more costs to mark down selling prices or returns.
Distribution and Administration – Mass retailers expect suppliers to deliver merchandises to their nationwide distribution centers and are able to monitor and quick responding to sales, stocking rates, and POS through their vendor system. Suppliers should have staff with experience to handle all administration on the weekly, if not daily, base.
