Over my 17 years working for small companies, I have had the opportunity to negotiate and eventually do business with the corporate offices of dozens of members of the Fortune 100. As much as I dislike the way these large firms are run as a whole, I must admit companies like Ford, AT&T, Verizon, Home Depot, Target, Cisco, 3M and Washington Mutual have always treated my companies fairly, and negotiated with honesty and integrity. The one exception, as the title of this posting indicates, is Walmart—a company that not only plays dirty, but whose tactics blur the line between negotiation and mafia-style shakedown.
Below are six (6) dirty negotiation tactics my small company was recently forced to endure when attempting to sell a package of services to the Walmart corporate offices in Bentonville, Arkansas. I feel obligated to tell you in advance that this deal eventually fell through, but only after my company refused to deliver our services for the 70% discount Walmart was demanding. If you work for a small company, and you have an opportunity to either sell something to Walmart Corporate or get your product on the shelf in a Walmart store, I sincerely hope you can turn my experience into something a bit more positive.
Walmart Negotiation Tactic #1: Gain Your Trust
In most situations, your first contact at Walmart will be someone on the business side: a director, a mid-level department head, a product manager, or someone acting in a similar capacity. This person will be friendly, open-minded, and presumably an advocate for your company’s best interests. But make no mistake—much like the guy in the Mickey Mouse costume in the lobby of a Disneyland hotel, this person is part of the show which is about to unfold.
Walmart Negotiation Tactic #2: Send in the Muscle
At some point, the business person mentioned above will ask you for your ‘best price,’ which you will happily turn over. He or she will then tell you the price looks very good, and lead you to believe (without actually lying to you) the deal is almost done. The final hurdle, as your contact will explain, is for you to work out a few minor details with the Walmart Purchasing Department. What your contact will fail to mention, however, is that Walmart Purchasing people are known for two very special talents: intimidation, and making grown men and women cry.
Walmart Negotiation Tactic #3: Use ‘Research’ to Justify a Lower Price
If you thought your company’s contract with Walmart was as good as signed, you are about to learn a hard lesson in the art of Walmart-style vendor-beating. Your assigned Purchasing contact will not only attempt to slash the already negotiated price in half, but will claim he or she is in possession of actual market research that indicates your price is out of line with the current market. Research, of course, they will not offer to share with you.
Walmart Negotiation Tactic #4: Imply That a Better Discount Will Benefit Your Company in the Long Run
I can’t say for certain that Tactic #3 and Tactic #4 appear in a specific order, but rest assured they will both be used. And there is an important distinction that must be made here: a Walmart Purchasing person will not offer your company more business in exchange for a better discount. They will LEAD YOU TO BELIEVE offering a discount is in your company’s long-term best interest. At this point in the negotiation process it is critical that you as a small company ask three very important questions:
- Will a lower price guarantee me a larger initial sale?
- Will a lower price guarantee me additional future business with Walmart?
- If I give you this lower price, will I be able to avoid negotiating with you next time?
The response to each of these questions, assuming you don’t hear an outright “no,” will likely be stunned silence. Either way, you now know exactly what kind of ‘deal’ you’re getting—a one-off committment with no guarantees of future business, and the prospect of having to endure this all over again next time Walmart comes calling.
Walmart Negotiation Tactic #5: Purchaser Escalation
Those of you who have ever tried to cancel a cell phone plan know exactly how this part of the game is played. When you call your current cell provider to discontinue service, the representative will always transfer you to a special ‘department’ designed to process cancellations. Of course, this ‘department’ is full of sales people who get paid to make sure you DON’T cancel your service. The Purchasing system at Walmart is no different. If the entry-level Purchaser can’t bring your price down, your case will be transferred to someone much more direct, aggressive, experienced, and impatient.
Dirty Negotiation Tactic #6: Branching Up
‘Branching Up’ is an unofficial term I will use to describe how Walmart works its way up your company org chart when they don’t get the price they demand. Walmart Purchasing people have no problem going over the heads of those who are standing between them and a better discount. In my particular case the Purchasing person attempted to jump from our Sales Department to the Founder and CEO of the company, with the intent (presumably) of casting the sales person in a negative light. Our sales person was given no warning or other indication this was part of the Purchasing process, and no explanation as to why this was done once she found out about it.
All of what is presented above sounds rotten, icky and unethical . . . because it is. But at the same time, I should have expected it from a company who has been sued by 1.6 million women for sexual discrimination AND by nearly 87,000 employees in 40 U.S. states for cheating them out of overtime pay. Compared to these offenses, the manner in which Walmart’s Purchasing Department negotiates is literally child’s play. As a result of my experience, I vow to never make a purchase from Walmart as long as I live. Neither will my kids, my extended family, or my friends if I can figure out a way to stop them. And many years from now, when my business skills have left me and a job at a Walmart store is the only thing preventing me from being homeless, I will sleep on the street in a cardboard box—with a smile on my face.
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