Dealing with Big Box Customers

I am under a confidentiality agreement. Customer names are not included.

Big Box was always the place to go to move product. It was just a matter of time. Amazon has been eating their lunch for quite some time now. Many big box stores are now doing what many vendors have worried about. Their vendor terms just increased significantly. More specifically, they are stating that these additional funds are directed mainly at advertising online. They did not say it in so many words, but they are trying to compete with Amazon.

Another thing that bites a little hard is that we negotiated a deal for future sales WITHOUT this knowledge and now that program is significantly less profitable. So how do you deal with this. First, expect to lose. That does not mean I am giving up though. The business cycle is a 12 month out cycle. They SHOULD HAVE given 12 month notice instead of 3. This impacts any business that had been working with them for the past 6 months for holiday programs.

This ONE change is going to decrease their expenses by $1.8 BILLION dollars. We are actively working with their internal rep, but that person has already washed their hands of it. All of this is because they want to continue the fight to the bottom in the world of online advertising. I mentioned this in an earlier blog, but Amazon has been making some new injections into the good adword spending and now this will make an even bigger change.

Increase Costs

I am pointing out that these sort of things only work to drive up their costs. Consumers end up paying these extra costs. YOU are going to pay 6% more this year. These sort of deals with our customers is just going to get worse. We will fight them as much as we can, but stores from other countries have been doing this for years (look at Australia monopolies of Cole’s and Woolies.) I dare call it unfair, but it just means that we need to show were are just as valuable a resource as they are to us.

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