What Can Network Marketers Learn from the Wal-Mart Business Model?

by Tina Gregory
What is the lifeblood of ANY business?

Answer: Product movement to the end consumer.

Have you read Sam Walton’s autobiography? His vision, the business model he pioneered, was brilliant. Walton started Walmart & Sam’s Club. He said, “We will be the largest retailer in the world.” And he achieved this goal because he found a way to move product to the end consumer at the cheapest price. How did he do that?

Walton said, “Do people care when they buy their groceries whether there’s an acoustical tile ceiling, or if they see roof rafters and white bar joists?” The answer: They don’t care. So he invented a business model where you have shelves with cases and cases and cases of soda pop.

In the evening, they bring that stuff down & fill the shelves. They stock the warehouse for ALL the manufacturing companies, saving those companies a TON of money.

Every Other Retailer Was Left In The Dust

He built massive warehouses around the world. Then he talked to Scott Tissues, Hershey’s, Johnson & Johnson, Levi’s, all these companies: “Hey! Don’t build expensive warehouses all over the place. Ship your products to MY warehouses, I’ll store it. As we sell it, I’ll pay you.”

So when they scan that bar code, Scott Tissues knows Walmart sold 73 cases of paper towels today. The system tracks that sale. At the end of each day, Walmart sends each vendor the money.

Other retail outlets don’t have the space – or the vision – to make that offer to suppliers. Instead, they buy the stuff in smaller quantity, store it in the back, and move it to the front as needed. There’s no tall, tall, tall ceiling with products stacked way up above you. That’s the way it’s always been done. But that’s not how Walmart does it.

Why Customers Choose Walmart

So Walmart & Sam’s Club pay less for identical products than other retail outlets. And they can pass the savings on to consumers, attracting throngs of buyers to their stores.

How does Sam Walton make money with Sam’s Club? Off the membership. Again, that and the warehousing of products allow them to sell at a very low price. It’s in the business model. Whoever figures how to move product to consumers at the best price, wins. Sam Walton proved that point.

How did he do it? He cut the overhead for all those companies, his product suppliers!

How does this apply in network marketing? Look at every company, every compensation plan. Let’s say every company pays out 50% of retail to reps. Each product, no matter the cost, they pay 50% commission.

You can only cut the pie so many ways. If you pay 50% commission on $79.95, or 50% commission on the identical product at $39.95. Do you think a $39.95 product makes it much easier to sell twice as much or 3 times as much?

Cut the overhead, and you have a better chance to sell that product. You’re not just competing against other network marketing products. You’re competing against Sam’s Club & Walmart, too. Your business model better let you make a good offer to the consumer, or you’ll never succeed.

Whatever network marketing company finds a way to move the product to the end consumer at the best price, wins. And that’s definitely who you want to build your future with.

Your friends for life,

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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