Why Walmart is Just Using You

Yesterday, Walmart filed a pre-emptive lawsuit against the federal government, claiming that they have no ‘legal’ responsibility for filling thousands of fraudulent opioid prescriptions during the last twenty years, including the worst years of America’s opioid epidemic.

“One Walmart store bought enough oxycodone and hydrocodone from 2006 to 2014 to supply 29 pills a year for each of the approximately 7,100 people who lived there.”

When you’re making bank on illegal prescriptions, why ask questions? One reason might be that you’re making it possible for your own local grocery customers to kill themselves and reduce your own grocery sales. Nope. Pills more than makeup for the lost grocery profits.

Walmart trains its cashiers to look for counterfeit $20 and $100 bills but can’t train its pharmacists to question prescription legitimacy? Not a rational argument to me. The ethical position is that Walmart should have been at the vanguard of blocking bad prescriptions, helping addicts get rehab, etc. They knew what was going on.

Now, step back and consider how they will treat you a tiny premium CPG startup, making no money, when you get pulled into their system? Do you imagine that you will be treated any better than the opioid addict fed a continuous stream of pills by Walmart pharmacists?

Walmart recently selected 850 startups out of 4,800 applications to pitch their buyers live for precious space inside its massive 4,800 store network. This sounds like an impressive commitment, but the contest and the onboarding of winners are critical, keeping Walmart ‘relevant’ to America’s middle-class grocery shopper. Walmart is positioned culturally as an EDLP chain retailer to receive yesterday’s urban trends and scale them up for late adopters. While the trend cycle may have accelerated in some categories, this is STILL their role in premium-priced CPG offerings.

If you’re willing to sell at category average pricing, then you can launch at Walmart feasibly and perhaps expect decent velocities.

However, the vast majority of premium brand cases I’ve reviewed have not only under-performed vs. mainlines supermarkets in terms of store velocities when they entered Walmart too early; they get delisted at their own expense. Walmart IS the kind of retailer that will make you buy back your unsold inventory.

You will then experience your own version of pain analogous to the opioid addict who kept passing delusional, fraudulent prescriptions to Walmart pharmacists. You’ll live, unlike them, but Walmart won’t send a condolence letter to you either when you are delisted.

Public source on this breaking story: https://www.cnn.com/2020/10/22/business/walmart-opioid-lawsuit/index.html

Dr. James Richardson

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