On Wal-Mart, Small Businesses and Business Ecosystems

Today's Wall Street Journal has an excellent piece by Gwendolyn Bounds about entrepreneurs getting their products into Wal-Mart. The article follows two entrepreneurs who have a new writing instrument -- a pen with an unusual shape -- and how they've dreamed of getting it on the shelves of Wal-Mart for years.

The article superbly captures the emotions and dreams of entrepreneurs and small business owners when Wal-Mart's buyers order their products for the giant retailer's shelves:

"Getting into Wal-Mart is an entrepreneur's equivalent of making it to Broadway. Even a short run on the shelves there can help transform an invention from niche product to household name. And while Wal-Mart certainly isn't the only retail path to commercial success, nor the right outlet for every product, for mass-market merchandise at a certain price point no other bricks-and-mortar retailer reaches so many shoppers. Today the company has 5,300 outlets world-wide, and gets more than 138 million customers a week."

This article illustrates an important point that Wal-Mart bashers all too frequently forget: it's not always a case of Wal-Mart and small businesses competing.

It's true that small retailers may feel competition from Wal-Mart, especially if they try to sell solely based on price and try to compete head-to-head with Wal-Mart (or any big retailer). But for small manufacturers and small consumer goods companies, Wal-Mart is the customer they pray for and the one that can propel their company into big-time sales. Wal-Mart is the "elephant" they dream of bagging.

For small manufacturers and consumer goods companies, the relationship with Wal-Mart is more akin to a business ecosystem. Business ecosystems are a key trend impacting small businesses that I wrote about over at our sister site, TrendTracker. Small businesses are likely to be more innovative in coming up with new products, but it is the large corporations that hold access to the marketplace. And as every small businessperson knows, the most innovative new product is worthless unless it can get to market. And often the route to that market is through a large business like Wal-Mart.

The Wall Street Journal's story is available here -- now open access on Startup Journal. You can also download a podcast of an interview of the journalist, Gwendolyn Bounds, in which she summarizes some key learnings for entrepreneurs from the article. The podcast is open access. It is an MP3 file -- about 11 minutes long.

(And as an aside, don't you just love this new media era, in which the journalist also gets interviewed?)

Tags: Business; small business; sales; entrepreneur; retail