Unlock the Door: Selling To Sams Club vs. Walmart

After a 28-year career at Sam’s Club, Joel Graham now develops education and services specializing in Sam’s Club as a consultant for 8th & Walton, a Bentonville firm that helps consumer packaged goods suppliers around the world through classes and advisory services.

“My many years of merchandise and operations with Sam’s Club enable me to understand what suppliers face, what the club expects, and how to best serve the member,” Graham said. “I want a supplier to feel safe asking me any question about Sam’s Club.”

In a recent interview with the Northwest Arkansas Business Journal, Graham provided some inside information on strategies for selling to Sam’s Club.

NWABJ: What differences between Sam’s Club and Wal-Mart Stores Inc. should a supplier keep in mind?  

Joel Graham: “Each is a different retail concept. Walmart is a discount department store, and Sam’s Club follows the warehouse-type business model.

“When Walmart gets a truck in, they have a backroom to hold product, and then they stock the store overnight. With Sam’s Club, there is no back room for storing product. It’s all out in the club and stacked up in the steel. Sam’s Club pushes all the merchandise it received that day to the floor. Naturally, the inventory management in each type of retailer is very different.”

NWABJ: What’s the impact of those differences?

JG: “First, suppliers new to Sam’s need to thoroughly understand the fundamental differences between the two retail concepts. There are many, many things to consider.

“Pallets going to Sam’s need to be designed so they go completely door-to-floor. That means that when the pallet comes in the back door, all that’s needed is for the shrink wrap to be cut off and the pallet pushed to the floor. The product should not be touched at all — no hand stacking, no rearranging, nothing.

“The SKU [stock keeping unit] count is another significant difference. Where Sam’s has thousands of SKUs, Walmart has hundreds of thousands. Some suppliers who have sold to Walmart but are new to Sam’s will try to bring 20 items to the table. Pare that down. Sam’s is going to buy one or two, max. You won’t sell your whole catalogue like you might to Walmart. Sam’s is item sales and management.

“The Sam’s Club business model requires a scaled-down approach to item management. At Sam’s, you bring in your one item. It needs to be the best of the best. It’s on a full pallet. It’s massed out and ready to sell in bulk. With Sam’s, you’re dealing with a singular item focus and mass quantities of it on the shelf — rather than on peg hooks.”

NWABJ: How is the club concept different for the shopper?

JG: “Club members pay an annual fee because, in effect, the buyers at Sam’s have done the work of shopping for them, exploring the whole market for the best products available. That greatly reduces the need for the members to shop around.

“At Walmart, you will find a wide assortment, starting at inexpensive, entry-level items and moving up to higher-dollar, higher-quality items. Sam’s completely steers clear of anything that’s entry level. The business model requires that the products are of the best quality possible, while keeping value in mind, too.

“The trust factor comes into play with the Sam’s Club member: ‘I spent $45 for a membership. Now I can go to Sam’s and be assured that what I buy has been vetted as the best product on the market.’ And Sam’s has publicly made that statement.

They want each member to trust that the buyers already have done the work for them — and they have.”