Lessons Learned from a Startup Called WalMart – the Power of Merchandising

A year ago I read a book called “Made in America” by Sam Walton, the founder of Walmart. It’s a great read and gives insight into the dynamics of how retail companies like Walmart (and now Amazon) came to be.

So… this morning while doing a little bit of work on an ecommerce site, a thought hit me out of the blue. There is a powerful marketing tactic WalMart used in their early days that we online sellers today need to be using as well.

Sam Walton repeatedly refers to his line of business as “merchandising”, which stuck out to me as it’s not really something people say these days in this age of ecommerce. At the time it was just the way to describe his style of retail sales. But… it is so much more than that.

The first few chapters of the book tell wild stories of the lawless early days of WalMart where loose-cannon store managers would try all kinds of crazy schemes to get people into their stores and away from competitors.

For example, they would buy massive bulk orders of toothpaste or shirts, or lawnmowers, and offer them at cost or at a loss in massive promotional sales.

90% off {{name brand}} toothpaste! This weekend only at WalMart in Bentonville! 10,000 units in stock, first come first serve!

Contrast this with their competitors in general stores down the street who would only buy enough to meet forecasted sales in their area and charge 3x or 4x COGS in margin.

So when the weekend came, thousands of people from all around the area would travel to WalMart to claim the insane deal. And in the process they would buy a bunch of other things, effectively driving a profit on an unprofitable sale.

There is a lesson to be learned here in marketing that I think is sadly a lost art today.

Sales like this were not meant to increase monthly revenues or add a little extra to the bottom line on units sold in the sale.

Rather, they were meant to be sensational, extravagant, one-of-a-kind events that were too good to be true.

Cards Against Humanity recently did something like this with their 99% off sale. An excellent example of sensational merchandising to sell some card games.

Similar to the general stores of back in the day, contrast this to your run-of-the-mill ecommerce brands or SaaS companies…

10% off cart re-capture campaigns?

20% off Black Friday sales?

1 Month Free sales the last week of the month to hit quota?

Not very inspiring and no one is fooling the customer… there’s still margin in a 10% off coupon, it’s obviously a last-ditch sales tactic.

I would love to see more sensational merchandising in the online world today. Let’s generate some buzz! There has never been an easier time in the history of the world for sensational events to get blown up by the media.

Can we get 99% off the first 100 people to sign up for a SaaS platform on Cyber Monday?

How about free + shipping offers on $5,000 luxury handbags and backpacks?

Part of why I was so drawn into the stories of early WalMart was the raw entrepreneurial spirit. All these guys, including Sam Walton, staked their whole net worth on the success of a few stores, and maxed their credit on big promotional events to shock and awe their communities.

I think most companies, brands, stores online today are too afraid to make big bets like that and are missing out on massive rewards to those who want to play the game.

So this is a call to arms for today’s internet marketers — let’s go big and profit.


Also published on Medium.

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