Guidance for Product Launches in Walmart

Guidance for Product Launches in Walmart

After 5 years of serving Walmart & its customer, and successfully launching >100 items across 7 Walmart departments/38 categories, with both branded & private label suppliers, I would like to share some directional guidance for launching items in Walmart. None of this guidance is by any means proprietary, and my hope in writing this is that a) it’s useful perspective & helpful for the CPG community, and b) the intel potentially saves a few headaches. Retail is Detail, and there are many steps & details to launching an item in Walmart, and incorrectly executing even one of the many steps causes a ripple effect of issues & troubleshooting that compound across both Walmart’s & suppliers’ teams. At the scale in which we’re all working…

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Suppliers are smart to really grab the item launch process by the horns, get everything right on the front-end, and truly stick the landing across sales, admin, operations, and marketing. Below I’ll outline a protocol for launching an item from a communicated commitment. I’ll review everything from coordinating cross functionally to hit the mod on time & in full, to details on organizing the item spec, item publishing, forecasting, EDI, managing the launch in Retail Link, and coordinating marketing support for the launch.

Establishing Timelines

From a new item commitment, the first step is understanding timing. Walmart’s fiscal year runs Feb 1 – Jan 31, and each week of the year is numbered 1-52. A Walmart calendar can be found here. Confirm what week the item is launching in Walmart, which will be the category’s Walmart modular reset week #, and begin planning from there. Plan for mod fill orders roughly 4 weeks prior to the mod reset week.

Here’s a look at key milestones working backwards from an example mod reset week of Walmart week 40:

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Item Spec Alignment, Item Publishing, Case Configurations

Also from commitment, align on & organize the item spec details, in their entirety, in one place (I use an excel template). This covers everything from case configurations, unit/inner/master UPC’s, dimensions, weights, final unit packaging, vendor stock number, and cost. This aligned on & organized data can then be shared cross functionally to initiate the new item’s integration into a supplier’s supply chain, operations, accounting, sales, and administrative departments. From here, each area of the value chain can begin planning to accommodate this new item & Walmart’s demand of it. Once the new item is established internally, it can then be published to Walmart’s GLN via a GDSN system like One World Sync, or built from scratch in Walmart’s Item 360 app in Retail Link. It is imperative the item spec is 100% accurate when published to Walmart. The item publish to Walmart’s system usually needs to be executed within 2-3 weeks of the commitment from Walmart (though this timeline can sometimes vary widely depending on the scenario).

Key considerations in coordinating an item spec are case configurations & case markings per Walmart’s guidelines. If the item comes in a retail ready case. That case needs to be a max of 10.5 inches in depth so Walmart can fit 2 cases comfortably in the item’s slot on shelf. If the item does not come in retail ready packing, it is strongly recommended that the case quantity be “pack and half compliant,” meaning Walmart can fit 1.5 cases’ worth of units on the shelf (Walmart’s average shelf depth is 21 inches), while the remaining .5 case is available in the backroom for replenishment. Also worth considering, too many units in a case can work against a supplier by raising the threshold to trigger a replenishment order. To strike a medium in increased efficiencies from larger cases while still meeting Walmart’s case quantity guidelines and not raising the reorder threshold too high (that can cost suppliers & WMT lost sales), suppliers can utilize a case configuration that has inner packs. This allows Walmart to open the case at the DC, and ship the smaller quantity inner packs to stores vs the larger quantity case flowing through the DC to stores.

Walmart requires cases have certain markings that allow products to flow through Walmart’s complex supply chain network smoothly. The guidelines for these markings can be found in Retail Link. These required markings can be stickered or printed on a case, but either way, the markings must be present & accurately follow Walmart’s guidelines.

Forecasting

Once the spec is organized and published to Walmart, suppliers obviously need to forecast the mod fill & build a directional annual forecast for its operations/production/finance teams. Suppliers are wise to come into these resets with a heavy inventory position to be best prepared to service Walmart and to capture any upside if sales take off & weekly replen orders become large. If suppliers don’t have the right amount of inventory in place for the launch, and the item does better than expected, the weekly replen orders become larger than expected, then in this scenario the supplier’s fill rate will drop because they are unable to fill the larger than anticipated orders, leading to lost sales & an effective “capping” of the item’s performance in Walmart, as when sales drop, the forecast drops, so orders drop, and it’s hard to crawl out of that hole and achieve your true potential in Walmart if you botch the launch by coming into the launch with not enough inventory.

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Suppliers will likely want store count information prior to Walmart having it available. Walmart can have >500 versions of a certain category’s modular, so designing these modulars across the many constraints, suppliers, strategies, etc is complex and takes time. Having said that, Walmart’s team does a great job providing suppliers with ample directional information & lead time, but suppliers’ unique raw material, operational, and supply chain lead times don’t always align with Walmart’s. In theory, outside of launching a private label item, for branded suppliers that are successful enough for Walmart to partner with, Walmart should not be more than 30% of that supplier’s/brand’s/SKU’s business, and the onus is on the supplier/brand to prepare for the reset volumes prior knowing exact, and even sometimes directional store counts. Suppliers should have a large, efficient, and successful business already in flow, so turning on the tap for Walmart isn’t such an atypical feat. This already-proven supplier scale allows for flexibility to handle the variance of an item’s initial commit from a buyer and the buyer’s final store count communication. When the inevitable forecast/store count variance is established, these successful brands/suppliers can easily find a home for any excess inventory they wisely built to hedge for a successful Walmart launch.

For forecasting the fill order, with directional store count information, I calculate 1.5 inner packs, or 1 case to each new POD. For some larger, denser-type items, the individual unit in the case can be its own “inner pack”, and the case is broken open at the DC and the units are sent to stores. For this specific scenario, take into account the unit’s depth, available merchandising space, the estimated velocity of the item, and call the ball on what you think makes the most sense. I usually land on 4-7 “inners” (units) per new POD in this scenario. After the fill order, Walmart will fill the inventory pipeline coming behind the mod fill inventory with approximately 40-50% of the fill order (this can vary depending on the item/category). Both of these orders cycles happen prior to actual reset date. Walmart executes its category reset across 4600 stores within two weeks (pretty amazing), so once the mod is reset, sales replenishment orders will start flowing. Suppliers can coordinate what days they receive orders, and establish their processing and delivering lead times to each DC with a lead time audit form, which can be found in Retail Link, and submitted to the category replenishment manager. Submit this completed form to the RM at least 2 weeks prior to the mod fill order. If the supplier is using a 3PL, the 3PL’s vendor pool # can be shared with Walmart in place of the lead time audit form submission.

To build an annual forecast after the mod fill forecast, I operate off this assumption: Walmart will order one week’s worth of demand every week. Once the inventory pipeline is healthy (the correct amount of inventory is in transit from the supplier to the DC’s, and from the DC’s to stores), Walmart should order one week of supply each week. With this assumption, suppliers can back into an annual forecast by using their empirical knowledge of the newly launching item’s store level velocity times the directional amount stores to calculate what one week of supply looks like, which in theory, should be ordered every week. For building mod fill and annual forecasts for my clients, I use a template that allows us to model and stress test our production projection assumptions, understand each factor’s variability, measure trade-off’s, and then hold hands and agree to what we want to project & then produce to.

EDI & test PO

Walmart has an amazing EDI support team & resources available to its supplier community. Suppliers need to utilize Walmart’s EDI resources and work with their EDI provider to ensure their EDI is successfully connected to Walmart, as well as ensure there is an automated process in place for sending ASN’s and invoicing via EDI. Once EDI is connected & the item is published, a test PO is in order. Suppliers can work in the NOVA app in Retail Link & the category replenishment manager to execute the test PO. The test PO will likely uncover some things like Walmart is ordering in units instead of cases, or the item descriptions are odd. Walmart ordering in units vs cases can be resolved with the EDI provider by adjusting the UOM(Unit of Measure) setting, and the same goes for the unit descriptions via adjusting item description settings. The test PO is also good for auditing the allowances & terms of a supplier’s Walmart agreement & the new item’s cost.

Marketing

Suppliers need to have a marketing plan in place to drive Walmart incremental traffic & category growth associated with their item. Suppliers banking on Walmart’s foot traffic & their great product/packaging alone will get out-performed by their on-shelf competition. Most suppliers launching in Walmart are likely already effective at marketing, but for Walmart specifically, I suggest pulling 3 main levers: Fetch, Ibotta, and deploying a CPC/SEO budget for 1P Walmart.com. Suppliers need their sales to speak for themselves, as they won’t be in the room when Walmart’s category and merchandising teams are assessing performance. Fetch & Ibotta are similar, but the apps’ user crossover is only ~10%. Both apps are pay for performance, which I like, as I’ve always felt marketing can be a little woo woo with the ROI being hard to measure. With Fetch & Ibotta, both platforms commit to moving a certain amount of units via their platform, and the only unknown variable is how long it takes them to do it, which I can live with vs sinking marketing dollars elsewhere and hoping for the best.

Tips for managing the launch during mod fill & launch season

Once mod fill orders start to arrive, I’ve found that a few additional steps really help set the item/brand up for success for both Walmart & the supplier, and ultimately the customer. The first step is auditing the mod fill orders to confirm that each new POD has inventory on order. Suppliers can pull a future valid store list out of Decision Support in Retail Link and audit this. Sometimes, there are gaps, and the gaps need to be brought to the category replenishment manager’s attention in a data-backed & actionable way. Once the mod is officially reset, my goal is to get 100% of the store/item combinations scanning as quickly as possible, as that reaps a whole host of benefits, from sales to optimizing Walmart’s replenishment system. Four-six weeks after the reset, I isolate the store/item combinations that haven’t sold/haven’t been activated, and I work with Jon Walker at Shelf Level Retail Solutions to call each 0 sale store, get to the department manager, and confirm the new item is correctly merchandised and not stuck in the back room or anything unusual. Jon Walker at SLRS is also a pay for performance scenario, as he only charges for store/item combinations he’s able to activate within 14 days. Again, I can live with this type of spend.

That’s a wrap! I hope the above directional guidance is useful for suppliers on their Walmart journey, and I appreciate anyone who’s read this far(what type of monster are you??). Any engagement, questions, challenges are more than welcome.

Tarick A. Gamay

Chief Sales Officer @ DreamPak | VSBFA (Virginia Small Business Finance Authority) Board Member | Oasis Hill Board of Directors

1y

Brilliant stuff

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Dana Marie Ponczek

Dedicated to Pet Health & Happiness | Product Development Leader | Brand Builder | Go-To-Market Strategist

2y

Well written Grant! Appreciate your passion and experience!

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