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Walmart Expands Global Branded Imports (GBI) Program

By: Greg Seminara,Export Solutions
Topics: Walmart GBI Mexico

Walmart sales outside the USA now exceed 180 Billion dollars. Many USA based suppliers and global brands seek to extend their relationship with the world’s biggest retailer to new countries. Walmart’s thought provoking Global Branded Imports (GBI) program simplifies the export development process. Credit Walmart for proactive efforts to promote global brands and bring product innovation to international markets. However, Export Solutions point of view is that Brand Owners should base international expansion strategies on a model to serve all major retailers in a country versus only one retailer. Additionally, manufacturers need to remember that few brands will succeed overseas without fundamental investments in consumer marketing and sales coverage at the retail level.

Overview:
Walmart’s GBI was tested in Japan with the objective of assisting Walmart Japan (Seiyu) with the direct importation of product, bypassing Japan’s complex wholesaler system. Basically, Walmart’s GBI system speeds the route to international markets and also provides dedicated logistics partners and mechanism’s for manufacturers without significant international infrastructure and resources. Walmart offers several alternatives within GBI, but the most simplistic approach is that the manufacturer ships to a Walmart Distribution Center or logistics partner in the USA, completes required paperwork, and Walmart and their logistics partners handle the rest.

Participating Walmart International Locations:
Walmart divisions in Japan, China, Brazil, Central America, Chile, & Mexico participate in this program. This is positive, as Japan, China, and Brazil are always challenging to navigate on an independent basis. Unfortunately, it appears that the United Kingdom and Canada do not participate in the GBI program, as these are 2 of Walmart’s top 4 overseas markets. Consumer habits, practices, and brand preferences in Canada ( and to a somewhat lesser degree the UK) are closest to those of the USA.

GBI Program Benefits
GBI should produce incremental volume, particularly for manufacturers that have limited resources and exposure overseas today. It is tempting to leverage Walmart’s well defined route to market with simplified logistics procedures and the ability to interact with English speaking, USA based buyers ( Senior Project Mangers in Walmart lingo), for foreign markets. GBI promises streamlined decision making, with a 45 day turn around on new products which is “lightening fast” on international timelines.

Key Issue # 1- What about other Market Customers ?
Obviously, Walmart’s program is designed for manufacturers to sell exclusively to Walmart outlets in a country. Normally, this may represent a starting point for a manufacturer, but a logical progression usually involves selling to all major customers in a market. Selling to Walmart through their direct import model may provide some short term volume, but may prevent you from broader expansion to other market customers in the mid to long term.

Key Issue # 2- Marketing Investment
Fundamental investments in consumer awareness activities (sampling, tv, radio, couponing etc. ) are universal requirements to stimulate consumer trial and repeat purchase. The GBI program appears “transactional” with focus on price, terms, and logistics versus brand building. On the other hand, I am sure that Walmart welcomes investment in local marketing, but how do you service consumers who may become aware of your media message but shop at outlets other than Walmart? Or can you afford measurable investments in marketing with sales only to one customer ? Or who will translate and manage marketing campaigns in Spanish, Chinese, Japanese or Portugese ?

Key Issue # 3 – Pricing
Walmart operates in a fair, transparent, fact based, manner when analyzing pricing. It is likely that most manufacturers will offer Walmart GBI a price equal to their current USA price to Walmart. What is the impact if you really need to be at a lower price point to compete effectively in an emerging market like Brazil or China where consumer spending power is very low ? In a second phase of international market development, manufacturers typically invest in marketing, local infrastructure, and a local distributor. Experience tells us that these costs are difficult to recoup later in form of a price increase.

Key Issue # 4 – Local Brand Oversight/Merchandising
Focus on brand presence at the point of sale is critical in all markets, but even more so in markets like Mexico, Brazil, & China. In these markets, leading local brand leaders invest in “armies” of merchandisers that are permanently in stores managing in store shelf conditions. Who will watch these functions at the point of sale for your brand when it is sold directly from the USA ? How will you know how your brand looks without regular visits?

Some Thoughts- My Experiences
Walmart should be recognized for a conscious effort to pioneer international brands with an efficient system. The GBI approach may provide some incremental volume to a manufacturer who would be content with shipments just to Walmart in a place like Japan or Brazil that they will never navigate on their own. The major consideration is how much volume can be generated without marketing and local support from a distributor/broker. Imagine the sales an unfamiliar Japanese brand would get at your local store in the USA or Europe if it just appeared on the shelf one day without any promotion ? I remember working in Argentina when Walmart first launched there in 1995. Someone from my company sold Hidden Valley Ranch salad dressing to Walmart from the USA. I was happy to be able to able to purchase Hidden Valley in Buenos Aires, but I was probably the only one. The product soon gathered dust, went out of code, and disappeared from the shelf.