Smaller Thoughts

Imagine

Prior to the early 90s, deodorant came boxed. The plastic deodorant stick was packaged in a paperboard box. In The Wal-Mart Effect, Charles Fishman describes how in the early 1990s, Wal-Mart decided the box was a waste. It wasted cardboard, took up shelf space, increased shipping expenses, and was unnecessary since the plastic deodorant package was more durable than the box. So Wal-Mart asked their suppliers to eliminate the box. Of course, they did. And it benefited everyone - the box turned out to cost about 5 cents, which Wal-Mart split with its suppliers - the deodorant makers got a couple cents, and a couple cents of savings were passed on the Wal-Mart customers. Everyone, except for the box makers, that is.

According to the Sr VP of Sustainability in a talk I attended this weekend, the Wal-Mart Sustainability Team has met with Yvon Chouinard, founder of Patagonia, a few times this year. During these meetings, Yvon had a few requests of Wal-Mart. They included

1. Wal-Mart should make suppliers change the ingredients in their products, including eliminating high-fructose corn syrup.

2. Wal-Mart should make suppliers eliminate the “on” light on appliances.

Except this would never happen. Eliminating the box on the deodorant reduced the cost of the product, thereby helping Walmart move more product, more efficiently allocation their shelf space, and save more money.

Forcing their suppliers to use real sugar instead of high-fructose corn syrup would increase the cost of nearly every food item at Walmart, during a down economy, when Walmart’s major competitive advantage (price) is more valuable than ever.

If you want to change the world, you need to figure out some way to align the “overall good” with the profit motive. Until that happens, nothing will change. Welcome to the free market.

Source: dihard