The ART Of Business

Apple Now in Walmart's Distribution Trap

Sept. 13, 2014

Over the years, I have written in this space how a Megacustomer (one that equals more than 10% of a firm’s total revenue) will ultimately capture the lion’s share of value from its supplier.

In our 2010 book THE DISTRIBUTION TRAP, Tim Wilkinson and I laid out the case that the power a Megacustomer is able to exert eventually leads to poor results for the provider: in the form of reduced brand equity, deeper and deeper discounts, and, finally, the accelerated commoditization of innovative products and services.

It seems that even the venerable Apple is now flirting with this danger.

As a Business Insider piece reports, Walmart- certainly one of Apple’s biggest Megacustomers- is already cutting the price of the new iPhone 6.

The temptation to sell to the biggest players in any industry is often too hard to resist. Unfortunately, it happens every day.

Selling to a Megacustomer, and giving them the ability to shape the future of your company, is like losing your virginity.

Once gone, you will never get it back.

About the Author

Andrew R. Thomas Blog | Associate Professor of Marketing and International Business

Andrew R. Thomas, Ph.D., is associate professor of marketing and international business at the University of Akron; and, a member of the core faculty at the International School of Management in Paris, France.

He is a bestselling business author/editor, whose 23 books include, most recently, American Shale Energy and the Global Economy: Business and Geopolitical Implications of the Fracking Revolution, The Customer Trap: How to Avoid the Biggest Mistake in Business, Global Supply Chain Security, The Final Journey of the Saturn V, and Soft Landing: Airline Industry Strategy, Service and Safety.

His book The Distribution Trap was awarded the Berry-American Marketing Association Prize for the Best Marketing Book of 2010. Another work, Direct Marketing in Action, was a finalist for the same award in 2008.

Andrew is founding editor-in-chief of the Journal of Transportation Security and a regularly featured analyst for media outlets around the world.

He has traveled to and conducted business in 120 countries on all seven continents.