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                   SoHo NEWS & TIPS
Helping You Make the Most of Your Small Office/Home Office


Small businesses are often pushed around by the big companies
and take the abuse because it is the hand they were dealt. 
Below is a small business owner who refused to back down to 
his biggest buyer, Walmart read the advice he gives.


P.S. You can discuss this issue or any other topic in the 
new SoHo News & Tips forum. Check it out here...

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- Microsoft Corp. posted an 11 percent rise in quarterly 
net profit, boosted by a strong performance at its data-
base division and shrinking losses from its Xbox 360 
video game console.

- Home builders, struggling to keep ahead in a weakening 
market, cut prices and offered a variety of other dis-
counts in September to help sell their newly constructed 
houses, the latest government and industry statistics 

- The US economy grew at a 1.6 percent annual rate last 
quarter, the slowest pace in more than three years and 
less than economists forecast, as housing slumped and 
the trade deficit widened.

- Wal-Mart announced their discount generic drug program 
is now available at its 63 stores in Kansas as well as 
at Wal-Mart and Sam's Club pharmacies in 11 other states. 
Target quickly responded by saying it would match the 
program in those 12 states.

- Leading US rural wireless provider Alltel Corp. reported 
a higher quarterly profit, but subscriber growth was 
weaker than expected and the stock fell 7 percent.

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Working Things Out With a Giant Customer 
By Riva Richmond

Romano Pontes, a longtime apparel supplier to Wal-Mart 
Stores Inc., vividly remembers the advice the company's 
legendary founder Sam Walton imparted to him the only 
time they met.

"'If you believe in a point, scream it as loud as you can 
to whomever will listen to you,'" Mr. Pontes recalls of 
the 1992 meeting to discuss how to improve the discount 
retailer's apparel offerings.

This spring, Mr. Pontes put Sam Walton's advice to the 
test and risked losing Wal-Mart, his biggest and most 
lucrative client, in the process.
Mr. Ponte and a Wal-Mart buyer had a disagreement over 
a shipment of apparel that wasn't selling. The buyer 
insisted that Mr. Ponte take the garments back, which 
would mean sustaining a financial hit in the short run. 
But the alternative was to refuse and potentially take 
a much bigger financial hit in the long run -- the loss 
of a big account.

With Mr. Walton's words still echoing in his head, Mr. 
Pontes says he decided to fight for what he thought was 
right. He thinks small-business owners who work with big 
corporations frequently are afraid to stick up for them-
selves, fearing they will ruin the relationship. He says 
that not giving in doesn't have to kill a business 
relationship. It can even strengthen it.

Mr. Pontes's company, Global Vision Inc., is one of 61,000 
U.S. suppliers to Wal-Mart, which is known in the industry 
for being a tough taskmaster. The company says it doesn't 
know how many supplier relationships end each year and how 
many new vendors they bring on board.

Each supplier has a different vendor agreement with Wal-
Mart, according to company spokeswoman Amy Wyatt. Some 
contracts may specify that unsold products will be 
returned. It depends on the type of product and supplier.

Shouldn't vendors always have agreements like that in 

"Not always," says Ms. Wyatt. "We believe it's best to 
have an open and transparent relationship with our vendors 
and have the ability to work things out. Situations are 
not always clear cut."

What is clear is that many small suppliers to retail be-
hemoths don't think they can fight back for fear they 
will lose the account. Mr. Pontes's strategy was to take 
his case as high up the chain of command as possible and 
to make sure Wal-Mart knew there were competitors that 
were interested in the same goods he was providing to 

Mr. Pontes makes his living buying excess inventory of 
name-brand clothing and accessories made by U.S. manu-
facturers. He, in turn, sells them to discount retailers 
based in Latin America, Europe and Asia.

About 30% of the time he gets manufacturers to make special 
orders for a particular retailer, a way for the manufacturer 
to use excess fabric.

Mr. Pontes's disagreement with Wal-Mart began last fall, 
when a buyer for the company's Sam's Club 9 outlets in 
Puerto Rico called Mr. Pontes with a request. She wanted 
about 4,000 Ocean Pacific cargo pants in a special cut. 
Mr. Pontes delivered the order, but within a few months 
the buyer said they weren't selling well. Mr. Pontes says 
he told them he would try to resell the clothes to stores 
in another nearby country, but before he could do so, he 
adds, Wal-Mart shipped the merchandise back to his La 
Jolla, Calif., warehouse and deducted the purchase price 
from what it owed his company.

Wal-Mart disputes this, saying Mr. Pontes agreed to take 
the pants back, according to Ms. Wyatt.

This was the first time in Global Vision's 20-year relation-
ship with Wal-Mart, Mr. Pontes says, that he was asked to 
take back his wares. The accompanying paperwork, he adds, 
claimed the reason for its return was that the merchandise 
was defective.

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Working Things Out (Continued)

Although Global Vision's contract with companies doesn't 
spell out the policy for merchandise that doesn't sell, 
Mr. Pontes says he had an unspoken agreement that "we would 
work things out."

In the past, for instance, the retailer might mark the 
product down to sell it more quickly. In return, Mr. 
Pontes would sell the company's next order at a discount 
to partially offset the retailer's loss or diminished 
profit from the earlier order. But first, he would always 
try to find another buyer, frequently in another country.

Had Mr. Pontes taken the order back, he would only have 
lost about $12,000 -- a small amount, he admits, for a 
company that has about $15 million in revenue a year and 
six employees. But Mr. Pontes says he didn't want to set 
a dangerous precedent. "It was the principle," he adds.

To straighten out the situation, Mr. Pontes says, he 
started with two members of the buying team, who claimed 
Mr. Pontes had authorized the goods to be returned. 
Neither side would relent, so Mr. Pontes then made his 
case to a senior executive in the finance department 
in Wal-Mart's Bentonville, Ark., headquarters. This time, 
Mr. Pontes said that he would produce documentation that 
the merchandise wasn't defective and challenged the 
company to prove that it was.

Mr. Pontes says he also strongly hinted that he wasn't 
going to deliver Sam's Club's next order for its Puerto 
Rico stores and then contacted his warehouse employees 
and told them to stop shipment of pending Wal-Mart 
orders to stores in about three or four countries.

A conference call was set up between Mr. Pontes and a 
general-merchandise manager. But two hours before the 
scheduled call, Mr. Pontes says he canceled and sent an 
email instead, claiming he had stopped shipments on 
Wal-Mart orders to locations around the world. He added 
that other buyers in Puerto Rico were interested in 
buying Wal-Mart's 1,296-piece order of T-shirts and 
board shorts by Quicksilver, a trendy teen brand.

Less than two hours later, Wal-Mart emailed back, saying 
it would pay for the original Ocean Pacific order and 
wanted it shipped back to Puerto Rico.

Wal-Mart says it was committed to working with Mr. Pontes 
and finding a "viable" solution to the problem. "Our 
suppliers are our business partners and we benefit from 
an open and transparent relationship with our suppliers," 
Ms. Wyatt says. "Whether they are small businesses or 
multinational corporations, they have the ability to use 
what we call our open-door policy. And they can do it all 
the way to the CEO."

Says Mr. Pontes: "You have to have courage and guts, 
elevate it as high as you can. If you leave it at the 
buyer's level, they'll bury you. I went four levels 
higher than whoever is in charge of our accounting."

"I was proud of myself," Mr. Pontes adds. "I did not 
destroy the relationship. In fact, they want me to sell 
them more. I just landed a big account with Sam's for 

From The Wall Street Journal Online



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So what did you think about this issue? Drop me a line and let 
me know at mailto:mandi@gophercentral.com 

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