Which would have given Wal-Mart more freedom to do what it wanted with the Twinkies. Instead of being contracted to do a consignment sale on Hostess’ terms, it owned the Twinkies and could mark them down to clearance shelves near end of code, give them away in promos, whatever.
Walmart is such a big buyer that it already can do pretty much whatever it wants with it’s vendors. Big buyers with clout have onerous rules, and the infraction of said rules causes chargebacks (fines against the cost of the merchandise). So they not only strike a favorable deal based on volume, but can incrementally lower the price all sorts of ways.
Our suppliers give retailers promotional costs, on occasion, too. Most of the advantages of SBT are on the retailers’ side. They don’t have to stock perishable items and split the shrink cost with their suppliers. It frees up retailer resources, too. They don’t have to keep inventory or manage orders and deliveries.
I have a feeling the retailers Hostess is doing SBT with will be selling thru the product and still paying them per sale.
And Bimbo, who just might take over these sugary snack names, is one of my biggest SBT customers (along with some others mentioned here).
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