Let It Snow! Big Brands Risk Failure When They Rely on Third Party Partners

by Justin Grensing, Esq., MBA

Just in time for Christmas, Walmart Canada provides a great example of how aggressive sales expansion can tarnish a company’s brand.

There is a natural conflict that exists between sales growth and brand protection. As sales expand—whether geographically or in terms of volume of goods or number of customers, etc.—it is harder and harder for companies to maintain tight control over the products and services carrying its name and impacting its brand.

From Small Baker to Brand Management Headaches

Consider, for example, a hypothetical baker. The baker may be locally renowned for exceptional baking abilities, with offerings that are in high demand. But that individual has a limited personal capacity for baking. There are only so many hours per day and days per year. Of course, there are opportunities for expansion. The baker could hire assistants whose work could be overseen. Eventually, those assistants could even go on to manage additional branches serving other localities. Similarly, the baker could expand further by documenting processes, techniques and strategies for use by franchisees who operate more or less independently under the original baker’s business model.

In each of the above expansion steps, the baker gains sales volume but loses more and more control over the production process, the end result and, ultimately, the brand. It’s possible that a manager a franchisee or even a closely supervised employee will fail to meet the high standards that spurred demand for these goods in the first place.

The Walmart Connection

So where does Walmart fit into all of this? Walmart isn’t known for making its own products but as a successful retailer of products produced by other companies. Its efficient supply chain, ubiquitous physical presence and name recognition make it a valuable retail partner for thousands of individual suppliers. In addition to its brick-and-mortar retail locations, Walmart also has a significant online presence.

If managing a brand influenced by the actions of employees, branches and franchisees is challenging, imagine managing a brand that can be influenced by the actions and products of thousands of independent businesses. Walmart has sought in the past to remove potentially objectionable products from physical stores. That process can be even more difficult in the online realm.

Enter our Christmas connection.

The Christmas Connection

Canadian news outlet Global News recently reported that a company called FUN Wear was selling adult-themed “ugly Christmas sweaters” through Walmart Canada’s online portal. Among the designs were a sweater with a bug-eyed Santa in front of a table holding several lines of white powder with the caption “Let it snow.”  The product description stated that the best snow comes from South America. Other designs included sexually suggestive material.

Walmart was quick to take the products off of its online portal upon their discovery. But having the designs show up on its website for even a short period of time can create damage that can be difficult to undo.

The bigger the brand the harder they may fall. We can all learn a lot from big brand examples—not just what happened, but how they responded. What would you do if you were Walmart?

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