SQEP e-commerce Packaging and Labeling

Learn about:

• Walmart’s SQEP requirements for .com barcodes and labeling
• Acceptable pack types and packaging
• How Walmart uses the VCOE process to handle fines

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Walmart is a massive retailer both physically and online. Due to the number of Walmart customers, it may be advantageous for a business to sell its products on Walmart.com. Now is a crucial time to understand the new requirements when shipping with Walmart with online retail booming.  

Walmart is now implementing a Supplier Quality Excellence Program (SQEP) to help suppliers maintain supply chain compliance. The goal is to reduce handling costs and expedite the shipping process. SQEP applies to all online suppliers using Walmart’s fulfillment centers (FCs). There are a few tricky areas that differ from previous requirements, and suppliers should review these carefully.

The packaging and labeling requirements for SQEP compliance have a few distinct steps that are important for the supplier to understand before shipping any consumer packaged goods (CPG).

How can I stay SQEP compliant?

Staying SQEP compliant is essential going forwards when shipping from Walmart FCs. Once a supplier begins shipping, it is time to monitor progress. 

Monitor SQEP compliance online using the SQEP portal. On the portal, suppliers can view SQEP compliance, PO accuracy, and performance results. The portal is accessible from Retail Link. 

1. Go to Retail Link. 
2. Click Academy.  
3. Click Ordering & Replacement.
4. Click Shipping, Routing.
5. Click Walmart.com Packaging & Labeling.

Supplier Academy has outlined the requirements in great detail, and these guidelines are visible within the SQEP portal. We have detailed some essential components in this article. 

What are the SQEP e-commerce packaging and labeling requirements?

Walmart is implementing SQEP in four phases:

•  Phase 1: PO Accuracy and Advanced Ship Notice (ASN) – migration to Item 360
•  Phase 2: Barcode and Labeling
•  Phase 3: Load Quality, Label Quality, Packaging
•  Phase 4: Scheduling & Transportation

Using SQEP, Walmart aims to reduce overall supply chain costs by standardizing each container through its FCs. The goal is SQEP is to ship 100% defect-free orders from its suppliers. 

Each step impacts the supply chain, starting with the barcode.

GTIN-14 requirements

SQEP requires a GTIN-14 which is a modified UPC. 

1. The online item file must match what the supplier has printed on the UPC label. If using a 12-digit UPC, first add a leading 0 to the UPC. 
2. Establish the packaging identifier (PI). 
3. Calculate a neck check digit. Suppliers can do this calculation using an online calculator. 

The UPC must match what is on the PO. The Unit UPC and Case UPC must match precisely with the Item 360 setup.

Pack types

There are different pack types to be aware of and comply with when using SQEP. 

Vendor pack

The vendor pack is what the supplier will ship directly to Walmart. The vendor pack must match what is in Item 360. For the vendor pack, the quantity is the number of selling units in the case shipped to the FC. 

Warehouse pack

Walmart does not use the warehouse pack for e-commerce. Warehouse packs go from a Walmart distribution center to physical store locations. The quantity for warehouse packs is the number of selling units within the inner packaging.

Ship-As-Is 

Sometimes called Ready-to-Ship or Ship-In-Own-Container (SIOC), these products must be ready to send directly to the consumer. For this type, the supplier carton must be capable of serving as the outbound carton. These oversized items include rugs, mattresses, sturdy cushions wrapped in plastic, and stackable storage bins. 

Furthermore, all selling units that exceed 25in x 20in x 14in, 30lbs, or 3.25 cubic feet must be able to ship as is January 2nd, 2021. 

Mixed master pack

Walmart advises against the mixed master pack type due to its more substantial margin for error. 

Mixed master packs aggregate multiple vendor packs within one single carton. Do not combine different POs within the same carton. Combining POs can result in delayed payment, product refusals, delayed processing, and other costly errors.

However, suppliers may use this pack type when multiple small items can fit in a master carton. Add two labels on the long sides of the carton. These labels should be the color red with black font, preferably Arial in 48pt and all capital letters. 

Because this is an unreliable pack type, suppliers must be careful when labeling and follow all other directions to avoid Vendor Correction of Error (VCOE) fines. 

Packaging

When shipping with Walmart, the supplier or its 3PL must polybag all inner units to comply with the SQEP standards. Walmart requires seals on fabric goods. 

Apparel

When shipping apparel, suppliers must pre-fold every item with a barcode on the lower right. No hangers or extra items are permissible; the supplier must only ship the fabric goods. 

Corrugated box testing requirements

Cardboard cartons must meet specific testing requirements to sell with Walmart. These requirements include:

• Edge crush test
• Mullen bursting test
• Box makers’ certification 

The supplier must ensure these are visible on the carton before shipping. 

Load quantity/pallet standards 

There are a few critical measurements to follow when shipping pallets with Walmart. The minimum pallet standards are:

• Width: 40 inches
• Length: 48 inches
• Deck coverage: The maximum spacing between each dock board is 4 inches
• Grade: Grade A, 4-way, flush and non-reversible (R)

Pallets must support the weight of the products shipped within them. Supplier must make sure that their pallets are strong to comply with SQEP. 

It is also crucial to remember that pallet height must not exceed 96 inches. The length must be a minimum of 48 inches to fit the racking in the FC. Suppliers and their 3PLs must properly block and brace all pallets for shipping to proceed, and overhang is not acceptable under any circumstances. 

For domestic orders, pallets must be ready for full truckload (FTL) and less-than-truckload (LTL) shipping. They must meet or exceed Grade A standards. Direct import orders cargo must be floor-loaded on a slip sheet unless otherwise stated on the PO. The FC may accept non-standard pallets when trailer cubes are a factor in the shipping process. 

Related Reading: What is TI/HI?

Not following the guidelines can result in fines and chargebacks, so always reach out to labeling@Walmart.com with custom pallet questions and concerns. 

The Vendor Correction of Error (VCOE) process

The Vendor Correction of Error (VCOE) process begins with the facility identifying an SQEP defect. From there, the FC will submit a VCOE ticket. The Pack and Label Team will review the ticket for validity. 

Walmart will file a chargeback after review. The supplier will then receive an email from the VCOE team (notify@quickbase.com). The supplier will have to reply to the email with a plan of corrective action within five days. 

The VCOE team will then review the corrective action. From there, the VCOE team will waive the chargeback, or it will proceed. Walmart processes chargebacks at the end of the month. Each chargeback has a $200 administrative fee and $1 fee per unit. 

To dispute chargebacks, file a dispute. Disputes have a 60-day deadline and must be filed with the Global eCommerce Transportation Support Portal (GEC TSP). For a successful dispute, ensure updated contact info with the Vendor Compliance Team. To update contact information, open a Vendor Compliance – Requests and Questions ticket. The ticket type will be Update Contact Info. Do this right away to avoid any additional problems. 

Email sample labels (shipping label and carton markings) to labeling@walmart.com for review. 

To avoid unnecessary fines, always check the Walmart.com SQEP portal before shipping and continually monitor shipping progress. Walmart designed SQEP to improve the shipping process for the supplier, Walmart, and the consumer.