Walmart requires that all suppliers utilize EDI for transactions. There is flexibility in whom Suppliers choose as an EDI provider; however, Walmart also offers a WebEDI platform, which is free and oftentimes used by smaller suppliers. The platform does require more manual effort and time to manage, and suppliers must ensure all settings are correct.
It is generally more feasible for suppliers to switch to an EDI provider once they are operating with two or more items.
By signing the supplier agreement, suppliers are agreeing to these EDI responsibilities:
- Suppliers will receive orders and send invoices electronically via EDI unless an alternative method is agreed upon in writing by Walmart.
- Only employees authorized to bind the supplier contractually should access the EDI system, which much be protected by passwords.
- By using EDI, the supplier accepts the terms and requirements of electronic contracting through the EDI system.
- Suppliers must establish a unique user ID to verify the source and authenticity of EDI documents.
- EDI documents with the supplier’s user ID are legally binding, and neither party can contest their validity due to the lack of a physical signature.
- EDI documents or their printouts will be considered originals.
- Both Walmart and the supplier must retain EDI documents in an accessible and reproducible form.
- If the company agrees to waive EDI requirements, orders can be sent via overnight mail at the supplier’s expense.
Download this Retail Supplier EDI Cheat Sheet to have all the industry-specific EDI codes at your fingertips.
Purchase Cost and Conditions
The supplier is responsible for the accuracy of costs, discounts, and allowances on all POs. If Walmart sends a PO with incorrect pricing, or if the supplier’s invoice has incorrect pricing, it is the supplier’s responsibility to notify Walmart of any inaccuracies at least 24 hours before shipment.
In the event that merchandise is shipped before an error is discovered on the order, the supplier must contact Walmart within 48 hours to determine the appropriate course of action.
For example, if Walmart’s PO lists an item at $10 but the correct price should be $11, the supplier should immediately work with the Walmart team to either edit the PO or cancel and reissue it. From Walmart’s perspective, shipping merchandise on an incorrectly priced PO implies that the supplier acknowledges the PO as correct. This is why it is important for the supplier’s team to be aware of all discounts and allowances to avoid invoicing or shipping errors, as it essentially is their responsibility, no matter what the error.
Compliance with Standards for Suppliers
Walmart has established a set of standards for its suppliers to ensure quality, safety, and regulatory compliance. These requirements are divided into 5 key sections:
1. Standards and General Requirements:
- Offensive (explicit, derogatory, and obscene) and Restricted (adult-oriented, gambling, government-issued, military/police related, etc.) items are prohibited from being sold on Walmart.com
- Suppliers must have a valid Federal Taxpayer Identification Number (TIN) to do business.
- Suppliers need to be registered with Dun & Bradstreet for business credibility.
- A GTIN/UPC membership number is required for proper product identification.
- Suppliers must undergo a Factory Capability and Capacity Audit to ensure their factories meet Walmart’s capability and capacity standards.
2. Insurance Requirements
Walmart mandates that all approved product suppliers carry specific types of insurance. This coverage is designed to handle legal costs and other liabilities that could arise from claims or legal actions related to the products supplied to Walmart. The required insurance protects against severe financial consequences for either party.
For more detailed information, suppliers can refer to the insurance requirements for suppliers document.
Suppliers must provide evidence of their insurance coverage to Walmart in order to become an approved vendor. This involves submitting insurance certificates and other relevant documentation that proves compliance with Walmart’s insurance requirements.
The supplier liability index matrix provides further insights into the liabilities and responsibilities associated with being a Walmart supplier.
3. Audits, Certifications, and Testing
When doing business with Walmart, products, facilities, and records need to be accessible for audits, inspections and tests. Products may be subject to various tests to ensure they meet safety, quality, and regulatory standards. Suppliers must make their products, manufacturing facilities, and relevant records available for review.
Depending on the product type, suppliers may need to undergo various audits, including:
4. Expectations by Compliance Area
Walmart sets specific expectations for suppliers across various compliance areas to ensure that all products meet its high standards for quality, safety, and ethical practices.
5. Packaging
Walmart’s efficient supply chain depends on suppliers adhering to specific packing, labeling, and shipping guidelines. The Supply Chain Packaging Guide outlines these requirements to ensure products reach customers accurately and on time.
Navigating Walmart’s Secondary Packaging Standards can be a daunting task. This SupplierWiki eBook serves as a guide to simplify the Supply Chain Standards for suppliers.
1. Standard Purchase Order Allowance
At Walmart, allowances are not built into the standard contract. Depending on the type of allowance, it is necessary to negotiate these allowances with different stakeholders in the Walmart supply chain.
Supplier Agreement Allowance Example:
Code Allowances Explained
SA - New Store Allowance
Typically a discount of 10% or more, this allowance supports Walmart’s investment in new stores, helping suppliers grow their market share.Stores that are relocated, renovated or expanded are considered new stores. It applies to each line item on all POs generated before the grand opening date. Stores can be flagged for grand opening up to 180 days for expansion, remodels, or conversions, 120 days for new stores, and 90 days for relocations.
An asterisk (*) will appear next to the new store number on all purchase orders (POs) created before the store’s grand opening date. This asterisk indicates that the store is eligible for the new store discount. If there is no formal grand opening, the store purchase orders are still eligible for the new store discount for six months from the date the asterisk was first applied. This means that any orders placed within this six-month period can benefit from the discount, even if there was no official grand opening event.
- For type 20, 22, 40 and 42 warehouse re-orders, the accounts receivable system tracks when stock is pulled for distribution to the new store.
- Walmart sends a report either monthly or quarterly, depending on the deduction cycle frequency. This report details the items, quantities shipped, and the corresponding discount amount applied.
- For type 67 orders, which involve direct shipments to the store or ship-and-bill orders, the system automatically calculates the new store discount. This ensures that the discount is applied appropriately to these types of orders.
OL - New Store/Club Discount
This discount, typically 10%, is applied to the total value of all POs generated to support the mod of New Stores/Clubs. It helps establish products in a new area for new, relocated, expanded, or renovated stores.
NW - New Warehouse Allowance
This allowance is a percentage applied to each line item for stocking a new Walmart Distribution Center, covering the initial inventory. It is typically only applied to items housed in Walmart’s Distribution Centers (warehouse items, not cross-docked items).
WA - Warehouse Allowance
This allowance applies to the total value of all POs, excluding Type 33, 83, and 93 POs. It’s negotiated with suppliers who ship through the warehouse, reducing the costs and efforts required for direct store shipments. Specific item numbers may need a separate supplier number sequence.
QD - Warehouse Distribution Allowance
This allowance, usually 1%, is applied to the total value of all Type 33, 83, and 93 POs. It’s negotiated with suppliers for items shipped through the warehouse and may require a separate supplier number sequence.
DM - Defective/Return Mdse. Allowance
This percentage is applied to the total value of all POs and is negotiated to cover costs involved in handling defective goods. The allowance must be sufficient to cover all defective goods markdowns or additional claims may be filed.
SD - Soft Goods Defective Allow
This is a discount taken for defective apparel merchandise.
PA - Promotional Allowance
This discount is applied to the total value of all POs for certain products over a specified period, used to promote sales.
VD - Volume Discount
This discount is based on the volume ordered and applied to the total value of all POs.
FA - Freight Allowance
This percentage is applied to the total value of all POs to compensate for transportation costs.
AA - Advertising Allowance
This percentage discount is applied to the total value of all POs, negotiated to help cover advertising costs.
DA - Display/Endcap allowance
This discount covers the cost of display or endcap fixtures located at one or both ends of an aisle display.
EB - Early Buy Allowance
This percentage discount is applied to the total value of all POs, negotiated to provide the supplier with budgeting advantages by allowing early purchases.
SW - Swell Allowance
Also known as the Defective Merchandise (DM) allowance, applies to fresh goods only. The percentage is applied to the total value of all POs to cover costs related to handling defective goods. The allowance must cover all defective goods markdowns, or additional claims may be filed.
It is important to note that while there are many code allowances available, suppliers are not required to use all of them. The most common allowances include SA/OL (New Store Discount) 10/10 (10% each) and WA/QD (Warehouse Allowance) 1/1 (1% each), and often a DM (Defective Merchandise).
2. Payment Terms
Payment terms define the conditions under which payments for goods or services must be made. There are three primary types of payment terms:
Cash Discount: To incentivize early payment, suppliers may offer cash discounts. As mentioned before, this is a percentage reduction in the invoice amount if the pyment is made within a specified period.
Cash Discount Days Available: The number of days within which the supplier must receive payment to qualify for the cash discount.
Note: The cash discount and cash discount days are optional for negotiation. Suppliers are not required to use this discount.
Net Payment Days Available: The total number of days the supplier allows for payment, after which the full invoice amount is due.
- This must be at least one day more than the cash discount days.
If the negotiated payment term is “2% / 30 net 60,” it implies that Walmart will receive a 2% discount on the invoice amount if payment is made within 30 days. If Walmart does not take advantage of this discount, the full invoice amount is due within 60 days.
3. Shipping Terms
Collect - F.O.B. Supplier: “Freight On Board (F.O.B.) Supplier” means that the supplier is responsible for transporting the goods to the shipping point, but Walmart covers the freight costs from the supplier’s location to the final destination.
Prepaid - F.O.B. Company: “F.O.B. Company” means that the supplier is responsible for all transportation costs to Walmart’s designated facility.
Prepaid to Consolidator - F.O.B. Company’s Consolidator: In this scenario, the supplier covers the transportation costs to Walmart’s consolidator, a third-party intermediary. From there, Walmart takes over and handles the freight costs from the consolidator to the final destination.
Related Reading: Should I Use Prepaid or Collect?
If a supplier were to check ‘Prepaid - F.O.B. Company’ on their supplier agreement, then it means that they would cover the transportation costs to Walmart’s facility. There is no minimum purchase requirement for prepaid shipping and the supplier would not be able to add freight charges to the invoice.
4. Condition of Sale
- Guaranteed Sales: The supplier agrees to accept returns of unsold merchandise and refund Walmart’s purchase price. This option is useful for suppliers who want to encourage Walmart to stock their products by reducing Walmart’s financial risk. This option can help get products on shelves but may involve higher return rates.
- Consignment: The title and risk of loss remain with the supplier until Walmart sells the merchandise. Walmart pays only after retail sales, and the supplier accepts returns of unsold items. This may be applicable to suppliers who want to ensure their products are displayed without immediate payment from Walmart. This reduces Walmart’s inventory risk but delays payment to the supplier until after sales.
- Preticketing: The purchase price includes the cost of attaching price tages to the merchandise by the supplier. This option can be beneficial for suppliers who want to streamline Walmart’s in-store processing, making it easier and faster for Walmart to display and sell products. It can enhance shelf readiness and improve product presentation.
- Prepricing: The purchase price includes the cost of setting prices on the merchandise by the supplier. This option is useful for suppliers who prefer to control the retail pricing of their products directly. This can help maintain consistent pricing across different stores and ensure pricing from the start.
- Overstock/Stock Balancing: The supplier agrees to accept returns of overstock or surplus items and refunds the greater of Walmart’s landed cost or the current merchandise cost in Walmart’s system.
- Shelf Labels: The purchase price includes the cost of side counter labeling by the supplier. This may be applicable for suppliers who want to ensure that their products are clearly labeled and easy to identify on the shelves, enhancing product visibility and customer convenience.
- Point of Sale (Pay from Scan): Title and risk of loss remain with the supplier until Walmart sells the merchandise. Payment occurs only after the merchandise is sold, and the supplier accepts returns of unsold items.
- Other: Any other agreed-upon condition not covered above.
Similarly to cash discounts, the Condition of Sales option is optional for negotiation. Suppliers are not required to select a category.
5. Product Chemical Information
This section ensures that suppliers disclose whether any of their merchandise sold to Walmart contains chemicals. It specifically applies to products in the following categories:
- Merchandise that contains powder, gel, paste, or liquid that is not intended for human consumption.
- Products intended for human inhalation, consumption, or absorption:
- Lozenges, pills, or capsules (e.g., pain relievers, vitamins)
- Medicated swabs, wipes, and bandages
- Heated and/or medicated patches
- Energy bars, diet supplements, and vitamin drinks
- Liquids (e.g., cough medicine, eye drops, ear drops, nasal spray, inhalers)
- Medicated shampoos, gums, ointments, and creams
- Lip balm, lip creams, and petroleum jelly
- Contraceptive foam, films, and spermicides
- Products or equipment sold with chemicals (e.g., vaporizer sold with medication)
- Electronic cigarettes
6. Return Policy
Walmart has specific policies for returning merchandise to suppliers, detailing when and how returns can be made, along with the associated costs and procedures.
Type of Returns
Walmart may return Merchandise to the supplier at the supplier’s expense under the following conditions:
- If the merchandise is faulty or does not meet agreed standards.
- Products are returned by customers (in-store or online).
- Merchandise subject to sales guarantees or excess stock agreements.
- Items recalled or withdrawn under Section 15 of the Supplier Agreement.
- Merchandise can be returned within 60 days after both parties agree to stop returns.
Return Options
Option #1: Return to Supplier
The supplier authorizes Walmart to return merchandise either via Walmart’s Return/Reclamation Center or directly from Walmart’s stores, clubs, and distribution centers. If the supplier does not respond within two business days or fails to pick up the merchandise within ten days, Walmart will handle the merchandise at its discretion, which could include recycling or disposal.
Option #2: Do Not Return to Supplier
The supplier authorizes Walmart to handle the merchandise through recycling, disposal, salvage, or donation. Instead of physically returning unsalable merchandise, Walmart may file a virtual claim to account for the product.
Costs, Expenses, and Charges
Walmart is entitled to:
- A refund of the purchase price plus a 10% handling charge.
- Walmart may charge for handling, processing, and management fees not covered by the handling charge.
- The supplier must cover transportation costs from the point of origin to the supplier.
- Any return costs exceeding the allowance are the responsibility of the supplier.
- The supplier must pay Walmart within 10 days of receiving an invoice for these costs.
- If the chosen return option is unsuitable, Walmart reserves the right to manage the chemical merchandise as it sees fit.
7. Shipping Instructions
Suppliers should ship all merchandise in accordance with Walmart’s current Shipping and Routing instructions, which are available on Retail Link.
Each purchase order will specify the appropriate routing, which is determined by Walmart’s Traffic Department. If the supplier does not follow the designated routing, they will be liable for any additional transportation costs.
For any questions about the specified routing, suppliers are encouraged to contact Walmart’s Traffic Department before releasing the shipment. The contact information for the Traffic Department is provided in the agreement.
Ship point creation, shipment maintenance, and transportation details are some of the easiest details to get tripped up on as a new Walmart supplier. Download our Walmart Shipping and Routing Transportation Guide to help get you started!