Apple Now in Walmart's Distribution Trap

Sept. 13, 2014

Over the years, I have written in this space how a Megacustomer (one that equals more than 10% of a firm’s total revenue) will ultimately capture the lion’s share of value from its supplier.

In our 2010 book THE DISTRIBUTION TRAP, Tim Wilkinson and I laid out the case that the power a Megacustomer is able to exert eventually leads to poor results for the provider: in the form of reduced brand equity, deeper and deeper discounts, and, finally, the accelerated commoditization of innovative products and services.

It seems that even the venerable Apple is now flirting with this danger.

As a Business Insider piece reports, Walmart- certainly one of Apple’s biggest Megacustomers- is already cutting the price of the new iPhone 6.

The temptation to sell to the biggest players in any industry is often too hard to resist. Unfortunately, it happens every day.

Selling to a Megacustomer, and giving them the ability to shape the future of your company, is like losing your virginity.

Once gone, you will never get it back.

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