“Living in interesting times” as Wal-Mart enters the information business …

Giant retailer Wal-Mart, as part of a number of bold moves in recent years to improve its image as a good corporate citizen, has just announced that it is now going to display eco-ratings on the products it sells. There’s only one small catch, of course: such ratings do not currently exist. Wal-Mart, however, has the answer: it is going to insist that its suppliers participate in this initiative, with Wal-Mart funding the development effort.   Wal-Mart is said to partner with leading technology companies to create an open platform that powers eco-ratings.

Wal-Mart sees this as a three-step process: first, collect data from its suppliers that will be input into a central database. The second step is to collaborate with universities and other groups to work through the various weights to be assigned to each data element. The third step will be to translate the weighted data into a single “sustainability index number,” that will essentially reflect how green a product is in terms of how it is manufactured, how it is distributed, and the extent to which it can be recycled.

Infocommerce writes:  This is a huge initiative, and one that many others have looked at, although generally on a less ambitious scale. Offering meaningful sustainability ratings is not only a worthwhile business; it can be a lucrative business as well. The key, of course, is getting market acceptance and critical mass. That where it helps to have the clout of Wal-Mart, with sales equating to 2% of GDP, and a proven willingness to use supplier mandates to enforce participation.   Source: Infocommerce Group

BIIA Comment:  One can spin the wheel further, as over time most likely other criteria will be added about supplier performance in terms of quality, delivery delays, environmental accidents, perhaps financial statements and how suppliers treat their suppliers down the value chain.  No doubt Wal-Mart will ask others to contribute data.  BIIA Chairman David Worlock commented in a recent Outsell Insight (July 31, 2009): “One of the oldest maxims of electronic publishing is that the customers are the next competitors.”  And in the case of Wal-Mart it will be a juggernaut on its way “to making the world better for all of us, (and Wal-Mart) will break the bones of some small players and force the re-alignment of some larger players on the way.”   Wal-Mart seems to have discovered that there is value in information, let us see whether the consumer will eat it.
BIIA Newsletter September 2009 Issue