Big Box Bullies: Defining Relationships in Business

Back in 1994 — when Internet service was still a fledgling business — I switched my Internet service to a local company called MindSpring. It provided fantastic support and service. I liked it so much that I eventually bought shares when the company had an IPO in 1996. I went on to pitch and land them in 2000, keeping them as a client for four years.

Even though I left MindSpring’s ISP service in 2003, I kept my email address until 2011. I just didn’t want to give it up. MindSpring’ service was legendary, but more importantly, MindSpring built its mission around its core values and beliefs. These nine core values and beliefs were far more than some dusty rules on a plaque in the hallway; they were a living part of the culture. There were built around telling the truth and applying the Golden Rule in business.

These mandates were mostly about how we treat others, and they reveal a truth about life — that we should act the same way in our personal relationships as we do in business: mercifully, kindly and supportively.

The Relationship of Business

No one is in business alone. We have employees. We have partners. It’s the efficient combination of these relationships that creates value. We take raw materials and make them into something. Then we add service and quality, and we ask our sales force to go find a customer. If customers have positive experiences and find value, they come back and buy again. If the employer pays well and is not deceptive, then the employees come back the next month and do it all over again. It isn’t contracts that keep the system producing. It’s mutual benefit and trust. This is a healthy value chain that produces products and services for the marketplace. These are business relationships.

What I have observed in the last two decades of working with large companies is that MindSpring’s approach to having integrity in all its relationships is not the norm. In fact, it’s quite the opposite. Two recent illustrations of this come from the retail world — a business environment where loyalty, integrity and respect for others is often pushed aside.

For example, let’s take Walmart. Last month, my wife bought baby shampoo and chose a bottle of Equate (Walmart’s house brand). Compare it to an actual bottle of Johnson & Johnson baby shampoo. See any resemblance? Over the past decade, retailers searching for more profits have created their own brands. The white label or “house brands” of products compete with their manufacturer vendors. That seems fair. I can choose to buy Green Giant’s English peas, or I can buy Laura Lynn peas. They are merely competing, and I as the customer get to be the judge on taste, quality and price.

Retailers and manufacturers are partners in a value chain. The system works because an entrepreneur creates a product, then looks for a way to distribute the product. If it’s a consumer product, he or she partners with retailers and shares the revenues, typically giving the retailer 40 percent of the purchase price. If the product is of value to consumers, they come back to the retailer again and again.

In my opinion, however, what Walmart does crosses the line. It is essentially copying everything about Johnson & Johnson’s baby shampoo, and then working to confuse the consumer by showing the products as identical. Johnson & Johnson created the category of baby shampoos. The company’s research led it to the golden color, and its testing and design work led to a tear-shaped bottle in order to echo the theme of “no more tears.” This product and package design has been in place for more than three decades. It is iconic and indisputably linked to its baby shampoo.

Walmart not only hires a contract manufacturer to white label a similar formula, but it also rips off the packaging ostensibly for the express purpose of fooling the consumer into buying its fake version. This is a rip-off of a vendor partner. To me, it violates the spirit and trust of the partnership. Johnson & Johnson enjoys and needs the benefits of the massive sales Walmart provides, but it’s at a power disadvantage and cannot prevent (or chooses not to try) the theft of its product identity. The fact is, Johnson & Johnson is largely to blame. The company is not a true victim; it chooses to stay silent about Walmart’s abuse and lets it continue, thereby binding other vendors and itself to continual incursions from the retailing giant.

The Golden Rule

In my own experience, and that of my “agency friends,” we often find ourselves at the short end of the fair-dealing stick when it comes to working with enterprise companies. In fact, I once had Home Depot tell me, in the middle of a contract year, that it was mandatory for me to rebate the company 2 percent of any invoice in which it paid within 30 days. All vendors got the same notice. What’s an agency to do? I gave up the 2 percent anytime the company paid early.

My friends at BKV Advertising have had clients try to stiff them on a media bill after switching agencies. It goes to show that contracts and former service just don’t matter. We have all had large clients ask us to provide ideas in request for proposals and “put skin in the game,” when in the end, the contract goes to the “preferred partner,” and the RFP work was just an exercise in the free and meaningless. Finally, how many of our clients honor their net 30 terms? The large ones frequently do not, and agencies get caught in a cash-flow squeeze.

I don’t look to cure every infraction. Many of the ills we suffer are by our own hand for not enforcing our contracts or standing our ground. Observing Walmart’s abuse of Johnson & Johnson gave me pause to consider that I aspire to run my business on my word and for the benefit of all customers and suppliers. The fact is, the better we treat our suppliers, the more likely they are to give us preferential terms and treatment. But if I discovered that a customer had taken my trademarks and tried to confuse the market with my packaging and methods, I’d surely do what I suggest to Johnson & Johnson — fire the customer.