Will Walmart’s early payment program be a difference-maker for minority vendors?
Walmart has launched an expanded supplier program providing diverse and minority-owned businesses with early payment on invoices
“We’ve heard loud and clear from current and potential diverse suppliers that the biggest challenge to achieving growth is the ability to gain access to working capital,” said Scott McCall, chief merchandising officer, Walmart U.S., and Megan Crozier, chief merchandising officer, Sam’s Club, in a blog entry.
Building on existing early payment programs, the new option launches with the goal of making access to working capital “affordable, transparent and more equitable” by offering qualified diverse or minority-owned suppliers faster payments from Walmart at the retailer’s lowest rates and significantly below bank financing rates. Walmart promises to deliver payment in as little as 24 hours versus the typical 30-to-90 day wait times.
Walmart sourced more than $13.1 billion in goods and services from diverse suppliers in 2020. Like many retailers, however, Walmart elevated diversity-related commitments in wake of the George Floyd protests, including committing $100 million over five years to help fight systemic racism.
Beyond committing to hiring more minorities internally, investing in Black communities and featuring more Black people in ads, retailers’ racial equity pledges have included placing an increased focus on supporting Black-owned businesses.
Macy’s, Sephora and West Elm are among retailers signing the 15 Percent Pledge committing to dedicating that percentage — aligned with the country’s Black population — of their retail space to Black-owned businesses.
Google announced a $175 million commitment last June to largely support Black-led venture capital firms, Black-owned startups, and other organizations focused on Black entrepreneurs.
In early April, Target committed to spending $2 billion with Black-owned businesses, including promising to add products from more than 500 Black-owned brands and more actively retaining Black-owned advertising firms, construction firms and other businesses. Modeled after the Target Accelerators program, the company also launched a Forward Founders program to help Black entrepreneurs develop exclusive products for the chain.
Many studies have highlighted the challenges minority businesses face securing financing. A Fed survey from April found white-owned small businesses were twice as likely to get non-emergency financing as Black-owned ones.
- Accelerating Our Commitment to Diverse and Minority Suppliers – Walmart
- Walmart Early Payment Program – Walmart
- Walmart Increases Support of Diverse Suppliers with Launch of Dedicated Online Showcase – Walmart
- Making a Difference in Racial Equity: Walmart CEO Doug McMillon’s Full Remarks – Walmart
- America Needs Diverse Businesses More Than Ever – The Atlantic
- Target Commits to Spending More Than $2 Billion with Black-Owned Businesses by 2025 – Target
- Our commitments to racial equity – Google
- Small Business Credit Survey – Fed Small Business
- White-owned small businesses are twice as likely to get financing as Black- and Latino-owned firms, Fed survey finds – Business Insider
DISCUSSION QUESTIONS: What’s the best way retailers or brands to support Black-owned or minority-owned businesses? What unique challenges does supporting start-ups present?