Walmart's New Collect Pickup Program and What It Means

Walmart announced that they will now begin "formalizing" the Collect pickup charges that will be charged to domestic suppliers with collect freight terms. While this might come as a shock to current Collect suppliers, it should be no surprise.

For months, Walmart has been very public about the rising costs of fuel and transportation-related costs. Veteran Walmart suppliers likely anticipated that these increased costs would soon be passed on to the supplier side of the table.

Well, that time has come.

The Problem With This Decision

If you are a current Collect supplier, you are well aware that when you were weighing the differences between being a prepaid or collect suppliers all boiled down to costs. A cost quote as a collect supplier already included a lower unit cost to Walmart … precisely to cover transportation costs. With the new Collect Pickup Program (CPP), suppliers are effectively now being double-billed for their collect deliveries.

The Details

With the CPP, suppliers will share a portion of transportation administration and fuel costs as a result of increased transportation expenses. This will include a category-specific cost (percentage of COGS) as well as a Fuel Surcharge. An internal Walmart document details the COGS charges, though these percentages are subject to change on a monthly basis.

Download a chart of CPP fees, by category.

This data is current as of 6/30/2022

Questions and Answers

Directly from a Walmart FAQ on the Collect Pickup Program:

1. Why is this program launching?

   Customers are at the center of everything we do at Walmart, and we continue to look for ways to keep bringing them everyday low prices. Since the time many of you elected Collect freight terms, the transportation industry has transformed and costs have increased significantly. This marked change now requires us to adapt how we’re working with our Collect suppliers to share transportation cost accountability in order to meet our everyday low price commitment to customers

2. What is the CPP objective?

   Walmart is committed to being our customers’ retailer of choice, and we continue to look for ways to deepen our relationship with them. With the CPP, suppliers will share a portion of transportation administration and fuel costs as a result of increased transportation expenses.

3. What is the timeline for CPP?

   Both the Collect Pickup deduction percent and the fuel charge will begin on all orders received at DCs beginning August 1, 2022

4. What locations are in scope for this program?

   This program is for all of Walmart U.S.

5. Are there any exceptions from the program?

   The CPP applies to all Walmart U.S. Collect suppliers. If you have both Collect and Prepaid domestic suppliers or POs, this only applies to the Collect shipments.

   DSV suppliers are included if the POs are created in Order Management System (OMS) and the supplier has Collect Freight terms. Ecommerce orders are not included.

   Walmart Fulfillment Services (WFS) and Prepaid suppliers who are backhauled are not included in program.

   Direct Imports are not included in the program but will have an upcoming solve.

   Any POs that flow through a consolidation center will be charged in this program regardless of the method of delivery. Please work with your merchant for Private Brands.

6. What is the charge and how is it applied?

   Suppliers will pay a department-specific Collect Pickup charge percentage rate aligning to a pre-determined fee and a fuel surcharge

   The Collect Pickup charge is assessed as a percentage of the Cost of Goods received by Walmart’s merchandising department.

   The fuel surcharge will be billed monthly and based on the geographic location and distances of actual loads hauled from origins to destinations (using Breakthrough Fuel).

   Charges will occur as a monthly invoice deduction for both Collect Pickup and fuel surcharge. The monthly deduction from supplier Cost of Goods invoices will take place at the 6-digit vendor accounting level.

   You will see the first monthly deduction beginning in September for August’s Cost of Goods received at DCs along with the fuel charge.

7. Is this charge across all departments?

   Yes, this charge will be across all departments, but the Collect Pickup percentage charge may vary from department to department.

8. Are these added charges permanent?

   Yes.

9. Can I request this percentage to be adjusted?

   No. Walmart has evaluated the Collect Pickup percent charge for each supplier category at the 9-digit level.

10. What is the process if I want to opt-out of the CPP?

    By choosing to be a Collect supplier, those suppliers will automatically be part of this program.

    Should you switch to Prepaid, please know you will be responsible for all Prepaid elements such as on-time deliveries (OTIF), warehouse allowances, returns, etc..

    If you choose to switch to Prepaid freight terms, any additional negotiation and Prepaid agreement execution must be completed by August 1, 2022. If the Prepaid agreement is not completed by August 1, 2022, any Collect volume shipped will be subject to the Collect Pickup Program.

11. How are fuel charges analyzed?

    Breakthrough Fuel (BTF) is a program Walmart Transportation has used for third party carriers. The fuel cost is based on the actual freight movements and real-time fuel costs, capturing daily fuel price changes that are matched against geographic locations and each shipment day. This calculation applies state and local taxes based on route data and captures regional price differentials across the U.S.

    Fuel data is aggregated at the 6-digit supplier level for billing.

    Walmart will leverage BTF data for all Walmart Collect shipments whether transported by Walmart’s fleet or Walmart’s engaged third party carrier.

    Multiple suppliers on the same truck will split fuel cost and is based on PO contribution predicted on the size of the load.

12. How will the charge show up on the supplier deduction?

    The CPP deduction will not have a special code. When the deduction is posted, the invoice number will start with 7XXXXXXXX. Suppliers will see the CPP and the fuel charge as split items on the invoice.

13. What happens if fuel goes down?

    Fuel charges will adjust per billing cycle predicated on the ship points. If fuel goes down, the surcharge will go down if the shipment miles remain consistent.

14. What if I just onboarded as a new supplier?

    Suppliers that were onboarded into the Collect program from February 1, 2022 - June 30, 2022, will have the Collect Pickup Program charges delayed until February 1, 2023. This will only apply to suppliers (at the 6-digit vendor number level) that were not shipping Collect prior to February 1, 2022. This grace period will not apply to suppliers that have added a 9-digit vendor number to an existing 6-digit vendor number that has been shipping under Collect freight terms.

15. Where do I go for questions about the program?

    All program information can be found at Supplier Academy > Getting Started > Supplier Compliance Programs. Please check back frequently for updates.