Walmart’s competitive advantage arises from various essential components. First, its highly effective distribution strategy reduces costs and offers customers affordable prices. Through ownership of its own fleet of trucks and implementing practices such as cross-docking, Walmart can streamline the supply chain and reduce inventory holding costs. This means that Walmart has lower unit costs, allowing it to stay with its “Everyday Low Prices” strategy that attracts price-conscious shoppers (Pandey et al.,112-123). Furthermore, Walmart creates a vast network of stores spread throughout the country, making it more accessible and convenient for customers, thus strengthening its competitive position. In addition, Walmart’s size and bargaining power enable it to have leverage over suppliers; thereby, it can negotiate favourable terms and get lower prices on merchandise, which helps its profitability.
Despite its size and dominance in the retail sector, Walmart has gotten along well with its suppliers. This is due to several reasons. First, suppliers also benefit from Walmart’s commitment to efficiency and cost-effectiveness because of its streamlined supply chain and high sales volumes, creating a reliable and profitable channel for distributing their products. Also, Walmart highlights collaboration and partnership with its suppliers, called “partners” rather than just vendors. This approach creates trust and mutual respect between Walmart and its suppliers, culminating in more positive and productive relationships. Walmart’s reputation for fairness and integrity in its dealings with suppliers also creates a positive atmosphere for suppliers. Through ethical business conduct and fair treatment of partners, Walmart wins the respect and trust of its partners, thus ensuring enduring relationships with suppliers.
Walmart’s distribution process is characterized by efficiency, scale, and control. The company has distribution centers where suppliers deliver goods to Walmart stores. Through consolidating inventory at these distribution centers, Walmart can achieve economies of scale and get bulk discounts with suppliers. Also, Walmart’s cross-docking decreases handling and storage expenses by reducing the time and space utilized to move merchandise from suppliers to stores. Additionally, the streamlined distribution process helps Walmart decrease unit costs and manage while maintaining healthy profit margins to offer competitive prices to its customers. Further, Walmart owns its distribution system. Hence, it has greater control over logistics and scheduling, which allows it to optimize delivery routes, minimize transit times, and guarantee timely replenishment of merchandise at stores.
Walmart’s decision to follow a concentric pattern of expansion and its attempts to block competitors from opening stores near their stores are strategic moves aimed at enhancing operational efficiency and safeguarding market share. Through the outward expansion from the central distribution centres, Walmart can reduce transportation costs and guarantee that merchandise is delivered to stores on time. This centralized distribution model makes inventory management easier and minimizes the chance of stockouts or overstocks at the store level. Furthermore, grouping stores close to each other enables Walmart to benefit from economies of scale and attract more customers as they are more likely to visit several Walmart stores in the same area. However, Walmart’s attempts to prevent competitors from opening facilities close to them ensure that it retains local dominance and safeguards its market share.
Besides the small profit margins in the grocery sector, Walmart has managed to be content with its performance due to several strategic advantages and growth opportunities. Firstly, groceries in a high-frequency purchase category with constant demand provide a reliable source of foot traffic and customer engagement. Walmart’s ability to offer a wide range of fresh produce, pantry staples, and household essentials at affordable prices attracts repeat visits and builds customer loyalty. Furthermore, grocery extends Walmart’s overall range of products, thus stimulating cross-category shopping and boosting basket size. In addition, Walmart’s scale and operational efficiencies allow the company to achieve economies of scale in the grocery business by offsetting low margins with higher sales volume and cost savings.
To grow its online sales, Walmart should concentrate on several key components. Firstly, the firm should continue investing in digital infrastructure and technology to improve online shopping for customers further. This encompasses improving website performance, mobile app features, and online payment facilities to make shopping more convenient and streamlined (Winata, Marylin, and Lena Ellitan 224-248). Also, Walmart should increase its product mix and collaborate with third-party sellers to provide a larger variety of merchandise to online shoppers. Through its huge supplier and distribution network, Walmart will improve product availability and reduce delivery time for online orders. Furthermore, Walmart should invest in marketing and promotional activities to drive online traffic and foster repeat purchases. This incorporates discounts, promotions, and loyalty rewards to motivate online shopping and enhance customer participation.
Work Cited
Pandey, Rudresh, et al. “Factors Influencing Organization Success: A Case Study of Walmart.” International Journal of Tourism and Hospitality in Asia Pacific (IJTHAP) 4.2 (2021): 112-123.
Winata, Marylin, and Lena Ellitan. “The Effectiveness of Technology Development Towards Walmart’s Sustainability Supply Chain Management.” J-CEKI: Jurnal Cendekia Ilmiah 2.2 (2023): 224-248.
write