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The Walmart Business Model Analysis

With over $572 billion in net sales in 2022, Walmart operates a differentiated Omni business model with three primary units comprising Walmart U.S., Walmart International, and Sam’s Club (a membership-only warehouse club), together with Walmart +. This subscription service includes unlimited free shipping, unlimited delivery from its stores, and discounts launched in 2021.

Table of Contents

Walmart origin story

Walmart is an American multinational retail corporation operating hypermarkets, grocery stores, and discount department stores. It was founded by Sam Walton in Arkansas in 1962.

Walton was a military veteran who moved to Newport, Arkansas after his service ended in 1945. Walton and his wife Helen then purchased their first Ben Franklin variety store franchise .

After five years in operation, Sam had fulfilled his wish to make the franchise the top store in the state. He achieved this through exemplary customer service and low prices, a personal philosophy still important to Walmart today.

In 1945, Sam Walton built up from scratch what would later become the largest retailer in the world.

In 1950, the Waltons were forced to move on after the landlord refused to renew their lease.

Until 1962, Walmart ’s founders focused on opening various stores. Only in 1983, did Walmart opens its first Sam’s Club, and by 1988, it opened its first supercenter.

By the 1990s, Walmart had become a giant in the US and started global expansion.

Starting in the 2000s, as e-commerce picked up, Amazon, once a startup , became a tech giant.

This also led Walmart in the direction of investing massive resources online.

To stay competitive, as the pandemic hit the world in 2021, Walmart also started to offer Walmart +, a subscription service, including unlimited free shipping, unlimited delivery from its stores, and discounts.

As the company highlighted with the launch of its subscription service:

Walmart+ uses the company’s unique assets to make life easier for busy families. Along with the power of its online presence, Walmart + has the reach of more than 4,700 stores, including 2,700 stores that offer delivery as fast as same day. Members will receive unlimited free delivery from stores, fuel discounts and access to tools that make shopping faster for families. Membership will be available to all customers on Sept. 15. It will cost $98 a year or $12.95 a month and includes a 15-day free trial period. In the future, the company will leverage its wide-ranging strengths to add additional benefits for members in a variety of services and offerings.

The three main features of the service are:

  • Unlimited free delivery.
  • Scan & Go.
  • And fuel discounts.

The move to Bentonville, Arkansas

Walton then began scouring northwest arkansas for somewhere to establish a new presence., in bentonville, he found a small variety store whose owner was willing to sell., he called this ben franklin franchise walton’s five and dime, marketing it as the “ most up-to-date, modern variety store in northwest arkansas. ”.

Between 1951 and 1962, Walton would open a further 14 stores in small, rural towns.

He believed discount stores could thrive in these places provided products were sold at the cheapest price possible.

He went to Ben Franklin with this strategy , but they were uninterested after learning their margins would have to be cut in half.

As a result, Walton decided to strike out alone.

The first Walmart store and further expansion

The first walmart store opened in rogers, arkansas in 1962., sam and helen provided 95% of the required funding, so they had to make it work., to increase their odds of success, sam would travel the country and learn everything he could about discount retailing..

In 1968, Walmart expanded into Missouri and Oklahoma and opened its first distribution center in Bentonville.

The following year, Walmart Stores was incorporated and held an IPO. By 1972, Sam Walton had enough money to build 15 more stores.

Facing stiff competition from retail giants such as Kmart, Walmart stock was offered on the New York Stock Exchange on August 15 that same year.

By the end of the decade, Walmart grew to 276 stores in 11 different states. The company made several acquisitions during this time, including 16 Mohr Value Stores and the Hutcheson Shoe Company.

Coming of age

In 1980, walmart through its business model became the fastest company to reach $1 billion in sales after just 18 years in operation., as the company continued to expand into other u.s. states, so too did walton’s aspirations..

The first Walmart Supercenter opened in 1988, at the time an experimental hypermarket selling traditional groceries alongside other services.

These included pet shops, garden centers, optical centers, pharmacies, and photo processing labs.

Sam’s Club was also created around this time, a membership-only retail warehouse club offering exclusive savings on shipping, fuel, and prescriptions, among other things.

In 1990, Walmart became the top retailer in the United States – a title it still holds over three decades later.

  • Walmart was founded by Sam Walton who started his retail career by operating a Ben Franklin variety store franchise. Walton believed in delivering value to the customer through exemplary customer service and low prices.
  • Walton would go on to operate 15 Ben Franklin franchises but decided to create his own chain after disagreements with the owners over profit margins.
  • The first Walmart store opened in Arkansas in 1962. Expansion throughout the United States was facilitated by an IPO in 1969 and a debut on the NYSE in 1972. By 1980, Walmart surpassed $1 billion in annual revenue and began experimenting with hypermarket and membership-only retail models.Some key highlights of Walmart’s history : 

Walmart’s Mission and Vision 

Walmart’s Mission and Vision are expressed below.

walmart-vision-statement-mission-statement

Walmart is still tightly owned by the Walton family:

who-owns-walmart

And below is a SWOT Analysis of Walmart :

walmart-swot-analysis

Walmart organizational snapshot

walmart-organizational-structure

The company operates three main store formats: supercenters, discount stores, and neighborhood stores.

While it offers three primary merchandise units:

  • Grocery (grocery, snacks, dairy).
  • General merchandise (entertainment, hardlines, apparel, and home).
  • Health and wellness (pharmacy, OTC products, and medical products).

Walmart’s main motto is to “ lead on price, invest in differentiating on access, be competitive on assortment and deliver a great experience by the motto of EDLP (every day low prices). “

Everyday low cost (“EDLC”) is Walmart’s commitment to controlling expenses.

Those savings can be passed along to customers. Walmart has an omnichannel presence to provide customers access to a broad assortment of goods at any time and in many locations in the US and internationally.

Besides its physical infrastructure, Walmart has also been investing in its digital platforms based on eCommerce.

Walmart comprises three main segments:

Walmart U.S.,

Walmart U.S. is the largest segment operating in all the 50 states in the U.S., Washington D.C., and Puerto Rico. It follows three primary store formats, as well as eCommerce. Walmart U.S. generated approximately 64% of our net sales in 2018.

The US segment follows what Walmart defines as a “ differentiated Omni business model” which tries to lead the customers off and online. 

Walmart International

Walmart International consists of operations in 27 countries outside of the U.S.

It comprises three major categories:

These categories consist of many formats, including:

  • Supercenters,
  • Supermarkets,
  • Hypermarkets,
  • Warehouse clubs (including Sam’s Clubs) and cash & carry,
  • As well as eCommerce.

Walmart International generated 7 approximately 24% of 2018 net sales.

Sam’s Club

Sam’s Club consists of membership-only warehouse clubs which operate in 44 states in the U.S. and Puerto Rico, as well as eCommerce. Sam’s Club accounted for approximately 12% of 2018 net sales.

As a membership-only warehouse club, membership income is a significant component of the segment’s operating income.

Sam's -club-Segment-membership-fees

Sam’s Club offers merchandise in the following five merchandise categories:

  • Grocery and consumables including dairy
  • Fuel and other categories consist of gasoline stations, tobacco, tools and power equipment, and tire and battery centers;
  • Home and apparel includes home improvement, outdoor living, grills, gardening, furniture, apparel, jewelry, housewares, toys, seasonal items, mattresses, and small appliances;
  • Technology, office, and entertainment includes electronics, wireless, software, video games, movies, books, music, office supplies, office furniture, photo processing and third-party gift cards; and
  • Health and wellness include pharmacy, optical and hearing services and over-the-counter drugs.

net-sales-by-merchandise-category-sam's-club

Walmart store formats

Walmart sells mainly through three store formats:

  • Supercenters
  • Discount stores
  • Neighborhood markets

walmart-store-formats

Supercenters occupy a larger area, compared to discount stored and neighborhood markets.

walmart-revenues-by-category

When it comes to merchandising, Walmart sold three main categories:

  • Grocery accounted for 56% of Walmart’s net sales in 2018.
  • Health and wellness accounted for 11% of its net sales in 2018.
  • and General merchandise accounted for 33% of its revenues in 2018.

How does Walmart manage to be competitive with such low prices? Inventory management is the key

As specified in its annual report Walmart can develop, open, and operate units at the right locations and to deliver a customer-centric omnichannel experience.

That largely determines its competitive position within the retail industry. Walmart employs many programs designed to meet competitive pressures within its industry.

These programs include the following:

  • EDLP (everyday low price): items priced at a low price every day so Walmart customers trust that its prices will not change under frequent promotional activity;
  • EDLC (everyday low cost): effort to control expenses so that savings can be passed along to customers;
  • Rollbacks : pass cost savings on to the customer by lowering prices on selected goods;
  • Savings Catcher, Save Even More and Ad Match : strategies to meet or be below a competitor’s advertised price;
  • Walmart Pickup : customer places order online and pick up for free from a store. The merchandise is fulfilled through Walmart distribution facilities;
  • Pickup Today : customer places order online and can pick it up at a store within four hours for free. The order is fulfilled through existing store inventory;
  • Online Grocery : customer places grocery order online and has it delivered to home or picks it up at one of Walmart participating stores or remote locations; and
  • Money Back Guarantee:  ensure the quality and freshness of the fruits and vegetables in Walmart stores by offering customers a 100 percent money-back guarantee if they are not satisfied.

How does Walmart distribution work?

For 2018, approximately 78% of Walmart U.S.’s purchases of store merchandise were shipped through 157 distribution facilities located throughout the U.S.

The remaining merchandise gets shipped directly from suppliers.

walmart-distribution-facilities

At the international level, Walmart utilizes a total of 188 distribution facilities located in Argentina, Brazil, Canada, Central America, Chile, China, Japan, Mexico, South Africa, and the United Kingdom.

Through these facilities, Walmart processes and distributes both imported and domestic products to the operating units of the Walmart International segment.

By January 2018, approximately 83% of Walmart International’s purchases had passed through these distribution facilities.

walmart-international-distribution-centers

Also, Sam’s Club distribution facilities play a key role:

Sam's Club's -distribution

The principal focus of Sam’s Club’s distribution operations is on cross-docking merchandise, while stored inventory is minimized.

What is cross-docking?

cross-docking

As explained by Walmart:

Cross-docking is a distribution process under which shipments are directly transferred from inbound to outbound trailers. In short, shipments typically spend less than 24 hours in a cross-dock facility, and sometimes less than an hour. Sam’s Club uses a combination of our private truck fleet, as well as common carriers, to transport non-perishable merchandise from distribution facilities to clubs. The segment contracts with common carriers to transport perishable grocery merchandise from distribution facilities to clubs. Sam’s Club ships merchandise purchased by members on samsclub.com and through its mobile commerce applications by a number of methods from its dedicated eCommerce fulfillment centers and other distribution centers.

Walmart revenues breakdown

walmart-revenues-breakdown

Key Highlights

Walmart’s Origin Story:

  • Founded by Sam Walton in 1962.
  • Started with a Ben Franklin variety store franchise.
  • Emphasized customer service and low prices.

Expansion and Growth:

  • Opened first Walmart store in 1962.
  • Expanded into other U.S. states in the 1980s.
  • Introduced Walmart Supercenters and Sam’s Club.

Business Model and Strategies:

  • Walmart’s motto: “Lead on price, invest in differentiating on access, be competitive on assortment, and deliver a great experience.”
  • Focus on everyday low prices (EDLP) and everyday low cost (EDLC).
  • Strategies include Rollbacks, Savings Catcher, and Walmart Pickup.

Distribution System:

  • Over 157 distribution facilities in the U.S.
  • Internationally, 188 distribution facilities in various countries.
  • Sam’s Club uses cross-docking and a private truck fleet for distribution.

Organizational Structure and Store Formats:

  • Walmart’s structure includes Walmart U.S., Walmart International, and Sam’s Club.
  • Store formats include supercenters, discount stores, and neighborhood markets.
  • Walmart+ launched as a subscription service.
  • Offers unlimited free shipping, delivery from stores, and discounts.
  • Utilizes Walmart’s extensive store network for convenience.

Key Values:

  • Customer service and low prices integral to Walmart’s ethos.
  • Focus on making shopping affordable and efficient.
  • Emphasis on adapting to changing consumer needs and technological advancements.

Read Also:   Walmart Mission Statement , Who Owns Walmart .

Related:  History of Amazon ,  History Of Apple ,  History Of Starbucks ,  History Of McDonald’s ,  History of WhatsApp ,  History Of Bitcoin ,  History Of Google .

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Why walmart's business model is so successful.

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Walmart’s Company Overview

Wal-Mart is an American multinational retailing corporation that operates as a chain of hypermarkets, discount department stores, and grocery stores. Headquartered in Bentonville, Arkansas, Wal-Mart has 11.695 stores and clubs in 28 countries, under a total of 59 banners. It also owns and operates the Sam's Club retail warehouses.

Country: Arkansas

Foundations date: 1962

Type: Public

Sector: Consumer Goods

Categories: Retail

Walmart’s Customer Needs

Social impact:

Life changing: affiliation/belonging

Emotional: rewards me, design/aesthetics, badge value, provides access, attractiveness

Functional: Quality, variety, reduces costs, saves time, organizes, integrates, sensory appeal, organizes

Walmart’s Related Competitors

Walmart’s business operations.

Advertising:

This approach generated money by sending promotional marketing messages from other businesses to customers. When you establish a for-profit company, one of the most critical aspects of your strategy is determining how to generate income. Many companies sell either products or services or a mix of the two. However, advertisers are frequently the source of the majority of all of the revenue for online businesses and media organizations. This is referred to as an ad-based income model.

Affiliation:

Commissions are used in the affiliate revenue model example. Essentially, you resell goods from other merchants or businesses on your website or in your physical store. You are then compensated for referring new consumers to the company offering the goods or services. Affiliates often use a pay-per-sale or pay-per-display model. As a result, the business can access a more diversified prospective client base without extra active sales or marketing efforts. Affiliate marketing is a popular internet business strategy with significant potential for growth. When a client purchases via a referral link, the affiliate gets a portion of the transaction's cost.

A brokerage firm's primary responsibility is to serve as a middleman, connecting buyers and sellers to complete transactions. Accordingly, brokerage firms are compensated through commission once a transaction is completed. For example, when a stock trade order is executed, a transaction fee is paid by an investor to repay the brokerage firm for its efforts in completing the transaction.

Combining data within and across industries:

How can data from other sources be integrated to generate additional value? The science of big data, combined with emerging IT standards that enable improved data integration, enables new information coordination across businesses or sectors. As a result, intelligent executives across industries will see big data for what it is: a revolution in management. However, as with any other significant organizational transformation, the difficulties associated with becoming a big data-enabled company may be tremendous and require hands-on?or, in some instances, hands-off?leadership.

A credit arrangement is when a consumer purchases items on credit (without paying cash) and spends the provider later. Typically, trade credit is extended for a certain number of days after the products are delivered. These credits may be deducted from one's tax liability.

Cross-selling:

Cross-selling is a business strategy in which additional services or goods are offered to the primary offering to attract new consumers and retain existing ones. Numerous businesses are increasingly diversifying their product lines with items that have little resemblance to their primary offerings. Walmart is one such example; they used to offer everything but food. They want their stores to function as one-stop shops. Thus, companies mitigate their reliance on particular items and increase overall sustainability by providing other goods and services.

Cross-subsidiary:

When products and goods and products and services are integrated, they form a subsidiary side and a money side, maximizing the overall revenue impact. A subsidiary is a firm owned entirely or in part by another business, referred to as the parent company or holding company. A parent company with subsidiaries is a kind of conglomerate, a corporation that consists of several distinct companies; sometimes, the national or worldwide dispersion of the offices necessitates the establishment of subsidiaries.

Curated retail:

Curated retail guarantees focused shopping and product relevance; it presents a consumer with the most appropriate options based on past purchases, interactions, and established preferences. It may be provided via human guidance, algorithmic recommendations, or a combination of the two.

Customer data:

It primarily offers free services to users, stores their personal information, and acts as a platform for users to interact with one another. Additional value is generated by gathering and processing consumer data in advantageous ways for internal use or transfer to interested third parties. Revenue is produced by either directly selling the data to outsiders or by leveraging it for internal reasons, such as increasing the efficacy of advertising. Thus, innovative, sustainable Big Data business models are as prevalent and desired as they are elusive (i.e., data is the new oil).

Customer loyalty:

Customer loyalty is a very successful business strategy. It entails giving consumers value that extends beyond the product or service itself. It is often provided through incentive-based programs such as member discounts, coupons, birthday discounts, and points. Today, most businesses have some kind of incentive-based programs, such as American Airlines, which rewards customers with points for each trip they take with them.

Customer relationship:

Due to the high cost of client acquisition, acquiring a sizable wallet share, economies of scale are crucial. Customer relationship management (CRM) is a technique for dealing with a business's interactions with current and prospective customers that aims to analyze data about customers' interactions with a company to improve business relationships with customers, with a particular emphasis on retention, and ultimately to drive sales growth.

Channel aggregation:

Consolidating numerous distribution routes into one to achieve greater economic efficiency. A business model for internet commerce in which a company (that does not manufacture or warehouse any item) gathers (aggregates) information about products and services from many competing sources and displays it on its website. The firm's strength is in its power to create an 'environment' that attracts users to its website and develop a system that facilitates pricing and specification matching.

Channel per purpose:

Creating separate channels for selling and purchasing current goods and services. A marketing plan is a vendor's plan for distributing a product or service to the end consumer through the chain of commerce. Manufacturers and retailers have a plethora of channel choices. The simplest method is the direct channel, which involves the seller selling directly to the consumer. In addition, the vendor may use its own sales staff or offer its goods or services through an e-commerce website.

Demarketing:

Excluding current clients that are unprofitable or who do not adhere to company principles. Efforts directed towards reducing (not eliminating) demand for a product that (1) a company cannot provide in sufficient quantities or (2) a firm does not want to sell in a particular area due to prohibitively expensive distribution or marketing expenses. Increased pricing, less promotion, and product redesign are all common demarketing tactics.

A digital strategy is a strategic management and a business reaction or solution to a digital issue, which is often best handled as part of a broader company plan. A digital strategy is frequently defined by the application of new technologies to existing business activities and a focus on enabling new digital skills for their company (such as those formed by the Information Age and frequently as a result of advances in digital technologies such as computers, data, telecommunication services, and the World wide web, to name a few).

Digital transformation:

Digitalization is the systematic and accelerated transformation of company operations, processes, skills, and models to fully exploit the changes and possibilities brought about by digital technology and its effect on society. Digital transformation is a journey with many interconnected intermediate objectives, with the ultimate aim of continuous enhancement of processes, divisions, and the business ecosystem in a hyperconnected age. Therefore, establishing the appropriate bridges for the trip is critical to success.

Discount club:

The discount club concept is built on perpetual high-discount deals utilized as a continual marketing plan or a brief period (usually one day). This might be seen as a reduction in the face value of an invoice prepared in advance of its payments in the medium or long term.

Electronic commerce, or e-commerce (alternatively spelled eCommerce), is a business model, or a subset of a larger business model, that allows a company or person to do business via an electronic network, usually the internet. As a result, customers gain from increased accessibility and convenience, while the business benefits from integrating sales and distribution with other internal operations. Electronic commerce is prevalent throughout all four main market segments: business to business, business to consumer, consumer to consumer, and consumer to business. Ecommerce may be used to sell almost any goods or service, from books and music to financial services and airline tickets.

Experience selling:

An experience in the sales model describes how a typical user perceives or comprehends a system's operation. A product or service's value is enhanced when an extra customer experience is included. Visual representations of experience models are abstract diagrams or metaphors derived from recognizable objects, actions, or systems. User interfaces use a range of experience models to help users rapidly comprehend what is occurring in the design, where they are, and what they may do next. For example, a software experience model may depict the connection between two applications and the relationship between an application and different navigation methods and other system or software components.

From push to pull:

In business, a push-pull system refers to the flow of a product or information between two parties. Customers pull the products or information they need on markets, while offerers or suppliers push them toward them. In logistics and supply chains, stages often operate in both push and pull modes. For example, push production is forecasted demand, while pull production is actual or consumer demand. The push-pull border or decoupling point is the contact between these phases. Wal-Mart is a case of a company that employs a push vs. a pull approach.

Hypermarket:

Disrupts by 'brand bombing' competitors, often by offering below cost. Hypermarkets, like other large-scale retailers, generally operate on a high-volume, low-margin basis. They typically span a space of 5,000 to 15,000 square meters (54,000 to 161,000 square feet) and stock more than 200,000 different brands of goods.

Ingredient branding:

Ingredient branding is a kind of marketing in which a component or ingredient of a product or service is elevated to prominence and given its own identity. It is the process of developing a brand for an element or component of a product in order to communicate the ingredient's superior quality or performance. For example, everybody is aware of the now-famous Intel Inside and its subsequent success.

Layer player:

Companies that add value across many markets and sectors are referred to be layer players. Occasionally, specialist companies achieve dominance in a specific niche market. The effectiveness of their operations, along with their economies of size and footprint, establish the business as a market leader.

Localized low cost:

In general, this business model is appropriate for standardized goods and services with minimal requirements and low consumer expectations that may be manufactured locally and branded worldwide. However, this company concept will succeed only if the following two criteria are satisfied. The first is contingent upon a sizable market presence in mature markets' urban regions. This circumstance enables businesses to capitalize on their established brand value in developing areas. The second criterion is that the product or service generates revenue or is self-sustaining. This circumstance creates the possibility of reduced earnings in developing economies.

The long tail is a strategy that allows businesses to realize significant profit out of selling low volumes of hard-to-find items to many customers instead of only selling large volumes of a reduced number of popular items. The term was coined in 2004 by Chris Anderson, who argued that products in low demand or with low sales volume can collectively make up market share that rivals or exceeds the relatively few current bestsellers and blockbusters but only if the store or distribution channel is large enough.

A pricing strategy in which a business provides a low price in order to drive demand and increase market share. Additionally referred to as a low-price approach. The low-cost model has sparked a revolution in the airline industry. The end-user benefits from low-cost tickets as a result of a revenue strategy that seeks various sources of income. Ryanair was one of the first businesses to embrace this approach.

Low-budget innovation:

Fast-moving consumer goods businesses produce co-created items with early adopters through sample testing based on user observation and involvement. As a result, fast-moving consumer goods businesses may obtain a greater new product success rate while incurring fewer development expenses via a low-budget innovation business strategy. That is referred to as low-budget innovation.

Mass customization:

Mass customization is a strategy that entails using modular goods and manufacturing processes to allow efficient product individualization. Mass customization refers to producing customized output using flexible computer-aided manufacturing systems in marketing, manufacturing, contact centers, and management. Mass customization is the next frontier for manufacturing and service sectors alike. Beyond the physical product, mass customization is utilized by a diverse variety of software products and services with the goal of developing strong connections with customers via personalization and suggestion.

Mobile first behavior:

It is intended to mean that as a company thinks about its website or its other digital means of communications, it should be thinking critically about the mobile experience and how customers and employees will interact with it from their many devices. The term is “mobile first,” and it is intended to mean that as a company thinks about its website or its other digital means of communications, it should be thinking critically about the mobile experience and how customers and employees will interact with it from their many devices.

Niche retail:

A marketing strategy for a product or service includes characteristics that appeal to a particular minority market segment. A typical niche product will be distinguishable from other goods and manufactured and sold for specialized purposes within its associated niche market. Niche retail has focused on direct-to-consumer and direct-to-business internet sales channels. The slogan for niche retail is Everything except the brand.

Online marketplace:

An online marketplace (or online e-commerce marketplace) is a kind of e-commerce website in which product or service information is supplied by various third parties or, in some instances, the brand itself, while the marketplace operator handles transactions. Additionally, this pattern encompasses peer-to-peer (P2P) e-commerce between businesses or people. By and large, since marketplaces aggregate goods from a diverse range of suppliers, the variety and availability are typically greater than in vendor-specific online retail shops. Additionally, pricing might be more competitive.

Open-source:

Compared to more centralized development methods, such as those usually employed by commercial software firms, the open-source model is more decentralized. Scientists see the open-source approach as an example of collaborative openness. Peer production is a fundamental concept of open-source software development, with deliverables such as source code, blueprints, and documentation made freely accessible to the public. The open-source software movement started as a reaction to the constraints imposed by proprietary programming. Since then, its ideas have extended to other areas, resulting in what is known as open cooperation. Typically, money is generated via services that complement the product, such as advising and maintenance.

Regular replacement:

It includes items that must be replaced on a regular basis; the user cannot reuse them. Consumables are products utilized by people and companies and must be returned regularly due to wear and tear or depletion. Additionally, they may be described as components of a final product consumed or irreversibly changed throughout the production process, including semiconductor wafers and basic chemicals.

Remainder retail:

Remainder retail (affectionately referred to as daily deal, flash sale, or one deal a day) is an online business strategy in which a website sells a single product for a period of 24 to 36 hours. Customers may join deal-a-day websites as members and get online deals and invite through email or social media. The deal-of-the-day business model works by enabling merchants to advertise discounted services or goods directly to the deal company's consumers, with the deal company receiving a cut of the retailer's earnings. This enables merchants to foster brand loyalty and rapidly liquidate excess inventory.

Self-service:

A retail business model in which consumers self-serve the goods they want to buy. Self-service business concepts include self-service food buffets, self-service petrol stations, and self-service markets. Self-service is available through phone, online, and email to automate customer support interactions. Self-service Software and self-service applications (for example, online banking apps, shopping portals, and self-service check-in at airports) are becoming more prevalent.

Spectrum retail:

Utilizes a multi-tiered e-commerce approach. The firm first focused on business-to-consumer connections with its customers and business-to-business ties with its suppliers. Still, it later expanded to include customer-to-business transactions after recognizing the importance of customer evaluations in product descriptions. It now also enables customer-to-customer transactions by establishing a marketplace that serves as a middleman for such transactions. The company's platform enables nearly anybody to sell almost anything.

Sponsorship:

In most instances, support is not intended to be philanthropic; instead, it is a mutually beneficial commercial relationship. In the highly competitive sponsorship climate of sport, a business aligning its brand with a mark seeks a variety of economic, public relations, and product placement benefits. Sponsors also seek to establish public trust, acceptability, or alignment with the perceived image a sport has built or acquired by leveraging their connection with an athlete, team, league, or the sport itself.

Subscription box:

A subscription box is a regular delivery of retail goods to a client. Thus, subscription boxes are both a marketing tactic and a delivery mechanism for products. Subscription boxes are used by subscription-based e-commerce companies, abbreviated subcom, that operates on a subscription-based revenue model. They cater to a diverse client base and address a range of particular demands and interests. Since the subscription box business is still in its infancy, there is little data available. However, between 400 and 600 distinct types of subscription boxes are available in the United States alone, with more known internationally.

Supermarket:

A supermarket is a self-service store arranged into aisles and has many foods and home goods. It is bigger and has a greater variety than traditional grocery shops but is smaller and offers a more limited selection than a hypermarket or big-box market. Supermarkets are usually chain shops supplied by their parent firms' distribution centers, allowing for more significant economies of scale. In addition, supermarkets often provide items at competitive rates by using their purchasing power to negotiate lower pricing from producers than smaller shops can.

Supply chain:

A supply chain is a network of companies, people, activities, data, and resources that facilitate the movement of goods and services from supplier to consumer. The supply chain processes natural resources, raw materials, and components into a completed product supplied to the ultimate consumer. In addition, used goods may re-enter the distribution network at any point where residual value is recyclable in advanced supply chain systems. Thus, value chains are connected through supply chains.

Target the poor:

The product or service provided here is aimed towards the bottom of the pyramid rather than the top. The target of the flawed business model is a financially feasible strategy that helps low-income communities by integrating them in the value chain of a firm on the demand side as customers and consumers and the supply side as producers, entrepreneurs, or workers in a sustainable manner. While the business earns a little profit on each product sold, it profits from the increased sales volume often associated with a large client base.

Technology trends:

New technologies that are now being created or produced in the next five to ten years will significantly change the economic and social landscape. These include but are not limited to information technology, wireless data transmission, human-machine connection, on-demand printing, biotechnology, and sophisticated robotics.

Transaction facilitator:

The business acts as an acquirer, processing payments on behalf of online merchants, auction sites, and other commercial users for a fee. This encompasses all elements of purchasing, selling, and exchanging currencies at current or predetermined exchange rates. By far the biggest market in the world in terms of trade volume. The largest multinational banks are the leading players in this industry. Around the globe, financial hubs serve as anchors for trade between a diverse range of various kinds of buyers and sellers 24 hours a day, save on weekends.

White label:

The term white label refers to a product or service bought by a reseller who rebrands it to show that the new owner developed it. Frequently, white-label goods are mass manufactured. Thus, white-label goods are produced by one firm and sold by another under their brand and model number. For instance, most Dell computer screens are created by third-party manufacturers yet have the Dell brand and model number.

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Walmart Inc. (WMT): Business Model Canvas

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Key Partnerships

Key activities, key resources, value propositions, customer relationships, customer segments, cost structure, revenue streams, introduction.

The retail industry is one of the largest sectors in the global economy, expected to reach $28 trillion by 2024 according to recent statistics. Within this industry, Walmart Inc. (WMT) is a dominant player, operating as a mass retailer offering a vast selection of products and services.

With its Supercenters, Neighborhood Markets, and Sam's Club warehouse clubs, Walmart has established itself as a one-stop-shop for customers seeking convenience and affordability. The company's revenue streams come from sales, rental income, and membership fees, making it a diversified business model.

As we explore Walmart's business model canvas, we'll analyze its value proposition, key activities, customer segments, cost structure, and key resources. Additionally, we'll examine how the company's partners contribute to its overall success, making Walmart a prime example of a continuously evolving and innovative retail powerhouse.

Walmart Inc. has established several strategic partnerships in order to enhance its overall business operations and increase revenue. These partnerships are essential to the growth and development of Walmart as they provide access to new resources, capabilities, technologies, and customer bases. The following are the key partnerships of Walmart:

  • Supplier Partnerships- Walmart relies heavily on its supplier partnerships to ensure a steady supply of goods at competitive prices. The company has a vast network of suppliers that provide products ranging from groceries to electronics. Walmart's suppliers also offer valuable insights into market trends and help the company to identify new customer needs and preferences.
  • Delivery Partnerships- Walmart has partnered with several delivery services such as Uber and Postmates to provide customers with convenient and fast delivery options. These partnerships enable Walmart to expand its e-commerce capabilities and provide customers with more shopping options without having to leave their homes.
  • Financial Partnerships- Walmart has entered into several financial partnerships to offer customers access to a range of financial services such as credit cards, savings accounts, and loans. The company has also established partnerships with several banks to provide ATMs and financial services in its stores.
  • Technology Partnerships- Walmart has established partnerships with numerous technology companies such as Microsoft and Google to enhance its IT infrastructure and streamline its business operations. These partnerships also help Walmart to improve its online shopping platform and offer customers a better shopping experience.
  • Retail Partnerships- Walmart has formed partnerships with several retailers such as Nike and Levi's to offer exclusive products and increase customer engagement. These partnerships not only provide Walmart customers with a wider range of products but also help to boost the company's brand image.

Overall, Walmart's partnerships play a crucial role in its ability to provide quality products and services to customers while maintaining competitive prices. These partnerships enable Walmart to expand its operational capabilities, improve its customer base and increase revenue, ultimately contributing to the company's overall success.

As one of the world's largest retailers, Walmart's key activities revolve around its operations, supply chain, and customer service. Below are some of the critical activities that Walmart undertakes:

  • Procurement: Walmart procures goods and products from suppliers across the globe. Walmart's procurement team ensures that the company sources high-quality, affordable products that meet its customers' needs.
  • Warehousing and Distribution: Walmart operates a complex network of warehouses and distribution centers. This network allows the company to move products from suppliers to stores quickly and efficiently. Walmart also uses technology to optimize its supply chain and minimize waste.
  • Inventory Management: Walmart's inventory management is a key activity that ensures stores have the right products at the right time. Walmart uses data analytics and technology to predict demand and optimize its inventory levels.
  • Store Operations: Walmart operates over 10,000 stores worldwide. Store operations involve activities such as managing employees, restocking inventory, and providing exceptional customer service.
  • Marketing and Promotions: Walmart uses a range of marketing and promotional activities to attract customers and increase sales. These activities include advertising campaigns, seasonal promotions, and product discounts.
  • E-commerce: Walmart's e-commerce activities include managing its website, shipping products to customers, and offering services such as online grocery shopping and pickup.
  • Corporate Social Responsibility: Walmart's corporate social responsibility activities involve initiatives such as reducing environmental impact, supporting communities, and promoting diversity and inclusion.

By focusing on these key activities, Walmart is able to serve its customers effectively while maintaining a competitive advantage in the retail industry.

Walmart Inc. (WMT) has a vast range of resources that it leverages to maintain its position as a retail giant in the industry. Here are some of the key resources that it relies on:

  • Physical Stores: Walmart Inc. has over 11,000 stores worldwide, which serves as its primary physical resource. These stores are strategically located across different regions, making them easily accessible to customers.
  • Infrastructure: The company has a robust infrastructure that supports its vast retail operations. This resource includes the supply chain network, logistics, warehousing, distribution centers, and transportation.
  • Technology: Walmart Inc. invests heavily in technology to optimize its operations and enhance customer experience. This resource includes the use of big data, analytics, AI-powered tools, mobile apps, and online platforms.
  • Human Capital: The company has a highly talented and diverse workforce, comprising over 2.2 million employees worldwide. The human resource base is critical to achieving Walmart Inc.'s overall vision and mission.
  • Brand: Walmart Inc. has built a well-known and trusted brand over the years, which helps to attract and retain loyal customers. This resource is critical in driving the company's sales and revenue growth.
  • Financial Resources: Walmart Inc. has a strong financial base, with vast cash reserves, assets, and investments. The company leverages these resources to fund its operations, expansion, and other strategic initiatives.

Together, these resources constitute Walmart Inc.'s core strengths and position the company to continue leading the retail industry, delivering high-quality products and services to customers, and driving long-term value for shareholders.

Walmart Inc. provides its customers with a range of value propositions:

  • Everyday low prices – Walmart offers customers everyday low prices across all its products, which helps it attract a large customer base.
  • Wide variety of products – With over 150,000 items available in-store, Walmart provides a broad range of product categories, which makes it a one-stop-shop for customers with different preferences.
  • Quality products – Walmart ensures that its products are of high quality, offering guarantees on many of its products such as electronics and appliances, which enhances customer trust and loyalty.
  • Convenient shopping experience – With its extensive reach, Walmart offers customers a convenient shopping experience through its brick-and-mortar stores, eCommerce platforms and mobile apps, ensuring that customers can shop anytime, anywhere.
  • Customer-centric services – Walmart provides customer-centric services that cater to the needs of different customers. This includes same-day pickup, home delivery, and installation services that help customers save time and effort.

Through these value propositions, Walmart creates value for its customers, attracting and retaining them while also achieving its business objectives such as increased sales and profits.

Walmart operates through a multi-channel distribution network that includes:

  • Online Sales: To reach out to customers who prefer online shopping, Walmart has a comprehensive e-commerce platform that features over 75 million products. The company's online sales channels include Walmart.com, Jet.com, Walmart mobile app, and Walmart marketplace. Customers can choose to have their orders shipped to their home or pick them up at a nearby store via the 'Pickup Today' service.
  • Physical Stores: Walmart operates more than 11,300 stores worldwide, including supercenters, neighborhood markets, and Sam's clubs. Walmart's physical retail stores allow customers to see, touch, and feel the products before making a purchase. The company has a vast network of stores that ensure that it is always within reach of its customers.
  • B2B Sales: Walmart has an extensive B2B sales channel that caters to the needs of businesses of all sizes. The company offers bulk purchase discounts, personalized customer service, and an extensive range of products to businesses from various industries. Walmart's B2B sales channels include Walmart for Business and Sam's Club for Business.
  • Social Media: Walmart has a strong presence on social media platforms such as Facebook, Twitter, Instagram, and YouTube. The company uses these platforms to promote its products, engage with customers, and offer exclusive deals and discounts to its followers.

Through its multi-channel distribution network, Walmart provides customers with different options to purchase products, enhancing convenience and accessibility. The company's channels help it reach a broader customer base and improve its brand awareness while providing customers with a seamless shopping experience.

  • Value Shoppers: Customers who are price-sensitive and are looking for the best deals and discounts on various products.
  • Everyday Shoppers: Customers who frequently shop at Walmart for their daily needs and necessities, such as groceries, household items, and personal care products.
  • Families: Customers who shop at Walmart for their family needs, such as baby products, children's clothing, and toys.
  • Small Business Owners: Customers who shop at Walmart for their business needs, such as office supplies, equipment, and inventory.
  • Tech Enthusiasts: Customers who are interested in purchasing electronics, computers, and other technology-related products.

Walmart Inc. operates on a low-cost business model, aiming to provide low prices to customers while maintaining profitability. The company's cost structure includes the following key elements:

  • Procurement Costs: Walmart's procurement costs include sourcing products from suppliers, negotiating discounts, and managing the supply chain. The company leverages its scale to negotiate favorable terms with suppliers and reduce procurement costs.
  • Operating Costs: Walmart incurs various operating costs, including rent, utilities, payroll, and marketing expenses. The company's large store footprint and economies of scale enable it to keep these costs low relative to competitors.
  • Logistics and Distribution Costs: Walmart's logistics and distribution costs include transportation, warehousing, and inventory management expenses. The company utilizes a highly efficient logistics network that enables it to move products quickly and minimize costs.
  • Information Technology Costs: Walmart invests heavily in information technology, including e-commerce platforms, data analytics, and cybersecurity. The company's large-scale operations require advanced IT systems to manage inventory, supply chain, and customer data.

Overall, Walmart's cost structure is optimized to reduce expenses while maintaining quality and customer satisfaction. By keeping costs low, the company is able to offer competitive prices and increase its market share, while also generating profits for shareholders.

  • Retail Sales: The primary source of revenue for Walmart is the sales of a wide range of merchandise, including groceries, electronics, household items, and apparel. Through Walmart’s extensive network of brick-and-mortar stores and e-commerce platforms, the company generates revenue from the sale of products.
  • Membership Fees: Walmart offers a membership program called Walmart+ that includes benefits such as free delivery, discounts on fuel purchases, and mobile scan-and-go. Members pay an annual fee to access these benefits, which generate additional revenue for the company.
  • Financial Services: Walmart also generates revenue from its financial services, including money transfers, check cashing, and prepaid debit cards. These services are provided through Walmart Money Centers, which are available in many Walmart stores across the country.
  • Advertising and Promotions: Through Walmart Media Group, the company offers advertising and promotional services to brands and manufacturers. This includes opportunities for in-store advertising, sponsored product listings, and digital advertising on Walmart’s website and social media channels.
  • Third-Party Marketplace: Walmart’s e-commerce platform includes a third-party marketplace where merchants can sell their products to Walmart customers. Walmart generates revenue by taking a commission on each sale made through the marketplace.

In summary, Walmart generates revenue through the sale of products in its retail stores and online, membership fees, financial services, advertising and promotions, and commissions from third-party sales on its e-commerce platform.

After a thorough analysis of Walmart Inc. (WMT) using the Business Model Canvas, it is evident that the company has a robust model that has enabled it to dominate the retail industry. Walmart Inc. has an efficient value proposition that focuses on offering quality goods at a low price to its customers. The company's key partners include suppliers and investors, while its key activities revolve around procurement, logistics, and marketing.

  • The company's key resources are its low-cost supply chain and a vast network of stores globally.
  • Walmart Inc. has a diverse customer base, consisting of people from all walks of life.
  • The company employs a cost-driven revenue model, which allows it to reap profits from bulk sales.
  • Walmart Inc. has a strong customer relationship due to its efficient supply chain and customer service.
  • The company's key channels are its network of brick and mortar stores and its online presence.

Therefore, Walmart Inc.'s Business Model Canvas demonstrates that the company has a sustainable business model that has allowed it to enjoy success in the retail industry. By staying true to its value proposition, Walmart Inc. can maintain its competitive edge and thrive in an ever-changing business environment.

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How the giant is growing its retail business through click-and-collect grocery, subscriptions, and retail media

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Walmart is one of the biggest and most accessible retailers in the country. It’s the second-largest retailer by US ecommerce sales, behind Amazon, thanks in part to its strengths in grocery and its third-party marketplace. 

Though its core retail business is going strong, Walmart is also investing heavily in its other business units, including its retail media network, a B2B membership program, fulfillment services, financial and payment services, and healthcare services. 

In this guide, we break down Walmart’s business units; where it could be facing competition; and what this all means for retail marketers, advertisers, and more.

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Walmart’s history, business units, and revenues

Founded in 1962, Walmart has evolved from a brick-and-mortar retail store in Arkansas to a global retail powerhouse with multiple banners. Ninety percent of the US population lives within 10 miles of the nearly 4,616 Walmart stores across the country, per the retailer. These retail stores give Walmart US a vast network of distribution centers and supply chain networks. Outside the US, Walmart International operates more than 5,200 physical locations across 19 countries.

The Walmart Inc. corporation also includes Sam’s Club, a club retailer that was founded by Sam Walton in 1983 to help small businesses save money on merchandise purchased in bulk. Today, there are nearly 600 Sam’s Club stores in the US. 

Walmart’s business model includes its physical retail and ecommerce business, its retail media network, a B2B membership program, fulfillment services, financial and payment services, and healthcare services. 

Here’s a deeper dive into each business unit:

Walmart Retail

Walmart’s retail business includes its 4,616 Walmart US locations across the country, Walmart.com, and the Walmart mobile app . The grocery category is one of the driving forces of Walmart’s ecommerce and in-person retail success. The retailer also hopes to drive retail sales through its Walmart+ membership program. 

Despite the fact that its ecommerce business has more than tripled from 2019 to 2024, Walmart is still a distant second in a market dominated by Amazon. Walmart Inc. will grow its US ecommerce sales by 13.5% in 2024 to reach $94.11 billion, a fraction of Amazon’s 2024 US ecommerce sales, totaling $492.23 billion, per eMarketer’s forecasts. 

walmart retail ecommerce sales

Walmart’s US ecommerce business is being driven both by its strength in grocery and its third-party marketplace. 

Walmart’s digital grocery business surged in 2020 as consumers leaned on online shopping and delivery during the pandemic. But even now that pandemic-era habits have normalized, Walmart’s grocery business is still booming as inflation on food and beverage prices has increased average transaction values and attracted more higher-income consumers looking to save money. 

In 2024, Walmart Inc.’s US grocery ecommerce sales will reach $58.92 billion and make up 26.9% of total grocery ecommerce sales in the US, per eMarketer’s November 2023 forecast. 

Click and collect, online grocery ordering that a customer picks up either in-store or curbside at the store, will be a big contributor to Walmart’s grocery success, according to eMarketer’s The Power of Walmart report. Click and collect’s share of total grocery ecommerce sales will continue to grow through 2027, when it will represent 40.7% of total US grocery ecommerce sales, per a January 2024 eMarketer forecast. This shift will directly favor Walmart, giving it an advantage over Amazon and Instacart, its two biggest competitors in digital grocery.   

Walmart Marketplace

In 2024, eMarketer forecasts Walmart’s marketplace ecommerce sales will reach $10.60 billion, a 17.5% increase YoY. A retail marketplace is an ecommerce site selling products from multiple third parties, sometimes in addition to their own products. 

By October 2023, Walmart Marketplace had doubled in size within 18 months to reach 100,000 active sellers, according to Marketplace Pulse research. It also offers around 400 million SKUs from marketplace sellers, per eMarketer’s US Retail Ecommerce Marketplaces Forecast 2023 report.

To keep current sellers loyal and attract new ones to the platform, Walmart announced a slate of new marketplace features at its seller summit, including enhanced fulfillment and logistics services for merchants. 

Walmart+, the company’s subscription membership service, launched with a bang in September 2020 but has struggled to sustain its initial growth, per The Power of Walmart . Five months after its launch, Walmart+ had between 7.4 million and 8.2 million members, according to Consumer Intelligence Research Partners as reported by Forbes.

“Walmart hasn’t disclosed the number of Walmart+ subscribers, but estimates from Morgan Stanley, cited by The Wall Street Journal, claimed Walmart+ had 16 million members in May 2022, up from 15 million in November 2021. Consumer Intelligence Research Partners said subscribers reached 11 million in July 2022, which was unchanged from April 2022,” as detailed in The Power of Walmart . 

In 2024, the number of Walmart+ users will grow 8.8% to reach 31.8 million, according to eMarketer’s March 2023 forecast. 

Twenty-five percent of respondents ages 18 to 34 had access to a Walmart+ membership, according to a December 2023 eMarketer survey conducted by Bizrate Insights. That’s a higher figure than for other age groups.

which retail membership services do US adults pay for

In the hopes of competing better with Amazon Prime, Walmart has added a variety of perks to its Walmart+ membership, including a cash-back rewards program, a members-only sales event, free home pickup for returns, and exclusive access to a limited-edition Oreo flavor, per eMarketer’s Retail Memberships Forecast 2023 report. However, Prime still offers more comprehensive media features than Walmart+, including video streaming, music, and podcasts.

Private label

In early 2023, Walmart said it would begin marketing its private label products as less expensive alternatives to name-brand goods. In addition, CEO Doug McMillon said the retailer would keep its private label brands—which include Great Value, Equate, George, and Wonder Nation—priced low in an effort to bring inflation down.

Consumer preference for private label has remained strong despite easing grocery inflation, with 90% of consumers saying they are likely to keep purchasing store brands even if inflation and grocery prices fall, per a report by FMI—The Food Industry Association.

Advertising and Walmart’s retail media network

Though ad revenues remain a small fraction of its business, Walmart Connect will be the fastest-growing retail media network we track in 2024, growing 39.5% to reach $4.45 billion in ad revenues, per eMarketer’s October 2023 forecast. 

Once again, Walmart is a distant second to Amazon, which will generate $44.26 billion in US ad revenues in 2024. 

retail media ad revenues by company in the US 2023

Walmart’s advertising capabilities include search, display, connected TV (CTV) , social, and in-store digital media. 

  • Search represents the majority of the Walmart Connect business today, but other capabilities are growing in importance as retail media moves further up the funnel. 
  • Walmart DSP, Walmart’s demand-side platform (DSP) built in partnership with The Trade Desk, provides access to digital ad inventory on third-party publishers and CTV, likely encouraging more brand advertising investment.
  • Walmart’s partnerships with Roku, TikTok, and Snap offer marketers the ability to advertise across social and CTV. 
  • As it continues to build out its advertising business, Walmart is bringing retail media in-store , focusing on ad formats like audio and product demos, per the company.

To help advertisers better understand and leverage its retail media network, Walmart introduced an ad certification program that covers the breadth of Walmart’s ad capabilities, including on-site, off-site, in-store, and omnichannel ad formats.

  • It also provides more in-depth coverage on sponsored products, sponsored brands, and sponsored video ads. 
  • Eventually, Walmart Connect plans to add courses on display ads, Walmart’s DSP, in-store advertising, and its new Brand Shops, which the retailer announced at its first seller summit in August 2023.

As the retail media channel evolves, Walmart’s physical footprint, strong ties to consumer packaged goods brands, and partnerships with streaming and social platforms will help it attract and keep advertiser clients looking to reach customers across many different channels. 

Walmart’s other business units

Outside of its core retail business, Walmart has several other business units, including a B2B membership, fulfillment services, financial and payment services, and healthcare services. 

Walmart Business 

Launched in January 2023, Walmart Business is a membership for small and medium-sized businesses that offers free shipping, free pickup and delivery from store, as well as rewards and savings opportunities. 

Since then, Walmart has also launched a Walmart Business app , revamped the ordering process to make it easier to order in large quantities, partnered with professional services platform Angi, and added a tool to help businesses track their organizational spending. 

With this membership service, Walmart hopes to gain a piece of the $2.091 trillion in B2B ecommerce site sales that eMarketer forecasts for 2024. 

Walmart Fulfillment Services

Walmart Fulfillment Services (WFS), which launched in February 2020, is tightly linked to the expansion of Walmart Marketplace and is crucial to fueling an Amazon-style flywheel , according to The Power of Walmart. 

“Third-party sellers are strongly encouraged to take advantage of WFS benefits, which include prioritized search results that highlight two-day shipping, management of customer service, and acceptance of returns via Walmart’s extensive store network, including the recent addition of curbside returns,” the report said.

In October 2023, Walmart announced plans to open its fifth “next-generation” fulfillment center in Stockton, California, in 2026. The 900,000-square-foot facility will increase its fulfillment capacity for West Coast online orders. The retailer said that the next-generation facilities operate far more efficiently than its other centers because they use automation to condense its 12-step fulfillment process down to five steps.

Financial and payment services  

Walmart offers low-cost banking and alternative financial services at more than 4,700 Walmart stores, which contribute close to $2 billion to the retailer’s bottom line, per The Power of Walmart. Usually housed within its MoneyCenter store-within-a-store concept, shoppers can find prepaid cards and gift cards as well as a host of payment-related services , including check cashing, tax preparation, and money transfer services. Customers can also pay bills, reload prepaid accounts, and apply for Walmart’s private label and co-branded credit cards. In fact, 700 retail store locations include full-service bank branches operated via lease agreement.

Walmart Pay, the retailer’s proprietary mobile wallet, lets customers make mobile payments at its more than 3,500 US Supercenters (i.e., larger stores that offer full ranges of merchandise beyond grocery). It lets customers select a payment method (including credit, debit, prepaid, and gift cards) before using the app to scan a QR code displayed on the register. It cannot be used at fuel pumps or Sam’s Club stores.

Healthcare services 

“ Walmart’s healthcare ambitions are decidedly retail-centric: It aims to give consumers another reason to visit a Walmart Supercenter. That philosophy is built into the 48 Walmart Health clinics now operating in five states. But that modest footprint isn’t going to impact the US healthcare industry in any major way,” per The Power of Walmart. 

However, its health and wellness division (including Walmart Health), is a tightly integrated part of its flywheel.

Walmart’s retail ecommerce competitors 

Walmart faces competition from both the ecommerce and physical retail sides.

top US retailers ranked by total sales 2022

Amazon is the top ecommerce retailer in the US . In fact, it’s larger than the next 15 largest US ecommerce retailers combined. In 2024, Amazon will grow its retail ecommerce sales by 11.5% to reach $492.23 billion, according to eMarketer’s November 2023 forecast.

To better compete with Amazon and steal market share from its Prime Day events, Walmart has begun hosting its own version of the sales event during the same time period.

As a third-party marketplace platform, Shopify directly competes with Walmart’s marketplace model . Shopify’s retail ecommerce sales will reach $117.34 billion in 2024, an 8.5% increase YoY, per eMarketer’s April 2023 forecast. 

Previously, Shopify also offered logistics services, but in May 2023, the company announced it would offload the offering to cut costs. 

Target competes with Walmart in both brick-and-mortar and ecommerce sales, but without Walmart’s strong grocery business, it struggles to keep up . In 2024, Target’s US grocery ecommerce sales will grow 7.5% to reach just $8.10 billion (compared with Walmart Inc.’s estimated $58.92 billion), per eMarketer’s November 2023 forecast. Target’s total US retail ecommerce sales will grow slower at 4.1%, reaching $21.01 billion in 2024. 

The opportunity Walmart offers marketers and advertisers

Walmart’s flywheel—powered by its ecommerce, advertising, and fulfillment businesses—enable marketers to promote, sell, and ship their products to customers across the US. The retailer’s physical reach helps brands connect with hard-to-reach customers, like older generations who prefer to shop in-store or those in rural areas.

Walmart’s innovation within its retail media business also provides value to its advertisers. New ad formats like CTV and in-store media offer creative ways to engage with customers, while its ad certification program ensures marketers are able to maximize the effectiveness of their campaigns.

The retailer’s other business units, including its healthcare and payment networks, help the retailer embed itself into every facet of customers’ lives, giving advertisers a multitude of touchpoints to reach their audience. 

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The Strategy Story

How does Walmart make money: Business Model & Supply Chain Strategy

Walmart helps people worldwide save money and live better – anytime and anywhere – by providing the opportunity to shop in retail stores and through eCommerce and access its other service offerings. 

Through innovation, Walmart strives to continuously improve a customer-centric experience that seamlessly integrates its eCommerce and retail stores in an omnichannel offering that saves time for the customers. Each week, Walmart serves approximately 230 million customers who visit more than 10,500 stores and numerous eCommerce websites under 46 banners in 24 countries. 

Walmart’s business strategy is to make every day easier for busy families, operate with discipline, sharpen the culture and become more digital, and trust a competitive advantage. 

Price leadership has been a cornerstone of Walmart’s business strategy and model. By leading on price, Walmart earns customers’ trust by providing a broad assortment of quality merchandise and services at everyday low prices (“EDLP”). 

EDLP is Walmart’s pricing philosophy and business strategy under which it prices items at a low price daily, so customers trust that prices will not change under frequent promotional activity. Everyday low cost (“EDLC”) is Walmart’s commitment to control expenses so the cost savings can be passed to customers. 

Let’s closely analyze the business model and supply chain strategy of Walmart.

Business Model Analysis of Walmart

Walmart has global operations of retail, wholesale and other units, as well as eCommerce, located throughout the U.S., Africa, Canada, Central America, Chile, China, India, and Mexico. The business model of Walmart makes money from three segments: Walmart U.S., Walmart International, and Sam’s Club. Walmart made $567.8 billion in fiscal 2022 through these three segments. Each component contributes to the Company’s operating results differently.

Walmart U.S. Segment

Walmart U.S. is the largest segment and operates in the U.S., including in all 50 states, Washington D.C. and Puerto Rico. Walmart U.S. is a mass merchandiser of consumer products, operating under the “Walmart” and “Walmart Neighborhood Market” brands and walmart.com and other eCommerce brands. Walmart U.S. had net sales of $393.2 billion for fiscal 2022, representing 69% of Walmart’s revenue in fiscal 2022.

Omni-channel : Walmart U.S. provides an omnichannel experience to customers, integrating retail stores and eCommerce through services such as pickup and delivery, ship-from-store, and digital pharmacy fulfillment options. As of January 2022, Walmart had approximately 4,600 pickup locations and more than 3,500 same-day delivery locations. 

Walmart+ membership offers enhanced omnichannel shopping benefits that include unlimited free shipping on eligible items with no order minimum, unlimited delivery from the store, fuel and pharmacy discounts, and mobile scan & go for a streamlined in-store shopping experience. 

Merchandise : Walmart U.S. does business in three strategic merchandise units, listed below:

  • Grocery consists of a full line of grocery items, including dry groceries, snacks, dairy, meat, produce, deli & bakery, frozen foods, alcoholic and nonalcoholic beverages, as well as consumables such as health and beauty aids, pet supplies, household chemicals, paper goods, and baby products;
  • General merchandise includes Entertainment (e.g., electronics, toys, seasonal merchandise, wireless, video games, movies, music, and books); Hardlines (e.g., automotive, hardware and paint, sporting goods, outdoor living, and stationery); Apparel (e.g., apparel for men, women, girls, boys, and infants, as well as shoes, jewelry, and accessories); and Home (e.g., housewares and small appliances, bed & bath, furniture and home organization, home furnishings, home decor, fabrics, and crafts).
  • Health and wellness include pharmacy, over-the-counter drugs, medical products, optical services, and other clinical services.

The Walmart U.S. business also includes an in-house advertising offering via Walmart Connect, supply chain and fulfillment capabilities to online marketplace sellers via Walmart Fulfillment Services, and access to quality, affordable healthcare via Walmart Health. 

In Fiscal 2022, Walmart’s U.S. initiatives also included the launch of a B2B last-mile delivery service platform via Walmart GoLocal, and Walmart Luminate, which provides a suite of data products to merchants and suppliers. 

Additional service offerings include fuel, financial services, and related products (including through digital channels, stores, and clubs as well as its previously announced fintech joint venture), such as money orders, prepaid access, money transfers, check cashing, bill payment, and certain types of installment lending. 

Distribution & supply chain strategy : Walmart U.S. has a total of 157 distribution facilities from which the majority of Walmart U.S.’s purchases of store merchandise are shipped. General and dry grocery merchandise are transported primarily through the segment’s private truck fleet. Walmart ships merchandise purchased through eCommerce platforms by many methods from multiple locations, including its 31 dedicated eCommerce fulfillment centers, or delivers directly from more than 3,500 stores. 

Walmart International Segment

Walmart International is the second largest segment, operating in 23 countries outside the U.S. as of January 2022. Walmart International operates through wholly-owned subsidiaries in Canada, Chile, and China and majority-owned subsidiaries in Africa, India, Mexico, and Central America. Walmart International had net sales of $101.0 billion for fiscal 2022, representing 18% of Walmart’s revenue.

Walmart International includes numerous formats divided into two major categories: retail and wholesale. These categories consist of many formats, including supercenters, supermarkets, hypermarkets, warehouse clubs (including Sam’s Clubs), cash & carry, and eCommerce through walmart.com.mx, walmart.ca, flipkart.com, and other sites. 

Walmart International’s strategy is to create strong local businesses powered by Walmart, which means being locally relevant and customer-focused in each market it operates. 

Omni-channel : Walmart International provides an omnichannel experience to customers, integrating retail stores and eCommerce, such as through pickup and delivery services in most of its markets, its marketplaces such as Flipkart in India, and a digital transaction platform anchored in payments such as PhonePe in India. 

Same-day delivery capacity continues to expand in Mexico, including the launch of a membership model which provides unlimited same-day delivery from stores. In China, Walmart’s partnerships with JD.com and JD Daojia provide customers with one-hour delivery by leveraging Walmart stores as fulfillment centers. 

A value-based internet and telephone service was recently launched in Mexico, allowing customers to enjoy digital connectivity. Generally, retail units’ selling areas range from 1,400 square feet to 186,000 square feet. Walmart’s wholesale stores’ selling areas range from 24,000 square feet to 158,000 square feet. On January 31, 2022, Walmart International had approximately 2,900 pickup locations and over 1,900 delivery locations. 

Merchandise : The merchandising strategy for Walmart International is similar to that of Walmart U.S. in terms of the breadth and scope of merchandise offered for sale. While brand name merchandise accounts for most of its sales, Walmart has leveraged U.S. private brands and developed market-specific private brands to serve customers with high-quality, low-priced items. 

In addition, Walmart has developed relationships with regional and local suppliers in each market to ensure reliable sources of quality merchandise equal to national brands at low prices. Walmart International also offers advertising, financial services, and related products in various markets, but they do not contribute significantly to Walmart’s revenue.

TESCO – British Retailer that redefined Grocery Shopping

Distribution & supply chain strategy : Walmart has 179 distribution facilities in Canada, Central America, Chile, China, India, Mexico, and South Africa. Through these facilities, Walmart processes and distributes both imported and domestic products to the operating units of the Walmart International segment. 

Across the segment, Walmart connects physical stores and distribution and fulfillment centers which facilitate the movement of goods. Walmart ships merchandise purchased on its eCommerce platforms from its 83 dedicated eCommerce fulfillment centers, more than 3,400 eCommerce sort centers, last-mile delivery facilities in India, and physical retail stores.

Sam’s Club Segment

Sam’s Club operates in 44 U.S. and Puerto Rico states. Sam’s Club is a membership-only warehouse club that also operates samsclub.com. Sam’s Club had net sales of $73.6 billion for fiscal 2022, representing 13% of Walmart’s revenue. As a membership-only warehouse club, membership income is a significant component of the segment’s operating income. 

Membership : The following two options are available to members. 

walmart business model canvas

All memberships include a spouse/household card at no additional cost. Plus Members are also eligible for free shipping on most merchandise, with no minimum order size, and receive discounts on prescriptions and glasses. Members may redeem Sam’s Cash on purchases in the Club and online to pay for membership fees or cash in clubs. 

Omni-channel : Sam’s Club provides an omnichannel experience to customers, integrating retail stores and eCommerce through such services as Curbside Pickup, mobile Scan & Go, ship-from-club, and delivery-from-club. The warehouse facility sizes generally range between 32,000 and 168,000 square feet, with an average size of approximately 134,000 square feet. 

Merchandise : Sam’s Club offers merchandise in the following five merchandise categories:

  • Grocery and consumables include dairy, meat, bakery, deli, produce, dry, chilled or frozen packaged foods, alcoholic and nonalcoholic beverages, floral, snack foods, candy, other grocery items, health and beauty aids, paper goods, laundry and home care, baby care, pet supplies, and other consumable items;
  • Fuel, tobacco, and other categories;
  • Home and apparel includes home improvement, outdoor living, gardening, furniture, apparel, jewelry, tools and power equipment, housewares, toys, seasonal items, mattresses, and tire and battery centers;
  • Technology, office and Entertainment include consumer electronics and accessories, software, video games, office supplies, appliances, and third-party gift cards; and 
  • Health and wellness include pharmacy, optical and hearing services, and over-the-counter drugs. 

Distribution & supply chain strategy : Walmart has 28 dedicated distribution facilities located strategically throughout the U.S. Some of the Walmart U.S. segment’s distribution facilities service the Sam’s Club segment for certain items. Most of Sam’s Club’s non-fuel club purchases are shipped from these facilities, while the remainder is shipped directly to Sam’s Club locations by suppliers. 

Sam’s Club ships merchandise purchased on samsclub.com and through its mobile commerce applications by several methods, including shipments made directly from clubs, 12 dedicated eCommerce fulfillment centers, and other distribution centers. Sam’s Club uses a combination of Walmart’s private truck fleet and common carriers to transport non-perishable merchandise from distribution facilities to clubs. 

Overall Supply Chain strategy of Walmart

As a retailer and warehouse club operator, Walmart utilizes a global supply chain strategy that includes U.S. and international suppliers from whom it purchases merchandise in its stores, clubs, and online. 

In many instances, Walmart purchases merchandise from producers near the stores and clubs where such merchandise will be sold, particularly products in the “fresh” category. Walmart offers its suppliers the opportunity to sell significant quantities of their products to Walmart efficiently. 

These relationships enable Walmart to obtain pricing that reflects the volume, certainty, and cost-effectiveness these arrangements provide to such suppliers, allowing it to offer low prices to customers. 

Walmart’s ability to acquire from its suppliers the assortment and volume of products, to receive those products within the required time through its robust supply chain strategy, and to distribute those products to its stores and clubs, determines the attractiveness of Walmart’s merchandise assortment.

Walmart strongly focuses on building a sustainable supply chain in its business model.

  • With respect to people, Walmart’s sustainability efforts focus on sourcing responsibly, helping prevent forced labor, empowering women, creating inclusive economic opportunities, and selling safer, healthier products. 
  • With respect to the planet, Walmart’s efforts aim to enhance the sustainability of product supply chains by reducing emissions, protecting and restoring nature, and reducing waste. 

To help address the effects of climate change, Walmart has set science-based targets for emissions reduction to achieve zero emissions in operations by 2040 —without offsets—and to reduce or avoid one billion metric tons of emissions in its value chain by 2030.

Information Source:  Walmart Annual Report Fiscal 2022

walmart business model canvas

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Walmart Business Model and How it Makes Money

Walmart is a household name in the USA and many other parts of the world. Well-known for its retail store chain, Walmart is the world’s leading retail corporation. Its main competitors, such as Tesco, Kroger, Costco, Alibaba don’t even come close to its popularity and business. One of the reasons why Walmart is so successful in its operations is its focus on low-cost products that provide value.

For an even better analysis of why Walmart is successful and generates billions in revenues each year, it is critical to look at its business model. The business model of a company shows the markets it operates in and how it generates revenues. For Walmart, the business model is not as simple as the company has an international presence and business ventures in multiple markets.

Walmart’s Business Model

Walmart’s business model consists of the products it sells. Similarly, it includes its strategies used in generating revenues. As mentioned, Walmart focuses on low-priced goods but generates its revenues by depending on a higher volume of sales. However, its business model is more complicated than just defining its sales strategy.

Walmart’s Products

The primary source of revenue for Walmart comes from the wide range of products that it sells in its stores. While it is impossible to list every product that Walmart sells, some of the popular categories in which it sells products include the following.

  • Auto-related suppliers.
  • Craft suppliers.
  • Electronics.
  • Health and beauty.
  • Home décor and furniture.
  • Pet supplies.
  • Sporting and fitness goods.

However, Walmart also offers products in the services industry. While it is well-known for its retail shops in the industry, the services that it provides also generates income for the company. Some of the services rendered by the company include the following.

  • Financial services.
  • Clinical and health services.
  • Movie streaming services.

Apart from its products and services, Walmart’s business model also contains all its segments in various countries.

Walmart’s Segments

There are three primary segments of Walmart based on geographical location.

Walmart USA

Walmart USA is the company’s largest segment and also its oldest. The company has stores in 50 stores across the USA. This segment mainly consists of the stores that the company operates, such as supercenters, discount stores, and other small stores. It also contains other services such as money orders, prepaid cards, wire transfers, and bill payments, which fall under financial services.  

Walmart also operates a website that caters to the needs of customers in this segment. Through it, the company gives customers access to merchandise and other services. It also has a feature where customers can interact with physical stores through the website.

Walmart International

Besides the USA, Walmart also operates in 27 other companies where it has stores. In some of these countries, Walmart operates under the same brand while in others, it functions through its various subsidiaries and joint ventures under a different brand. Overall, it has 156 distribution facilities in these countries that provide physical access to its customers.

Named after Walmart’s founder, Sam Walton, Sam’s club is the final segment of Walmart’s business model. This segment consists of membership-only warehouse clubs in 44 states in the USA. It provides a subscription service to both individual customers and business owners. Similar to its other segments, the company also allows digital access to customers.

Walmart’s Revenues

Walmart generated net sales of $519.92 billion in revenues, which was an increase of approximately 2% from the $510.33 billion net sales it generated in 2019. It also earns from other sources, but there hasn’t been a significant change in it. Here’s a breakup of the total revenues generated in both years classified by segment.

From the above breakup, it is apparent that Walmart US is the company’s largest earner making almost 66% and 65% of its net sales in 2020 and 2019 respectively. After Walmart US, Walmart International is the second-highest earner for the company, with 23% and 24% of the overall net sales in both years respectively. Lastly, any remaining net sales come from its Sam’s Club segment.

The net sales of the company consist of all sales revenues, net of sales tax, and estimated sales returns, at the time it sells merchandise or services to its customers. The company calculates its estimated sales returns based on expected returns. It also includes eCommerce sales, including shipping revenue, and recorded when it delivers goods to customers.

Apart from its net sales, the company also generates revenues from membership fees. These fees include revenues from both the US and the international segment. For 2020, the revenue generated from membership fees was $1.5 billion, while for 2019, it was $1.4 billion. Walmart Plus membership is the primary source of income in this category.

The other sources of revenues that Walmart generates comes are gift cards and financial and other services. Gift cards are common in the US and some other countries and do not have an expiration date. Customers can buy these and gift them to others. However, these are not a big part of Walmart’s sales.

Similarly, its financial and other services mainly include revenues from its MoneyCard service. These revenues are not a part of its other income but included in net sales for each segment.

Walmart’s Business Model Strategies

There are a few strategies that power Walmart’s business model. Based on these strategies, the company has become the world’s largest retailer and continues to attract customers in various countries. Some of these strategies are as below.

Lead on Price

The first strategy used by Walmart is ‘Lead on price’. With this strategy, the company maintains low prices so everyone can afford its products. This strategy has worked wonders for the company over the years. It has been one of the prominent factors in its success. While this strategy may sound unfruitful, it helps the company generate high volumes of sales, which make up for the low prices of its products.

Invest to Differentiate on Access

The second strategy used by Walmart is the ‘Invest to differentiate on access’ strategy. Through this strategy, the company increases its retail shops giving customers access to a new location. Similarly, the company is investing in digital marketing and retail. It is to keep up with the technology changes, which can bring in new customers. Likewise, Walmart is also investing in services that are relatively difficult to access through this strategy.

Be Competitive on the assortment

The next strategy that helps the company generate revenues and in its business model is the ‘Be competitive on assortment’ strategy. Walmart promotes the assortment of products and large varieties of items across its physical stores and digital portals. It also customizes its products according to the geographical location in some cases. It helps the company attract the maximum number of customers.

Deliver a Great Experience

Furthermore, the company uses a ‘Deliver a great experience’ strategy that focuses on the customer experience. It is one of the main focuses of Walmart’s business model. The company is the world’s largest employer in the private sector, with 2.2 million employees. To focus on its customer care and relations, the company focuses on its employees to achieve the best results.

Money-Back Guarantee

Lastly, the company also offers customers a “Money-back guarantee”, which is a part of its strategy. Through this strategy, the company achieves maximum customer satisfaction and attracts the most customers in its given locations.

Walmart is the world’s largest retail company that has a significant competitive advantage over others. The company’s success lies in its business model. Walmart’s business model consists of its products, which include both physical products and services. Similarly, it has three segments from which it earns money. Walmart generates revenues from these products and services from its different market segments. Likewise, the company uses strategies that help in its business model.

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  • Walmart Business Model Explained - Bottom Line

Everyone knows Walmart, the famous US retailer, but few know its unbelievable history and steady growth. Walmart appeared in the ’60, and now operates a wide range of stores, including supermarkets, hypermarkets, neighborhood markets, department stores, grocery stores, and discount shops. Below, you’ll find Walmart’s business model explaine d in detail.

This will give you further insight into how this business developed and became successful nationwide. Walmart would be the world’s largest business if we considered annual revenue. Keep reading for the full Walmart business model explained.

  • Walmart was launched in the ’60, and it quickly became one of the largest chain stores in the US;
  • By 2022, the company became the most successful business in the world, with annual revenues of approximately $570 billion;
  • Walmart is the world’s second-largest employer in the private sector, with around 2.2 million employees. Amazon occupies the first place;
  • The company’s business model focuses on four important market segments: within the US, the international market, Sam’s Club, and the brand’s mobile app.

Walmart’s Business History

Let’s see how Walmart went from one store to a vast network of brick-and-mortar and  online shops .

The first  Walmart  store was opened in 1962 in Rogers, Arkansas. Sam Walton, the founder, had a clear marketing strategy: providing the lowest prices on the market, anywhere, anytime. By 1967, Walmart had become a store chain with 24 physical locations. As a result, sales were rising, reaching nearly $13 million.

In 1970, Walmart’s national appeal spread more than ever before. The company had had incredible growth over its first decade of existence. Around this time, the business becomes publicly traded, with one share costing $16.50.

By 1975, Walmart had already been listed on the NYSE (New York Stock Exchange). Before opening its first pharmacy, in 1978, Walmart had over 50 stores and a whopping sales total of almost $80 million. The company established the Walmart Foundation in 1979.

The ’80s represented a decade of many new and exciting things for the business, including the opening of the original Walmart Supercenter. This store mixed general merchandise with supermarket items. The chain had 21,000 employees, 276 stores, and annual sales of $1 billion.

Another fantastic innovation that Walmart revealed was computerized point-of-sale systems. These revolutionized the process of grocery shopping while offering customers quick and accurate checkouts.

The Walton Family Foundation appeared in 1987, the same year in which Walmart linked the corporation’s communication systems and its operations through video, voice, and data, all combined. That’s possible due to the most extensive private satellite system ever seen in the US.

By 1990, Walmart becomes US’s number one retailer. The  company’s strategy  focuses more on boosting convenience and going international. The first international location was opened in Mexico City in 1991.

Sam Walton, the owner, died in 1992 at the age of 74. His son, Rob Walton, takes on the family’s business and responsibilities. In 1994, the first Canadian stores appeared, followed by an expansion into the Chinese market in 1996. The growth continues because Walmart acquired the UK-based Asda. By 2002, Walmart’s clients could do their shopping online.

After the company’s penetration into the Japanese market, its representatives state their commitment to environmental sustainability. They focused on three main aspects:

  • Using renewable energy;
  • Creating zero waste;
  • Selling sustainable products.

In 2010, Walmart focused more on sustainable agriculture and innovating the retail environment. It did that by supporting local farmers and helping customers save money. The company celebrated 50 years of existence in 2012. By 2015, the retailer served over 200 million customers per week in 27 countries.

This famous store chain changed its legal name to Walmart Inc. in 2018, the same year Judith McKenna became CEO and President of the entire corporation. In 2019, the company launched its InHome Delivery service, and in 2022, it celebrated its 60th anniversary.

Walmart Business Model Explained – How Does It Work?

The company’s mission statement is about  helping customers save money , enjoy highly convenient shopping sprees, and lead better lives. So, as you can see, Walmart’s business model is quite simple, very clear, and straightforward: offering the lowest prices on the market.

  • Mission  – helping people save a lot of money that they would’ve spent on groceries;
  • Value proposition  – offering a wide range of affordable products in a highly convenient manner;
  • Selling channels  – physical stores, their online shop, and mobile app.

Walmart’s Strategy Pillars

Walmart relies on five business pillars that support and create the company’s strategy.

Keeping prices as low as they can is the main focus at Walmart. The company’s managers want to ensure the products they sell are affordable and accessible to the whole population. The retailer made efforts to create the world’s largest supply and distribution chain to keep those prices low. That’s possible due to Walmart’s bulk purchases, which tremendously increase its negotiating power.

Sam’s Club, an important part of Walmart, relies on  cross-docking  to support its affordable prices. This redistribution system operates in an intelligent and organized manner. The products that arrive in the retailer’s warehouses are directly sent to the point of sale or clients. Cross-docking is the opposite of traditional stored goods.

Both these tactics are unique, offering Walmart substantial leverage that helps it differentiate from its main competitors.

Walmart’s business model enables the retailer to provide its customers with a wide range of products and services. Some are sourced from local producers, while others come from international suppliers. Further on, the company sells this wide variety of items across its physical stores and online shops.

This approach has helped Walmart create and develop a massive customer database.

The retailer has made numerous investments in its attempt to differentiate on access. It did that as a response to all the new and competitive strategies other businesses introduced over the years. Although most people still think about supermarkets or hypermarkets when they hear about Walmart, the company diversified its population access.

It did that through small stores where you can find fresh food. Then, there are the online shops and the retailer’s mobile app through which Walmart enhanced its online shopping experience. Clients can purchase their desired items from their mobile phones and then pick them up from the local physical store. Finally, Walmart is the only US-based retailer that owns medical clinics and pharmacy stores.

Both these health services are less accessible than food, so Walmart’s decision to tackle this need was an intelligent business move. Besides wellness products, this company provides preventive health care and regular checkups. If that’s not disruptive and innovative, I don’t know what is?!

Walmart knows that gaining new clients and retaining existing customers can be achieved through a flawless shopping experience. The retailer has recently announced that they will increase their staff’s hourly wage. It’s an attempt that hopefully will lead to a customer satisfaction boost. Moreover, they plan to train or retrain their employees to achieve high ROI* and make their clients happy.

ROI* – return on investment 

Any Walmart client who finds the retailer’s services and products unsatisfactory will receive their money back due to the company’s money-back policy. Due to this approach, you can ensure you get the best and freshest veggies, fruits, and other high-quality items.

Walmart’s Operations

There are three market segments that Walmart covers:

  • The United States  – this is the largest Walmart market segment. It operates in all 50 US states as well as in Puerto Rico. This segment represented around 64% of the company’s net sales in 2018;
  • Walmart  International  – the retailer operates in 27 countries all over the globe. These operations can be found in wholesale, retail, and more. This segment consists of supercenters, hypermarkets, eCommerce, supermarkets, cash & carry, and warehouse clubs;
  • Sam’s Club  – speaking of clubs, this is a membership-only segment in the form of a warehouse club. Subscribers will have access to consumables, fuel, groceries, electronics, grills, home items, toys, office furniture, pharmacy products, and more.

Then, there’s also the  Walmart  mobile app . You can download it on both iOS and Android devices. Once installed, you can browse through millions of products sold by Walmart whenever and wherever you are. The app makes your life easier as a Walmart client by saving time and effort.

Furthermore, with this software, you can create customized shopping lists, scan bar codes, check a product’s availability or price, and identify the aisle location of a specific item.

Key Partners

Walmart’s key partners are trustworthy worldwide suppliers. Of course, being a giant global retailer means Walmart has numerous suppliers. But, some of them are more important than others, out of those 100,000 partners worldwide. Walmart’s partners could be grouped into different categories: technology collaborators, solution partners, service suppliers, etc.

This consumer goods business has a long history, being founded in 1837. All Walmart stores sell P&G products. Moreover, the supplier hoped on board when Walmart required tagging based on radio frequency identification.

Through Green Dot and Walmart partnership, the retailer’s clients benefit from the MoneyCard program. In 2019, they launched a checking account called GoBank. Green Dot Corporation serves consumers needing prepaid debit cards.

When Walmart was looking for an innovative fuel like hydrogen cell technology, it found Plug Power Inc. These two companies teamed up in their joint effort to reduce operational costs, power usage, and emissions. The supplier’s primary revenue comes from collaborating with two large market players: Amazon and Walmart.

For instance, Walmart refined its technology approach and machine usage by fueling its warehouse forklifts with energy cells.

Everyone who knows a bit about the tech industry knows what a significant player HP is in this niche. The company was launched in 1939 and had three market segments: corporate investments, personal systems, and printing. Walmart organized the Home Entertainment Design Challenge, and HP won that contest. This supplier has helped the retailer by lowering its computer packaging impact on the surrounding environment.

The retailer gets its self-service water dispensers from this supplier. Primo Water also supplies other major businesses like Lowe and Home Depot. Primo’s headquarters are located in North Carolina, and its 2021 revenue reached $2.07 billion.

  • Channel  partners – Acenda, BuzzFeed, Channel Sale, Clearoute, Deposco, Fitbit, OpenCart, ShippingChimp, etc.;
  • Technology  partners – ChannelAdvisor, eHub, Magento, Owler, ShipEngine, WooCommerce, etc.

Financial Performance

Walmart’s two main revenue streams are  retail sales and other services . First, the company gains a lot of money through product revenues and retail sales. These products are sold within the US and globally through their stores or local distributors.

Its financial performance is impressive, considering Walmart is one of the top Fortune 500 companies. In 2018, the company’s net sales were almost  $500 billion . 64% came from the US market, while Walmart International added 24%. The lowest proportion came from Sam’s Club – only 12%. It’s safe to say that Walmart has a massive  economic impact on the food retailing industry .

The company’s  gross profit  for this year (2023) is estimated at almost  $150 billion , representing an increase of nearly 3% compared to the previous year. Walmart’s updated  revenue  will exceed  $611 billion , an essential boost of 6.7% compared to 2022.

See also:  Home Depot Business History .

Walmart has two main customer segments:

  • Mass market;
  • Low-income clients.

The company applies two types of market segmentation:

  • Geographical  segmentation – based on your location, Walmart will sell specific items. For instance, if you live in a hot area where it doesn’t snow, you won’t find snow shovels in any Walmart store;
  • Demographic  segmentation – once the location is established, the retailer groups its customers by age to effectively cater to the client’s needs. Teenagers have different needs than young adults or senior customers.

There are three main product categories that Walmart sells:

  • Grocery  items – foods such as snacks, dairy, beverages, and others;
  • Health  and wellness – medical and pharmaceutical products;
  • General  merchandise – home items, apparel, entertainment goods, and hardlines.

Due to its low prices, Walmart’s main clients are individuals who want good-quality yet low-cost items. Some are people with low incomes, while others are simply searching for optimal cost benefits. In short, the company’s target audience would be  low to middle-class families  who live predominantly in rural areas.

Moreover, these clients want a quick shopping experience, one that’s convenient. They are students, workers, or floor-level employees who  seek the best cost advantage  out there.

Most of the retailer’s customer services are automated and simplified. For example, clients can  contact the company ‘s representatives via phone if they want to clarify something or offer a comment. Besides that, Walmart also offers a few other convenient contact ways through their mail address ( [email protected] ) and return policy.

Walmart’s marketing strategy relies on two pillars:

  • A high-sales volume approach;
  • Helping customers save money.

The retailer uses multiple advertising channels to promote its services, including outdoor billboards, TV commercials, online ads, and social media. It wants customers to see the brand as highly reputable and trustworthy.

Walmart’s Marketing Mix

  • Pricing  – everyday low prices by keeping costs as low as possible;
  • Product  – carefully selected products; high level of diversity; complementary goods; seasonal items;
  • Promotion  – based on the point of Sale and Point of Purchase. Besides commercials and ads, Walmart also invests in press releases and public relations;
  • Placement –  Walmart operates through over 150 distribution centers and its e-commerce store.

Future Plans

In the future, Walmart wants to do more than sell products. We expect a more  diverse   business model  based on seamless  omnichannel  distribution. They plan to provide  complementary products  to create a  one-stop shopping  experience. Its delivery service will continue to be greener and greener, more  sustainable , and more  environmentally friendly .

Regarding the company’s advertising revenue, the staff plans to grow this income stream. They also stated the intention to raise employee wages. We should keep watching Walmart to see what other innovations and disruptions it may do.

Let’s look at what Walmart does best and some of the market challenges it has to overcome.

  • Affordable products;
  • Convenience;
  • Highly trained staff;
  • International presence;
  • Advanced technology;
  • Multiple sales channels, both offline and online;
  • A wide range of available products.
  • A couple of employee lawsuits;
  • Having a business model that’s too simple;
  • Poor brand reputation in some cases;
  • A few situations of negative publicity;
  • High employee turnover;
  • Customer service that’s not good enough;
  • Relying too much on the US market.
  • Expansion possibilities;
  • Higher profit margins;
  • Automation tools development;
  • eCommerce expansion;
  • Better shopping experiences due to virtual reality;
  • The constant growth estimates regarding the eCommerce market;
  • Improving its human resources.
  • More regulations regarding wages, food, safety, and work benefits;
  • Fierce competition;
  • Increasing costs of labor and raw materials;
  • The risk of data breaches is rising;
  • The risk of new lawsuits could damage Walmart’s brand reputation.

Main Competitors

  • It’s the largest retailer worldwide;
  • It’s better than Walmart at item inventories, streaming services, and handmade goods;
  • Walmart is still better at selling fresh and affordable groceries.
  • The international leader in the retail food market;
  • Carrefour has lower revenues compared to Walmart;
  • Walmart has more affordable items;
  • Carrefour has a longer history of 55 years on the market;
  • Walmart has stores in only 27 countries, whereas Carrefour is present in 33 countries.
  • Walmart is more trusted than eBay because its Marketplace sellers are all verified and approved before they start selling;
  • eBay also works as an online auction platform;
  • The products featured on eBay are significantly higher than the ones marketed by Walmart.
  • Wholesale company with membership discount warehouses;
  • For higher prices, Costco provides premium goods and more opportunities;
  • Walmart is more approachable, having more stores and a larger footprint.
  • Markets only house improvement products, garden furniture, and building materials;
  • In the home improvement niche, Home Depot is more profitable than Walmart.
  • Very similar to Walmart in terms of products;
  • Target is smaller than Walmart and operates only within the US.

Answer : They buy in bulk from their suppliers. Hence, they can negotiate lower prices. This leads to lower costs and further translates into more affordable goods. 

Answer : A broad assortment of products sold at low prices every day, without exception. Also, one-stop shopping that’s highly convenient. These are Walmart’s strategy corner stones. 

Answer : Clients love this retailer because they find everything they need in one place at affordable prices. So, it’s easy and convenient, without the need to visit multiple stores and waste time.

Walmart Business Model Explained – Bottom Line

Walmart is an excellent example of a massive globally-scaled success. It focused on a simple yet appealing mission right from the start. Moreover, it sticks to that same value proposition to this day. Do you want a wide range of decent-quality products that are affordable? Walmart is the place to go. It helps middle-class people save money without compromising the overall experience and customer satisfaction.

The retailer’s business model relies on building a long-lasting and strong brand, developing a large customer base, and offering low-cost products while boosting the company’s sales.

All images: Walmart.com

Other useful reads:

  • Walmart value chain analysis
  • Insurance Value Chain Explained
  • Transnational Strategy Explained
  • Target Competitors Analysis: 5 Major Competitors
  • Home Depot Competitors Analysis: 6 of Its Biggest Competitors . 

Resources :

  • https://fourweekmba.com/walmart-business-model/
  • https://businessmodelanalyst.com/walmart-business-model/
  • https://thestrategystory.com/2022/12/01/how-does-walmart-make-money-business-model-supply-chain-strategy/
  • https://www.marketing91.com/business-model-of-walmart/
  • https://www.nbcnews.com/business/business-news/walmart-raise-hourly-wage-how-much-and-where-rcna67213
  • https://www.reuters.com/article/us-walmart-services-idUSKCN1PB2K9
  • https://www.retaildive.com/news/walmart-connect-ad-network-partnerships/628690/
  • https://www.annualreviews.org/doi/abs/10.1146/annurev-resource-111820-032827
  • https://www.nytimes.com/2022/11/15/business/walmart-inflation-sales-profit.html
  • https://www.forbes.com/sites/shelleykohan/2022/02/17/walmart-sets-its-sights-on-more-than-just-selling-stuff/
  • https://www.forbes.com/sites/walterloeb/2021/02/19/walmart-reports-2020-results-and-plans-for-future-growth/
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Walmart Business Model | How does Walmart Make Money ?

Company: Walmart Inc. (NYSE: WMT) Founders : Sam Walton Year founded: 1962 CEO: Doug McMillan Headquarter:  Bentonville, Arkansas Number of Employees (2023): 2.1 million Type: Public Market Capitalization (July 2023): $432.17 billion Annual Revenue (FY 2022) : $572.75 billion Net Income (FY 2022) : $13.67 billion

Products & Services:  Grocery, electronics, apparel, toys, and home furnishings (some stores also sell fuel) Means of Sales: Physical Stores and E-commerce. Competitors:   Target Corp , Costco , Dollar General, Dollar Tree, Family Dollar, Kroger , Amazon , Best Buy , and BJ’s Wholesale Holdings.

Table of Contents

Introduction to Walmart

Walmart is the largest enterprise in the world in terms of revenue. The retail giant operates 10,500 stores in 24 countries, offering thousands of products to over 230 million customers annually. Besides selling products from its stores, it also sells them via several E-commerce sites like Walmart, Sam’s Club, and Flipkart .

Walmart attracts customers by offering some of the industry’s lowest prices for groceries and merchandise. It does this by buying directly from the manufacturers and is precise with its expenses.

Sam Walton founded Walmart in 1962. He entered the variety retail industry when he opened a Ben Franklin chain variety store, threw away the traditional rules of running a retail shop, and developed his own. Even though he had to shut shop in a little while, the experience was a strategic success and helped him start Walmart.

Today Walmart is a retail behemoth . The company’s revenue grew from $44 million in 1970 to $572 billion in 2022, with share prices rocketing from $0.77 in 1982 to $146.67 in 2022.

Walmart’s Business Model

1. customer segments.

Walmart’s customer base comprises two segments:

  • Individual customers
  • Business customers

The firm markets to consumers through its two distinct brands . Walmart’s target demographic consists of middle-income and lower-income families who prefer to shop in one location. On the other hand, Sam’s Club caters primarily to the middle and upper-income groups.

Together, the two businesses have a massive customer base that spans the entire country and encompasses virtually every demographic.

2. Value Propositions

Walmart offers customers a range of products at the best possible price and in the most convenient way, living up to its motto of

“ Save Money. Live Better, “

It achieves this by focusing on a strategy that revolves around four key ideas:

  • Buy Cheap, Sell Cheap
  • Earn profits on volumes
  • Focus on customers
  • Avoid pointless expenses

The company has also renewed its focus on technology, investing more than $14 billion in automation technology , supply chain, and customer-facing initiatives in FY 2022.

3. Key Partners

Being the largest retailer in the world necessitates establishing a global network of distributors, suppliers, and manufacturers for the company to manage its massive supply chain effectively.

Over 100,000 vendors and 210 warehouses are on-board with the organization. Walmart’s distribution network is among the largest in the world, providing service to shops, warehouse clubs, and home delivery.

In addition, more than 11,000 individuals contribute to Walmart’s transportation system, which includes a fleet of 9,000 tractors, 80,000 trailers, and several other vehicles.

Some of the primary suppliers to Walmart include-

  • Plug Power Inc.
  • Proctor & Gamble
  • Hewlett-Packard
  • Green Dot Corp
  • Primo Water Corp

4. Key Activities

  • Buying Goods : Since Walmart is in the retail sector, it must frequently purchase various products from numerous categories. This method involves extensive negotiations and bulk purchases from suppliers and manufacturers. The company also distributes products under the Great Value
  • Transporting and Delivering Goods : The corporation sells around 120,000 distinct types of products. Most of these commodities are purchased in bulk, so the corporation must devote substantial resources to transportation. Additionally, the business must organize conveyance for home deliveries and in-store pickups.
  • Inventory Control : To ensure that its shelves are always stocked, it has to confirm an appropriate amount of inventory.

5. Key Resources

  • Human Resources : With approximately 2.1 million employees, the corporation is the largest private employer in the world. These individuals are vital to managing its over 10,500 stores, distribution hubs, and virtual infrastructure.
  • Mobile app and website: The corporation already reigns supreme among retail outlets. After experiencing intense competition from online retailers like Amazon , the company’s website and shopping app now account for a significant amount of its overall sales.
  • Stores: The company operates 10,500 Walmart and Sam’s Club locations. These retail locations generate the majority of Walmart’s revenue.

6. Key Acquisitions

After a certain point, every company augments the traditional organic growth route with strategic acquisitions . Walmart has also followed the same path, with some of its notable acquisitions such as:

  • Asda : Walmart Inc. owned this British supermarket until last year when it was sold to the EG group for more than GBP 6.8 billion.
  • Seiyu Group : Walmart owns a 15% stake in the Japanese retail company. Seiyu has more than 400 stores in Japan and is worth an estimated $13 billion.
  • Flipkart : Walmart acquired a 77% stake in the Indian E-commerce giant in 2018. Currently, Flipkart is India’s second-largest E-commerce company. It also owns other notable online companies like Myntra and PhonePe.
  • Massmart : It is the second largest distributor of goods in Africa. The company owns local brands like Makro, Game, and Jumbo, each occupying a different space in the consumer necessity and discretionary market. Walmart bought the company for $2.54 billion in 2011.

7. Key Competitors

The retail industry is ancient, mature, and overcrowded. Even though Walmart is the largest retail chain in the world, it still faces stiff competition from-

  • Amazon: Amazon has changed the game in the retail industry. It can offer customers products are extremely low prices since its overhead costs are next to nothing. The online retailer received a significant boost during the pandemic when retail stores were forced to shut down.
  • Costco: Costco offers the best hotdog and soda combo in the US and is also one of the favorite places to shop for consumers. Its strategy of a no-frills warehouse-like store that offers everything in bulk is a real challenge to the savings promised by Walmart.
  • Target: Just like Walmart, Target also focuses on savings, but it also focuses on online sales, with more than 18% of its revenue coming from online channels. It also has smaller stores with more premium-looking interiors and a youthful feel.
  • Dollar General: Dollar General is the largest discount retail chain in the US, with more than 18,000 stores. The company generally targets low-income demography and offers products at significantly low costs. In the current inflationary environment, with forecasts of a recession, Dollar General is expected to increase its footfall.

8. Channels

These are mid-sized stores offering a variety of value-priced items. The discount stores are spread across 107,000 square feet, employ about 225 associates and offer 120,000 items each.

These 24/7 large stores focus on offering customers the convenience of a one-stop shop. These stores have third-party restaurants, hair salons, banks, fuel stations etc.

Supercenters average 187,000 square feet, employ 350 or more associates on average and offer 142,000 different items.

These stores are the smallest of the lot and focus on delivering everyday items like groceries, pharmaceuticals and general merchandise. Neighborhood Markets have an average size of 42,000 square feet, employ 95 associates on average, and offer about 29,000 items.

This members-only warehouse club offers general merchandise and large-volume items at value prices to small business owners and families.

The average size of Sam’s Clubs stores is 132,000 square feet, employ around 160-175 associates, and roughly have 5,500 products.

The company generates a majority of its online revenue in the US from the following two sites:

  • samsclub.us

It also has a majority stake in the Indian E-commerce giant Flipkart.

9. Customer Service

Walmart has a long and distinguished history of putting customers first. The company’s founder, Sam Walton, invented the concept of door greeters. The organization also employs a workforce to provide customer service via chat, internet, and telephone, besides in-store customer support representatives.

Today, Walmart’s CRM strategy, customer service strategy , and customer experience initiatives work in tandem to develop customer loyalty that rivals most other retailers. According to InMarket , Walmart has the most loyal customer base of all retailers in the United States.

10. Walmart’s Cost Structure

Walmart is a wholesaler and retailer, acquiring goods from producers and suppliers.

  • The cost of buying and transporting these goods (cost of sales) was $429 billion in FY 2022, $9.3 billion more than FY 2021’s cost of sales of $420.3 billion.
  • Operating and SG&A costs (short for selling, general, and administrative) amounted to $117.8 billion in FY 2022, up $1.5 billion from $116.29 billion in FY 2021.

11. Walmart’s Revenue Streams

  • The company posted revenue of $567.76 billion for FY 2022, an increase of 2% over FY 2021.
  • Most of Walmart’s revenue (82%) was from the US, followed by its International business (18%).

Revenue Breakdown by geography

  • In FY 2022, groceries accounted for 56% of Walmart’s total income in the US, followed by general merchandise (32%), health and wellness (11%), and other categories (1%).
  • The company posted a net profit of $13.67 billion in FY 2022, slightly higher than the $13.5 billion profit in FY 2021.
  • Walmart also witnessed a surge in inventory from $44.95 billion in FY 2021 to $56.5 billion in FY 2022, indicating a slow movement of products.

Revenue

Final Thoughts

Walmart is #1 on the list of Fortune 500 companies in the United States for 2022. The annual list of Fortune 500 companies, compiled and published by Fortune magazine, ranks the most significant corporations in the United States in terms of revenue for the fiscal year.

The changes implemented by the company on how consumers shop have influenced the overall culture, leading to its robust growth.

Walmart’s business ethics have also provided investors with astronomical returns on equity. For instance, an investor who bought $1,000 worth of shares in 1972 when the company first listed on the NYSE would have seen its value rise to nearly $3 million at the end of 2022.

 References & more information

  • Walmart SEC filings: https://stock.walmart.com/financials/sec-filings/default.aspx
  • SimilarWeb: https://www.similarweb.com/top-websites/category/e-commerce-and-shopping/
  • Linda Shepherd for NCESC: https://www.ncesc.com/companies-owned-by-walmart/
  • Liz Flynn (2019, April 19): https://moneyinc.com/companies-you-didnt-know-walmart-owned/
  • Marianne Wilson (2021, November 06): https://chainstoreage.com/walmart-has-most-loyal-customers-us-followed-fred-meyer-meijer-and-target
  • Sandra Gudat (2022, May 2): https://www.customer.com/blog/retail-marketing/how-walmart-customer-loyalty-rose-to-the-top-and-stayed/
  • Elvin Mirzayev (2019, September 03): https://www.investopedia.com/articles/active-trading/070715/target-vs-walmart-whos-winning-big-box-war.asp
  • Walmart corporate website: https://corporate.walmart.com/
  • Yahoo Finance: https://finance.yahoo.com/quote/WMT?p=WMT&.tdata-src=fin-data-srch
  • Richard Best (2022, May 02): https://www.investopedia.com/articles/insights/050116/walmart-stock-analyzing-5-key-suppliers-wmt.asp
  • James Moore (2014, January 10): https://www.talkativeman.com/sam-walton-frugality-wal-mart/
  • Featured image by Marques Thomas

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Walmart: Business Model, SWOT Analysis, and Competitors 2023

Inside This Article

In this blog article, we will delve into the business model of Walmart, one of the largest retail corporations in the world. With a focus on providing affordable products to customers, Walmart has built a reputation for its low prices and wide range of offerings. We will also conduct a SWOT analysis to examine the company's strengths, weaknesses, opportunities, and threats. Additionally, we will explore the competitive landscape of Walmart, highlighting its key rivals in the retail industry as we look ahead to the year 2023.

What You Will Learn:

  • Who owns Walmart and the background of its ownership structure
  • Walmart's mission statement and how it guides the company's operations
  • The various ways in which Walmart generates revenue and sustains profitability
  • An explanation of the Walmart Business Model Canvas and how it applies to the company's success
  • Insight into Walmart's competitors and the challenges they pose
  • A comprehensive SWOT analysis of Walmart, highlighting its strengths, weaknesses, opportunities, and threats.

Who owns Walmart?

The walton family: a legacy of ownership.

When it comes to the question of who owns Walmart, the answer lies in the hands of one of the wealthiest families in the world - the Walton family. Walmart was founded by Sam Walton in 1962, and since then, it has grown into the largest retailer in the world. Sam Walton's vision and entrepreneurial spirit laid the foundation for the success of the company, and his family has continued to play a significant role in its ownership and management.

The Walton family's ownership of Walmart can be traced back to Sam Walton's descendants. After Sam Walton's passing in 1992, his fortune was divided among his immediate family members, primarily his wife, children, and grandchildren. Today, the Walton family collectively owns a majority stake in Walmart, with individual family members holding significant shares in the company.

The Walton Family's Influence on Walmart

The Walton family's influence on Walmart extends beyond their ownership stake. They have been actively involved in the company's management and decision-making processes. The family members have served on Walmart's board of directors and have held key executive positions. Their deep understanding of the company's values and principles has shaped Walmart's culture and business strategies over the years.

Moreover, the Walton family has played a crucial role in shaping Walmart's philanthropic initiatives. They have established the Walton Family Foundation, which focuses on supporting education, environmental conservation, and other charitable causes. Through their foundation, the family has made significant contributions to various communities and organizations around the world.

The Power of Family Ownership

The ownership of Walmart by the Walton family highlights the power of family ownership in shaping the destiny of a company. Their long-term perspective and commitment to the company's growth have been instrumental in Walmart's success. Unlike publicly traded corporations that are subject to the interests of various shareholders, family-owned businesses can often maintain a stronger sense of purpose and continuity.

The Walton family's ownership of Walmart has not been without criticism, with concerns raised about income inequality and the impact on small businesses. However, it is undeniable that their ownership has played a pivotal role in Walmart's rise to dominance in the retail industry.

In conclusion, the question of who owns Walmart is answered by the Walton family, who collectively own a majority stake in the company. Their ownership has been accompanied by a deep involvement in the management and decision-making processes, as well as a commitment to philanthropy. The Walton family's ownership exemplifies the power of family ownership in driving the success and shaping the future of a company.

What is the mission statement of Walmart?

Understanding walmart's mission statement.

Walmart, being one of the largest multinational retail corporations, has a clear and concise mission statement that guides its operations and strategies. The mission statement of Walmart can be summarized as follows: "We save people money so they can live better."

This mission statement emphasizes Walmart's commitment to providing affordable products and services to its customers. By offering low prices, Walmart aims to improve the quality of life for its customers, enabling them to live better within their means. Walmart strives to enhance the financial well-being of its customers by helping them stretch their budgets further.

Core Values supporting the Mission Statement

To achieve its mission, Walmart adheres to a set of core values that align with its overall purpose. These values include:

Customer Focus : Walmart places its customers at the center of everything it does. By understanding their needs and exceeding their expectations, Walmart builds long-term relationships with its customers.

Respect for Individuals : Walmart values diversity and treats every individual with respect and dignity. It encourages an inclusive and supportive work environment for its associates, fostering a sense of belonging and teamwork.

Strive for Excellence : Walmart is committed to continuous improvement and excellence in all aspects of its operations. It aims to be the best retailer by consistently delivering exceptional value, quality, and service to its customers.

Act with Integrity : Walmart conducts its business with the highest level of integrity and ethics. It follows all applicable laws and regulations, ensuring transparency and accountability in its operations.

Embrace Change : Walmart embraces change and innovation to stay ahead in the ever-evolving retail industry. It actively seeks new ideas, technologies, and strategies to enhance the shopping experience and drive business growth.

Impact on Walmart's Business Strategy

Walmart's mission statement serves as a guiding principle for its business strategy. The company focuses on three key strategic priorities to fulfill its mission:

Everyday Low Prices : Walmart's commitment to saving people money is evident through its "Everyday Low Prices" strategy. By leveraging its vast scale and efficient supply chain, Walmart strives to offer the lowest prices on a wide range of products, ensuring affordability for its customers.

Customer Experience : To help people live better, Walmart places significant emphasis on enhancing the overall customer experience. This includes improving store layouts, increasing product variety, and investing in online platforms to provide convenience and accessibility to customers.

Community Engagement : Walmart recognizes the importance of giving back to the communities it serves. Through various charitable initiatives, grants, and volunteer programs, Walmart actively contributes to the well-being and development of local communities, aligning with its mission to help people live better.

In conclusion, Walmart's mission statement reflects its commitment to saving people money and improving their lives. It highlights the core values of customer focus, respect for individuals, excellence, integrity, and embracing change. By aligning its business strategy with this mission, Walmart continues to be a leading global retailer, dedicated to serving its customers and communities.

How does Walmart make money?

Retail sales.

The primary source of revenue for Walmart is through its retail sales. As the largest retailer in the world, Walmart generates a significant portion of its income through the sale of a wide variety of products across multiple categories. From groceries and household goods to electronics and apparel, Walmart offers an extensive range of merchandise to cater to the diverse needs of its customers. By leveraging its massive network of stores and e-commerce platforms, Walmart is able to attract millions of shoppers, both in-store and online, resulting in substantial sales volume and revenue.

Walmart's Store Format

Walmart operates under different store formats, which contribute to its revenue generation. The company operates Walmart Supercenters, which combine a grocery store and general merchandise under one roof. These Supercenters offer convenience to customers by providing a one-stop shopping experience. Additionally, Walmart operates smaller-format stores such as Walmart Neighborhood Market, which focuses primarily on groceries and serves local communities. Each store format has its own revenue stream, further diversifying Walmart's income.

E-commerce and Online Sales

In recent years, Walmart has placed a strong emphasis on expanding its e-commerce presence to adapt to the changing retail landscape. Through its online platform, Walmart.com, the company has witnessed significant growth in online sales. Customers can purchase products from various categories, including electronics, home goods, clothing, and more, without having to visit a physical store. Walmart's e-commerce strategy also includes offering same-day delivery, curbside pickup, and other convenient options, further enhancing the shopping experience for its online customers. E-commerce sales contribute to Walmart's overall revenue and help the company remain competitive in the digital era.

Membership Programs

Walmart offers membership programs such as Walmart+, which provide additional benefits to customers in exchange for a subscription fee. Walmart+ members enjoy perks like unlimited free delivery, fuel discounts, and access to exclusive deals. By offering these membership programs, Walmart not only generates additional revenue but also fosters customer loyalty. The recurring subscription fees contribute to the company's overall financial success.

Advertising and Partnerships

Another way Walmart generates revenue is through advertising and partnerships. Walmart has a vast network of suppliers and brands that pay for advertising space within its stores and on its website. These partnerships allow suppliers to showcase their products and reach a wide customer base. Additionally, Walmart offers sponsored product placements, both online and in-store, enabling brands to increase their visibility and drive sales. Advertising and partnerships provide an additional revenue stream for Walmart while benefiting its suppliers and enhancing the overall shopping experience for customers.

In conclusion, Walmart's revenue primarily comes from its retail sales, encompassing various store formats, including Supercenters and smaller-format stores. The company's e-commerce platform, membership programs, and strategic partnerships also contribute significantly to its financial success. By diversifying its income sources and adapting to changing consumer preferences, Walmart continues to thrive as one of the world's leading retailers.

Walmart Business Model Canvas Explained

Introduction to the walmart business model canvas.

The Walmart Business Model Canvas is a strategic management tool that provides a comprehensive overview of how Walmart creates, delivers, and captures value. Developed by Alexander Osterwalder and Yves Pigneur, the Business Model Canvas helps organizations understand their business model and identify potential areas for improvement and innovation.

Key Elements of the Walmart Business Model Canvas

Customer segments.

Walmart caters to a wide range of customer segments, including individuals and families seeking affordable everyday products, small businesses looking for bulk purchases, and online shoppers seeking convenience and competitive prices. By targeting multiple customer segments, Walmart ensures a diverse customer base and maximizes its market reach.

Value Proposition

Walmart's value proposition lies in its ability to offer "Everyday Low Prices" on a wide range of products. By leveraging its massive scale and strong supplier relationships, Walmart is able to negotiate lower prices and pass on the savings to its customers. In addition to affordability, Walmart also focuses on convenience, providing a one-stop shopping experience with a vast selection of products under one roof.

Walmart operates through a multi-channel approach, combining brick-and-mortar stores, e-commerce platforms, and a strong presence in the grocery sector with its Walmart Supercenter and Neighborhood Market formats. This omni-channel strategy allows Walmart to reach customers through various touchpoints and cater to their diverse shopping preferences.

Customer Relationships

Walmart builds customer relationships by providing a seamless shopping experience. With its focus on low prices and convenience, Walmart aims to establish long-term relationships with its customers, encouraging repeat purchases and building customer loyalty. Additionally, Walmart invests in customer service initiatives to address any issues or concerns promptly.

Revenue Streams

Walmart generates revenue primarily through the sale of products across its various retail formats. In addition, the company also offers financial services, such as money transfers, check cashing, and prepaid cards, generating additional revenue streams. Walmart also earns revenue through advertising and partnerships with suppliers and brands, allowing them to promote their products within Walmart stores.

Key Activities

Walmart's key activities include sourcing and procurement, inventory management, retail operations, and supply chain management. The company focuses on efficient logistics and distribution networks to ensure products are readily available and delivered to stores in a timely manner. Walmart also invests heavily in technology and data analytics to optimize its operations and improve customer experience.

Key Resources

Walmart's key resources include its extensive network of physical stores, strong supplier relationships, advanced IT infrastructure, and a highly efficient supply chain. These resources enable Walmart to maintain a competitive advantage by offering low prices, ensuring product availability, and delivering a seamless shopping experience.

Key Partnerships

Walmart collaborates with a wide range of partners to enhance its business model. This includes suppliers and manufacturers, logistics and transportation providers, technology companies, and financial institutions. By building strategic partnerships, Walmart strengthens its supply chain, improves operational efficiency, and expands its product offerings.

Cost Structure

Walmart's cost structure is focused on achieving operational efficiency and maintaining low prices. The company leverages its scale and bargaining power to negotiate favorable terms with suppliers, reducing procurement costs. Walmart also invests in technology and automation to streamline operations and minimize labor costs.

The Walmart Business Model Canvas provides a holistic view of how Walmart operates and creates value for its customers. By understanding the key elements of Walmart's business model, it becomes evident why the company has been able to achieve long-term success and become a dominant player in the retail industry. The Business Model Canvas serves as a valuable tool for analyzing and optimizing business models, enabling organizations to identify areas for improvement and innovation.

Which companies are the competitors of Walmart?

Overview of walmart's competitors.

Walmart, being one of the largest retail corporations in the world, faces competition from various companies across different sectors. These competitors vary in terms of their business models, target markets, and product offerings. Here are some notable companies that compete with Walmart:

Target is one of the most prominent competitors of Walmart, particularly in the United States. Similar to Walmart, Target operates as a general merchandise retailer, offering a wide range of products, including clothing, electronics, home goods, and groceries. Both companies strive to provide customers with affordable prices and convenient shopping experiences. However, Target differentiates itself by focusing on a more upscale and trendy image, catering to a slightly different demographic than Walmart.

Amazon, the e-commerce giant, poses a significant threat to Walmart's dominance. With its vast online marketplace and efficient delivery services, Amazon has transformed the retail industry. The company offers an extensive range of products, including groceries through its acquisition of Whole Foods Market. While Walmart is also expanding its e-commerce operations, Amazon's dominance in the online retail space continues to challenge Walmart's market share.

3. Costco Wholesale

Costco Wholesale is a membership-based warehouse retailer that competes with Walmart's Sam's Club division. Both companies offer bulk purchases at discounted prices, targeting price-conscious consumers and small businesses. While Walmart operates numerous stores across the country, Costco focuses on a smaller number of large-scale warehouse locations. Costco's loyal customer base and reputation for quality products pose a competitive threat to Walmart's membership-based retail business.

Kroger is one of the largest supermarket chains in the United States, specializing in groceries and related products. While Walmart offers groceries in its stores, Kroger focuses solely on this sector and has a strong presence in local communities. Kroger differentiates itself by providing a wide range of fresh produce, organic options, and specialty products. Walmart's expansion into the grocery market has intensified the competition between the two companies, particularly in terms of pricing and product selection.

5. Best Buy

Best Buy, a leading electronics retailer, competes with Walmart in the consumer electronics market. While Walmart offers a wide variety of electronics alongside other products, Best Buy specializes in this sector, providing customers with a more extensive selection and knowledgeable staff. Best Buy's focus on customer service and expertise in the electronics industry gives it a competitive advantage over Walmart in this specific market segment.

While Walmart remains a formidable force in the retail industry, these competitors present ongoing challenges and opportunities for the company. Target, Amazon, Costco Wholesale, Kroger, and Best Buy are just a few examples of the companies that directly compete with Walmart, each offering unique strengths and strategies to attract customers. As the retail landscape continues to evolve, it will be intriguing to see how Walmart adapts and competes with these rivals to maintain its market position.

Walmart SWOT Analysis

Strong brand recognition: Walmart is one of the most well-known retail brands globally. Its logo, store layout, and marketing efforts have created a strong brand image and customer loyalty.

Wide product assortment: Walmart offers a wide range of products, including groceries, electronics, clothing, home goods, and more. Its vast assortment appeals to a broad customer base and allows for one-stop shopping convenience.

Economies of scale: Walmart's massive size and global presence provide it with significant economies of scale. By purchasing large quantities of products, Walmart can negotiate lower prices from suppliers, giving it a competitive advantage in terms of pricing.

Efficient supply chain: Walmart has invested heavily in developing an efficient supply chain system. Through advanced logistics and inventory management, the company ensures that products are delivered to stores in a timely manner, reducing stockouts and improving customer satisfaction.

Negative public perception: Walmart has faced criticism for its labor practices, treatment of employees, and impact on local businesses. These controversies have negatively affected its reputation and may deter some socially conscious consumers from supporting the brand.

Limited international success: While Walmart has a strong presence in the United States, its international operations have not been as successful. The company has struggled to adapt to local preferences and faced challenges in some markets, limiting its growth potential outside of the US.

Reliance on physical stores: Despite its efforts to expand its online presence, Walmart still heavily relies on its brick-and-mortar stores. This dependence on physical locations can be a weakness in an era where e-commerce is rapidly growing.

Opportunities

E-commerce growth: Walmart has made significant investments in its e-commerce capabilities, including the acquisition of online retailers like Jet.com and Flipkart. As more consumers shift towards online shopping, Walmart has an opportunity to capitalize on this trend and expand its online presence.

International expansion: Although Walmart has faced challenges in certain international markets, it still has room for growth in untapped regions. By adapting its strategy to local preferences and investing in local partnerships, Walmart can successfully expand its global footprint.

Sustainability initiatives: With increasing consumer demand for sustainable products and practices, Walmart has the opportunity to enhance its sustainability efforts. By offering more eco-friendly products, reducing its carbon footprint, and supporting responsible sourcing, Walmart can attract environmentally conscious consumers.

Intense competition: Walmart operates in a highly competitive retail industry. It faces competition from traditional retailers, e-commerce giants like Amazon, and discount stores. Intense competition can erode market share and put pressure on pricing and profitability.

Changing consumer preferences: Consumer preferences and shopping behaviors are constantly evolving. If Walmart fails to adapt to these changes, it risks losing customers to competitors that better cater to shifting needs, such as online convenience, personalized experiences, or sustainable options.

Economic fluctuations: Walmart's performance is closely tied to the overall health of the economy. During economic downturns, consumers may reduce discretionary spending, impacting Walmart's sales and profitability. Additionally, inflation, rising labor costs, or fluctuations in exchange rates can also pose challenges for the company.

In conclusion, Walmart has several strengths, including its strong brand recognition, wide product assortment, economies of scale, and efficient supply chain. However, it also faces weaknesses such as negative public perception and limited international success. By capitalizing on opportunities like e-commerce growth, international expansion, and sustainability initiatives, while mitigating threats such as intense competition, changing consumer preferences, and economic fluctuations, Walmart can navigate the dynamic retail landscape and maintain its position as a market leader.

Key Takeaways

  • Walmart is owned by its shareholders, with the Walton family being the largest individual shareholders.
  • The mission statement of Walmart is to save people money so they can live better.
  • Walmart makes money primarily through its retail operations, selling a wide range of products at low prices.
  • The Walmart Business Model Canvas highlights key elements such as customer segments, value proposition, channels, customer relationships, revenue streams, key activities, key resources, and key partnerships.
  • Some of the main competitors of Walmart include Amazon, Target, Costco, and Kroger.
  • In terms of SWOT analysis, Walmart's strengths include its scale and market dominance, while its weaknesses include labor-related controversies. Opportunities for Walmart include e-commerce growth, while threats include competition and changing consumer preferences.

In conclusion, Walmart is a multinational retail corporation that has gained immense success and recognition over the years. As for who owns Walmart, it is mainly owned by the Walton family, with a significant percentage of shares held by other shareholders.

The mission statement of Walmart is to save people money so they can live better. This mission statement drives the company's focus on providing affordable products and services to its customers.

Walmart makes money through various revenue streams, including the sale of merchandise, groceries, and pharmaceutical products. Additionally, the company generates income through its membership program, advertising, and financial services.

By examining the Walmart Business Model Canvas, we can see how the company utilizes key resources, activities, and partnerships to create value and generate revenue. Through its extensive supply chain, efficient distribution network, and strategic partnerships, Walmart is able to offer its products at competitive prices and maintain its market leadership.

When it comes to competition, Walmart faces numerous competitors in the retail industry. Some of its main rivals include Target, Costco, Amazon, and Kroger. These companies constantly strive to gain market share and compete with Walmart in terms of pricing, product offerings, and customer experience.

Lastly, conducting a SWOT analysis on Walmart reveals the company's strengths, weaknesses, opportunities, and threats. Walmart's strengths lie in its extensive global presence, economies of scale, and strong brand image. However, weaknesses such as labor issues and negative public perception pose challenges. Opportunities for Walmart include expanding into e-commerce and international markets, while threats include intense competition and changing consumer preferences.

Overall, Walmart's success can be attributed to its commitment to its mission statement, innovative business model, and ability to adapt to evolving consumer needs. As the retail industry continues to evolve, it will be interesting to see how Walmart continues to position itself and maintain its market dominance.

What is Walmart's SWOT analysis?

  • Strong brand image and global presence: Walmart is one of the largest retail companies in the world, with a strong brand reputation and a presence in multiple countries.
  • High economies of scale: Walmart's large size allows it to negotiate lower prices with suppliers and gain cost advantages over competitors.
  • Extensive product assortment: Walmart offers a wide range of products across various categories, providing customers with a one-stop shopping experience.
  • Efficient supply chain management: Walmart has a sophisticated supply chain system that enables it to minimize costs, reduce inventory levels, and deliver products efficiently.
  • Strong financial performance: The company consistently generates high revenue and profits, which allows it to invest in growth initiatives and withstand economic downturns.

Weaknesses:

  • Negative public perception: Walmart has faced criticism for its labor practices, treatment of employees, and impact on local communities, leading to a negative public image in some cases.
  • Employee turnover and labor lawsuits: The company has been involved in various labor-related lawsuits and has high employee turnover rates, which can impact productivity and customer service.
  • Limited online presence: Walmart has been relatively slow in adapting to the e-commerce space, which has resulted in a weaker online presence compared to some competitors.
  • Dependence on China for sourcing: A significant portion of Walmart's products are sourced from China, which exposes the company to risks related to trade tensions, supply chain disruptions, and rising labor costs.

Opportunities:

  • E-commerce growth: Walmart has the opportunity to further develop its online platform and grow its e-commerce business to compete with companies like Amazon.
  • Expansion into emerging markets: The company can expand its operations into emerging markets, where there is potential for growth and less competition.
  • Sustainability and ethical practices: Walmart can improve its sustainability initiatives and focus on ethical sourcing to meet increasing consumer demand for environmentally friendly and socially responsible products.
  • Health and wellness trends: Walmart can capitalize on the growing health and wellness industry by expanding its offering of organic, natural, and healthier products.
  • Intense competition: Walmart faces intense competition from various retailers, both offline and online, which puts pressure on pricing and market share.
  • Changing consumer preferences: Shifts in consumer preferences, such as increased demand for e-commerce and online shopping, can impact Walmart's traditional retail business.
  • Economic factors: Economic downturns, inflation, and changes in consumer spending patterns can negatively affect Walmart's sales and profitability.
  • Regulatory challenges: Walmart operates in multiple countries and is subject to various regulations, including labor laws, trade policies, and taxation, which can pose challenges and impact its operations.

What are 3 weaknesses of Walmart?

Labor practices: Walmart has faced criticism for its labor practices, including low wages, inadequate benefits, and poor working conditions. This has led to various lawsuits and protests from employees and labor rights organizations.

Negative impact on local economies: Walmart's entry into new markets often results in the closure of smaller, locally-owned businesses. Critics argue that this leads to a loss of jobs, reduced competition, and a decline in the overall economic health of communities.

Environmental concerns: Walmart has been accused of being a major contributor to environmental issues, such as excessive waste, pollution, and unsustainable sourcing practices. Despite some efforts to improve sustainability, the company still faces criticism for not doing enough to mitigate its environmental impact.

What are the threats to Walmart SWOT analysis?

Some of the threats to Walmart in a SWOT analysis include:

Intense competition: Walmart faces competition from various retailers, both brick-and-mortar and online, which can affect its market share and profitability.

Increased online shopping: The rise of e-commerce has made it easier for customers to shop online, which can result in reduced foot traffic in Walmart stores.

Economic factors: Economic downturns and fluctuations in consumer spending can impact Walmart's sales and revenue.

Negative public perception: Walmart has faced criticism in the past for its labor practices and impact on local communities, which can harm its reputation and brand image.

Regulatory challenges: Changes in regulations, such as labor laws or environmental regulations, can increase compliance costs for Walmart and impact its operations.

Supplier relationships: Walmart heavily relies on its suppliers, and any disruptions in the supply chain or conflicts with suppliers can affect its ability to offer products at competitive prices.

Global expansion challenges: Walmart operates in various countries, and political, social, and cultural factors can pose challenges to its international expansion efforts.

Cybersecurity threats: As a large retailer, Walmart is at risk of cyberattacks and data breaches, which can compromise customer information and damage its reputation.

Changing consumer preferences: Shifts in consumer trends and preferences, such as increased demand for sustainable and ethically sourced products, may require Walmart to adapt its offerings and strategies.

COVID-19 pandemic: The ongoing pandemic has affected the retail industry significantly, with lockdowns, supply chain disruptions, and reduced consumer spending impacting Walmart's operations and financial performance.

What are the weaknesses of Walmart business?

Some of the weaknesses of Walmart's business include:

Negative public perception: Walmart has faced criticism for its treatment of employees, including low wages and limited benefits. The company has also been accused of driving small businesses out of business and negatively impacting local communities.

Labor disputes and lawsuits: Walmart has faced numerous labor disputes and lawsuits related to issues such as wage theft, discrimination, and unfair labor practices. These incidents have led to damage to the company's reputation and financial losses.

Dependence on overseas manufacturing: A significant portion of Walmart's products are manufactured overseas, particularly in countries with low labor costs. This dependence exposes the company to risks such as supply chain disruptions, political instability, and changes in trade policies.

Competition from e-commerce giants: With the rise of online shopping, Walmart faces intense competition from e-commerce giants like Amazon. Despite efforts to expand its online presence, Walmart's e-commerce business still lags behind its competitors in terms of market share.

Inability to penetrate certain markets: Walmart has faced challenges in entering and succeeding in certain international markets, such as Germany and South Korea. Cultural differences, regulatory hurdles, and local competition have hindered the company's growth in these markets.

Environmental impact: As one of the largest retailers in the world, Walmart's operations have a significant environmental footprint. The company has been criticized for its carbon emissions, waste generation, and unsustainable sourcing practices. These concerns can impact its reputation and attract environmentally conscious consumers.

Vulnerability to economic downturns: Walmart's business model heavily relies on offering low prices to attract customers. During economic downturns, consumers may reduce their spending and opt for even cheaper alternatives, which can impact Walmart's sales and profitability.

Large size and bureaucracy: Walmart's vast size and bureaucratic structure can make decision-making slow and hinder the company's ability to adapt to changing market conditions. This can result in missed opportunities and an inability to respond quickly to competitive threats.

It's important to note that while Walmart has these weaknesses, it also has numerous strengths that have contributed to its success as one of the largest retailers in the world.

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Business Model of Walmart

Walmart, the US-based retail giant has enjoyed strong growth over the past several years. The company has also experienced impressive growth and rising demand across the e-commerce segment bolstered by the growing use of digital technology.

Walmart’s investment in e-commerce and digital technology over the past several years is paying off. The company has strategically invested in technology and human resources to overcome the rising competitive pressure from the e-commerce giant Amazon .

However, the retail industry in the US is marked by intense competition and other leading physical retail brands are also extending their reach and growing their market penetration through investment in digital commerce.

Costco , Target , and other physical retailers are also enjoying the benefits of e-commerce. In the longer term, customer experience and technology will remain the main factors affecting growth momentum in the US retail industry. 

The core pillar of Walmart’s success is its business model. Sam Walton had focused on some key factors when he laid the foundation of Walmart and one of them was managing operations and prices in a manner to benefit the customers the most.

Since then Walmart’s business model has evolved a lot and the company has acquired a strong competitive position in the United States. The company has also expanded overseas to 28 markets.

Walmart Reportable Business Segments:

Walmart’s retail empire is divided into three main segments apart from e-commerce. The largest business segment of Walmart based upon revenue is Walmart US followed by Walmart International and Sam’s Club. Walmart US, the largest business segment of Walmart accounts for the highest sales and revenue of the company.

This segment includes only the domestic part of Walmart’s business . The largest of all the markets where Walmart operates is the United States. Walmart International includes the part of Walmart’s business that is located overseas. Sam’s Club is the premium segment of Walmart’s business. 

Walmart US:

Walmart is the largest physical retail brand located in the United States. Its largest individual market is the US where the company is present across all the 50 states as well as Washington D.C. and Puerto Rico. 

This segment operates under several brands including Walmart and Walmart neighborhood as well as several e-commerce brands including walmart.com, jet.com, and many more. Historically, Walmart US has remained the best performer among the three segments of the company.

The gross profit rate (which Walmart defines as gross profit/net sales*100) of Walmart US has been the best of all the three segments. It is also the best performing segment in terms of net sales and operating income. 

This segment offers an integrated omnichannel experience to its customers that includes both online and offline channels. It combines online and offline channels to provide a superior shopping experience to its customers.

Walmart US has combined pickup and delivery services including “Walmart Pickup,” “Pickup Today”, “Grocery Pickup”, “Grocery Delivery,” and “Endless Aisle” with retail to provide a seamless buying experience to its customers.

 During fiscal 2020, Walmart launched Next Day Delivery to more than 75 percent of the US population. The company also launched delivery unlimited in the same fiscal year from 1,600 locations. it also expanded Same Day Pickup to around 3,200 locations.

Walmart US operates three large store formats in the US including supercenters, discount stores, and neighborhood markets. The Walmart Supercenters are the largest store formats that are an average of 178,000 sq feet in size. The Walmart Discount stores are 105,000 square feet in size. The neighborhood markets of Walmart US are 42,000 square feet in size. Walmart US sells merchandise in three strategic categories that include grocery, health and wellness, and general merchandise.

The general merchandise category includes entertainment, hardlines, apparel, home furnishing products, and seasonal merchandise products. Walmart US sells a large range of branded merchandise. It sells a vast assortment of products created by its private label brands. Several of the large format retail stores run by Walmart US are operational round the clock. Generally, it is the largest quarter of the year that is the busiest season for Walmart US. (Walmart’s fiscal year ends on Jan 31.) 

Walmart US also faces a lot of competition. The categories of retailers that compete with Walmart include the ones operating discount, department, retail and wholesale grocers, drug, dollar, variety and specialty stores, supermarkets, hypermarkets, and supercenter type stores as well as e-commerce stores. 

Walmart’s US operations are supported by a large web of distribution facilities that are located throughout the United States at key locations. There are 156 distribution facilities established by Walmart in the US that support its domestic operations. The merchandise customers buy from Walmart US stores are shipped mainly through these distribution facilities. Walmart has also established 33 dedicated e-fulfillment centers that it uses to ship merchandise customers buy from its e-commerce platform centers. 

The chart below shows the net sales of Walmart US in billions.

Walmart International:

Walmart International is the second largest segment of Walmart and operates in 26 countries.  The Walmart International segment operates through the company’s wholly-owned or majority-owned subsidiaries. It operates several store formats that are mainly divided into three categories including retail, wholesale, and others.

The store formats used by Walmart International include supercenters, super-markets, hypermarkets, warehouse clubs (including Sam’s clubs), and cash and carry as well as several e-commerce platforms. 

The e-commerce platforms of Walmart International include walmart.com.mx, asda.com, walmart.ca, flipkart.com, and several other sites. The omnichannel experience offered by Walmart integrates retail stores and e-commerce through services like click and collect in the United Kingdom or online marketplaces like Flipkart in India. In terms of merchandising, Walmart US and Walmart International follow a similar strategy. Apart from leveraging the US-based private label brands, the company has also developed market-specific brands. By forming strong relationships with the local and regional suppliers, Walmart International has ensured that it offers its customers national brands at lower prices. It utilizes a total of 221 distribution facilities that are located in Argentina, Canada, Central America, Chile, China, Japan, Mexico, South Africa, India, and the United Kingdom. It uses these distribution centers to process and distribute both domestic and international products to the Walmart International retail operating units. For the distribution and shipping of products bought from its e-commerce channels, Walmart International utilizes its 90 dedicated e-fulfillment centers as well as 1900 e-commerce sort centers in India.

Sam’s Club:

Sam’s club is a warehouse club and also operates samsclub.com. It is operational in 44 states in the US as well as Puerto Rico. Sam’s Club memberships include a spouse/household card that does not involve any extra cost. However, the plus members of Sam’s Club are eligible for cash rewards. Plus memberships include cash benefits of $10 for every qualifying purchase of $500 and the customers can earn as much as $500 each year in rewards that they can use for purchases, membership fees, or redeem for cash. Moreover, the plus members are eligible for free shipping on most of the merchandise that they buy from samsclub.com. There is no minimum order size for the plus members and they can also receive discounts on prescriptions, glasses, and contact lenses.

Just like Walmart US and Walmart International, Sam’s Club also offers an omni-channel experience to its customers that integrates physical retail and e-commerce.  Its members have access to a large assortment of products. Sam’s Club sells merchandise in five main categories including grocery and consumables, health and wellness, fuel and other, home and apparel, as well as technology, office, and entertainment. Member’s Mark by Sam’s Club offers a large assortment of carefully curated premier quality products. Sam’s Club continues to grow its assortment of products every year. In 2019, the sales of Member’s Mark were higher than $12 billion driven mainly by growth across the private brand portfolio.

Business Growth Strategy of Walmart:

To achieve faster growth, Walmart is following an omnichannel retail strategy that will help it penetrate the market deeper in the US as well as several international markets. As customers are moving towards digital channels for shopping, Walmart’s focus on technology has grown to provide its customers with a seamless buying experience. Price leadership has been and will continue to remain a cornerstone of Walmart’s successful business model. Each week the company serves nearly 265 million customers through its more than 11,500 retail stores and 56 banners in 27 countries. While focusing on disciplined growth and investment in digital technology, the company is also trying to make its business model stronger by investing more in its associates and strengthening the trust customers place in Walmart. The focus of the company is to help people around the world save money and live better lives.

Walmart’s E-commerce Business:

The first e-commerce initiative of Walmart (walmart.com) was launched in 2000. Since then it has taken several bold steps that have enabled it to strengthen its position in digital commerce . After launching walmart.com, the company also launched samsclub.com. In 2007, the company launched its site to store service. As a part of this service, Walmart customers could make purchases online and then pick merchandise from one of the nearest Walmart’s physical retail stores. With time, the company made some acquisitions and also formed strategic alliances that helped it build better growth momentum in terms of e-commerce.

In 2016, Walmart acquired jet.com in the United States and also formed a strategic alliance with jd.com in China, taking its e-commerce initiative a step ahead. The company has been following the same track and made a number of acquisitions in the United States to grow its e-commerce capabilities there and improve its reach through digital commerce. After acquiring jet.com, the company also acquired shoes.com, Moosejaw, Bonobos, and many more digital consumer brands. Walmart further boosted its e-commerce initiatives by adding free shipping from walmart.com on more than 2 million items. During the same year, Walmart also created a technology incubator named Store No.8 whose main focus was to speed up e-commerce innovation at Walmart. 

To expand its e-commerce business overseas, Walmart acquired a majority stake in Flipkart in August 2018. Flipkart is an Indian e-commerce marketplace that also includes Flipkart , Myntra, and Jabong. In the United States, the company has continued to extend its e-commerce presence by adding more grocery pickup and delivery locations. In many of its international markets also the company is able to provide its customers with an omnichannel experience by offering a mix of physical and digital retail. Over the coming years, Walmart plans to further boost its e-commerce capabilities through continued investment in technology and acquisitions.

Role of Supply Chain in the Business Model of Walmart:

The supply chain of Walmart is a central pillar on which the operational efficiency and business success of the retail brand rests. Walmart has always maintained a heavy focus on maintaining supply chain efficiency through technology and by building strong relationships with suppliers. The cost-efficiency of the retail brand arises mainly from its supply chain management strategy. The company sources directly from the producers and eliminates the need for middlemen. In this way, it substantially reduces the costs of merchandise. By buying in bulk from the producers, it has been able to maintain lower prices. 

An important aspect of Walmart’s supply chain strategy is its use of technology to reduce complications related to inventory management. The company uses cross-docking, an inventory management system that reduces the time required for the transportation of merchandise. Cross-docking reduces the time lost between inbound and outbound logistics. As a part of cross-docking , inbound trucks are unloaded directly into outbound trucks. It eliminates inefficiencies from the Walmart supply and distribution system and also saves the retailers billions in the form of saved storage costs. The EDLP pricing strategy of Walmart requires it to reduce expenses in all aspects of business and by managing supply chain efficiency, the retailer saves substantial costs related to transportation, storage and inventory management.

Competitive Advantage in the business model of Walmart:

Walmart is the largest physical retailer in the United States. The company has acquired several sources of sustainable competitive advantage and continues to strengthen its competitive position through investment in technology, human resources and continuous expansion of its merchandise range as well as an increased focus on customer experience. The main source of competitive advantage for the company is its lower pricing strategy that continues to drive higher footfall across Walmart stores compared to the rival businesses. Here we will discuss some leading sources of competitive advantage for Walmart that have continued to support its fast growth and international expansion.

EDLP or everyday lowest prices is the pricing strategy utilized by Walmart. It is also the main attraction of the company which brings customers flocking to Walmart stores regularly. The company has been following this strategy since its early days and offering its customers lower prices than its customers. The company manages its supply chain and operations in a manner to keep operating expenses low and passes on the benefits to the customers. 

Brand image:

T he brand imag e of Walmart is also one of the leading strengths of the company. It is a customer-oriented brand that has always placed its main focus on the convenience and satisfaction of the customers. Apart from selling a large assortment of products, the company has always been aggressive in terms of lower prices and customer price. This has helped the company gain strong popularity in the United States. While the popularity of the company has kept growing stronger over time, the only grey area was HR management. However, in recent years, apart from raising hourly wages, Walmart has also grown its investment in the training and development of its associates. This has also helped the company strengthen its image in the market.  

Extensive presence:

The United States is the largest market of Walmart and accounts for the highest share of its revenue. Walmart has maintained an extensive presence throughout the US as well as several more international markets. The company operates 5,355 retail stores in the US as well as 6,146 internationally (as of Jan 31, 2019). In the United States, the retail format that the company uses the most is the supercenters. The company operated 3,571 supercenters in total as of Jan 2020 in the United States. Texas had the highest concentration of Walmart Supercenters at 392.  Outside the US, the company had the highest number of stores operational in Mexico (2,408) as of Jan 2020.

Sourcing and supply chain management:

Walmart’s supply chain management strategy is also one of the core pillars of its competitive business strategy. It has helped it achieve a competitive advantage that is very difficult for rivals to match. Right since the foundation of the company, its focus was on managing prices. A key step in this direction was managing the supply chain in a manner that helped reduce costs and grow profits. Sam Walton formed a strategy that focused on eliminating middlemen and sourcing directly from the producers. In this way, the company was able to significantly reduce costs. Walmart has kept making improvements in the area of supply chain management to achieve higher efficiency. The company-owned fleet of trucks plays a significant role in distribution. Walmart’s investment in technology for inventory management and in other areas including distribution and delivery has also helped it achieve higher efficiency and offer its customers higher convenience.

Customer Experience:

Customer experience is of paramount importance for managing a retail brand’s competitive position. It is one of the most significant factors that affect brand image and popularity directly.  By investing in customer experience, the company has maintained its leading market position in the physical retail industry. People love shopping at Walmart because of the distinctive experience the company offers. Walmart offers a large assortment of good quality merchandise. However, not just product quality, the company also maintains a heavy focus on customer service for retaining customers. Technology is an important pillar of its business strategy and by investing in digital technology (including e-commerce websites and apps), the company is offering its customers superior omni-channel shopping experience.

Distribution and logistics:

The integrated omnichannel retail experience that Walmart offers mixes e-commerce and physical retail with various delivery options in several markets. However, a strong distribution and logistics system has helped the company bring higher efficiency to its business model. The company owns a large part of its distribution and logistics system in its domestic market. It has a large fleet of company-owned trucks that the company utilizes for delivery and distribution. Apart from that, it has established a large web of warehouses and e-fulfillment centers that also support distribution and delivery throughout the US and internationally.

Financial Performance of Walmart in the last two years:

Walmart’s performance in the last three years has been nothing less than stellar. Its net revenue climbed past $500 billion in 2018 for the first time. In 2019, the net revenue of Walmart climbed to $514.4 billion. In fiscal 2020, the net revenue of the company climbed to around $524 billion.

Walmart Performance during fiscal 2019:

In 2019, net sales of Walmart US segment grew by $13.2 billion compared to last year. Net sales of Walmart US grew to $331.7 billion in 2019 from $318.4 billion in 2018. The increase in net sales happened mainly due to the growth in comparable store sales of 3.7% in 2019 compared to 2018 driven by growth in average ticket size and traffic. Growth in e-commerce sales contributed positively to comparable-store sales.

Walmart International segment experienced a growth of $2.8 billion or 2.3% in 2019.  Walmart acquired a majority stake in Flipkart in the third quarter of 2019. However, Flipkart sales still added substantially to the net sales of Walmart International and remained the primary driver of growth for this segment. Apart from that comparable sales saw positive growth across most of the international markets of Walmart. However, Walmart also sold a majority stake in Walmart Brazil that led to a net reduction of around $3.1 billion in net sales of Walmart International which offset this segment’s revenue growth to some extent. The impact of currency fluctuations was around $0.7 billion. 

The Sam’s Club segment of Walmart experienced a decrease of around $1.4 billion or 2.3% for fiscal 2019. The factors that affected the decline in revenue during 2019 included closure of 63 clubs as well as reduced tobacco sales since Walmart decided to not sell tobacco across certain locations. Ecommerce sales also contributed around 0.9% to the net sales of Sam’s Club. 

Walmart performance during fiscal 2020:

The net revenue of Walmart Inc grew to $524 billion in 2020 from $514.4 billion in 2019. Walmart’s net revenue includes net sales as well as membership and other income. In fiscal 2020, the net revenue of the company grew by $9.6 billion or 1.9% compared to the previous year. The increase in Walmart’s net revenue was driven mainly by the growth in net sales. Comparable sales grew positively across Walmart US and Sam’s Club. Apart from that, Flipkart also contributed to the growth of Walmart’s net sales. Walmart’s US segment experienced a growth of $9.3 billion or 2.8% in net sales during fiscal 2020 compared to the previous year. However, the gross profit rate of Walmart US decreased by 14 basis points in 2020.

Walmart International segment experienced a decrease in sales of $0.7 billion or 0.6% during 2020 compared to the previous fiscal. The gross profit rate of Walmart International decreased by 136 basis points in 2020 compared to the previous year.

Sam’s Club experienced an increase of 1.6% in net sales compared to the previous year. The net sales of Sam’s Club grew by $1 billion in 2020 compared to 2019 and reached $58.8 billion.

Data and financial performance analysis based on the annual report of Walmart (form 10K for 2020)

Analysis of  Walmart’s Operations based on the 4Vs model:

Operations and operational processes are like the fundamental building blocks of organizations that have a significant influence on the productivity of the organization and the quality of the organizational output as well. Focusing on operational efficiency has helped businesses find faster market growth as well as maximize output. Many times, if the efficiency of processes is low then it is mainly because the organization has adopted a poor operational design. Processes across business organizations and industries can differ significantly and that is why all processes must be managed differently. Some of the leading differences between various processes are due to the technologies and the level of know-how involved. Different processes require different production equipment as well as different skills and know-how. However, apart from these things, the difference also lies in the nature of the demand for the products and services these processes produce. There are four particular characteristics of demand that have a significant impact on process management and which are as follows:

  • The volume of the products and services produced
  • Variety of products and services produced
  • Variation in the demand for products and services.
  • Degree of visibility that customers have of the production of products and services

Volume of products and services:

Does the business being discussed produce a large amount of the same products and services or only various items in small volumes? If the volume of output is high, it indicates repeatability or high-level familiarity of the processes. Many times since a large business produces more and more of the same thing, it helps the business gain a significant competitive advantage compared to the smaller ones.

In the case of Walmart, while the company sells several private label brands too, it does not produce the products it sells. it sources from thousands of suppliers from all over the world and mainly in the US as well as some Asian countries. However, the assortment of products that the company sells is indeed very large and despite that, the company competes on the basis of prices. The volume of products sold by the company is very large and it also sources form its suppliers in very large volumes which have helped the company keep product prices low for its consumers. Production is indeed not an operational aspect for retailers like Walmart that depend mainly on their suppliers for the products they sell. So, production efficiency is in fact immaterial in the case of retailers like Walmart, Costco, or even Amazon. In the case of the private label brands that retailers like Walmart or Costco or Target sell, they generally outsource the production to external suppliers that produce it to the company’s specifications. However, despite sourcing from a very large number of suppliers, the company tries to maintain its quality standards and lower prices as compared to rival retailers.

Variety of processes (products and services produced):

 Variety is related to the various types of activities that are being performed by the company and how well it manages the various processes. The level of operational complexity is very high when it comes to a mixed model manufacturer that is engaged in lots of changeovers between processes. It means apart from having to choose from a very wide range of inputs, the company has to handle the additional complexity of matching specific customer requirements in terms of products and services. Generally, the high variety processes are more costly as compared to the lower variety processes.

For example, Walmart is the leading retailer in the United States. However, the company is not engaged in complex production processes. Its main operations include running retail stores, managing its sourcing or suppliers network as well as distribution and warehousing. However, the company has managed the efficiency of its processes in all these areas very well and apart from a large range of retail stores in various formats, the company also runs e-commerce websites and a fulfillment network to cater to the needs of the customers that shop online from its website.

The company sells a wide assortment of products including products its private label brand Sam’s Club through both physical and online channels. However, in most areas from supply chain management to distribution and sales the operations of the company follow a fixed format. Its associates operate the retail stores and the company also has a dedicated fleet of company-owned trucks that continue to replenish the stores. Since the company does not have to handle high variety processes, both operating expenses and the level of operational complexity remain low for the brand.

Variation in demand of products and services:

In fact, demand variation is among the most challenging aspects of business operations. It is easier for businesses to manage the processes when the level of demand is predictably constant. However, when demand can fluctuate significantly, then managing processes becomes somewhat complex. If demand is predictably constant, it is easier to gear resources to efficiently cater to the existing demand, Moreover, businesses can plan operational activities including marketing and sales or after-sales services in advance.

On the other hand, if the level of demand varies significantly or can be highly variable or even unpredictable, then resources will need to be adjusted over time. What is even worse is that if demand can soar unpredictably, extra resources need to be devoted to the process such that it provides a capacity cushion that can easily absorb the unexpected demand. Let’s take a simple example of seasonal variations in retail and e-commerce. Demand for a large range of products surges suddenly during the festive season including gifts, electronics, home decor products as well as fashion products. Another important factor that can cause a variation in demand for specific products and services is the level of competition in the market. If the overall level of competition in the market is very high, the companies have to care a lot to maintain the demand for their products and services and that may require a large annual investment in marketing as well as technology (in the areas of e-commerce and fulfillment). Apart from that in order to maintain the level of demand for their products and services, the companies like Walmart also have to focus a lot on customer experience, innovation, as well as product quality since any decline in these areas, can lead to a corresponding decline in customer loyalty as well as demand.

Seasonal variations in demand for the products sold by Walmart is not something surprising. Demand for a large range of products especially surges a lot during the holiday season and these products will fly off the shelves in no time. However, the company always remains ready for such variations. In recent years, it has also expanded its fulfillment capabilities a lot and that helps the company handle the growing number of orders being placed online on walmart.com or samsclub.com. Walmart also employs a large number of part-time associates who help shoulder the extra pressure during the holiday season. Moreover, the company generally is aware of the products and services whose demand can suddenly grow during the holiday season and accordingly manages its inventory as well as other necessary factors including the number of associates in each store.

Visibility of processes:

This is also a rather complex aspect of business operations to grasp. It denotes that aspect of business operations that is easily visible to the customers. The businesses that work with consumers directly may have more visible processes. For example, the healthcare and retail industry have more visible processes. However, the same is not true about an automobile business. Customers generally do not have a very clear view of the production and distribution processes of automobile brands. They cannot peep into everything that goes on before the finalized cars reach the showrooms. This is the only aspect of automobile operations that they are generally familiar with. It is also true about businesses like Apple inc. However, when it comes to businesses like Amazon or even Facebook, these are highly customer-facing businesses or customers have very high visibility into their operations. These are also some businesses for which transparency and accountability matters a lot. However, even in the physical retail industry, accountability and transparency have become of paramount importance because of the growing focus on the brand image as well as customer trust and customer experience.

As in the case of Walmart, the most visible aspect of its operations are the store operations as well as the fulfillment of home delivery. These are not just the most visible aspects of Walmart’s operations but they are equally important in terms of marketing and branding since customer service has an important or significant level of impact on the marketing of the retail brands. Customers do not visit Walmart stores only for the sake of shopping but there is also an emotional connection between the buyers and Walmart stores who would like to spend their time on the weekends or on holidays roaming inside the Walmart stores. You will easily come across families shopping together at one of the large format Walmart stores. So, store operations are the most visible aspect of Walmart’s business operations. Retail brands like Walmart place a strong focus on customer service since sales and business growth as well as the popularity of the brand are affected to a large extent by the level of customer service and customer convenience that the brand offers.

Five Operational Performance Objectives

To run an organization, a well-defined set of operations performance objectives is essential.  There are five basic performance objectives applicable to all types of business operations. These five basic operations objectives include cost, dependability, flexibility, quality, and speed. There are both internal and external implications of these five performance objectives.  Moreover, the internal effects of these performance objectives have a definite impact on cost.

This is the first leading operational performance objective. It refers to consistent performance according to your customer’s expectations. Quality also affects customer satisfaction to a significant extent. However, the meaning of quality can vary across industries and businesses. Suppose there is an automobile business and there is another technology business. The same quality standards would not apply to each of the two businesses. Quality can acquire different meanings in different settings or industry environments. While in some industries, the level of staff friendliness is a leading parameter on which to measure quality, product efficiency is the main indicator of quality for another. However, no matter whatever industry a business belongs to, customers appreciate quality cannot be denied. Quality can, therefore, bear a direct and major influence on customer satisfaction as well as organizational performance. Nevertheless, quality is also related to a company’s image and apart from making certain things easier for the business like customer acquisition, it can also increase an organization’s profitability.

In the context of Walmart’s business that includes both physical and online retail, quality means product quality as well as customer service and also the overall customer experience. Walmart is an international business and apart from its millions of customers that the company serves in the United States, it is also present in several more markets where it serves its customers through both physical and online channels. So, overall there are several elements that together define quality for a large physical retailer like Walmart. However, when it comes to retail including both physical and online retail, price is an important determining factor in terms of quality. In the case of Walmart, the everyday lower prices are its leading source of popularity as well as customer loyalty for the brand and also the reason that it has grown into the largest physical retailer in the United States.

Walmart follows a competitive pricing strategy which is a key aspect of its overall customer experience. The company sells a vast assortment of products and it sources from millions of suppliers all over the world. Walmart also uses its financial strength as well as clout in the retail industry to source products at lower prices and then passes the benefit to the customers in several countries including the United States. While there is significant competition in the retail industry coming Walmart’s way from both physical and online retailers, the company has very well managed t retain its leadership position by placing a consistent focus on product quality as well as customer service.

However, another important aspect of quality that Walmart is well known for is its customer service. This is an important area of focus for Walmart and the company has continued to perform very well on this parameter right since its beginning. Apart from selling a vast range of good quality products, Walmart has also built a strong reputation in terms of customer service. Another important factor that supports quality on Walmart’s online shopping platforms is its use of innovative and industry-leading technology that helps the brand offer its customers seamless shopping experience. In fact, quality is one of the core pillars of Walmart’s business strategy which has helped the company acquire and maintain its leading position in the retail industry. Even in the area of e-commerce Walmart’s position has strengthened such that it is one of the leading rivals of Amazon, the largest e-commerce brand in this area.

As the industry has evolved speed has become more and more integral to business performance and growth. In fact, you cannot imagine an operational performance without speed. Now in nearly every industry speed matters just as much as quality. Customers want that products are delivered to their doorsteps faster. In this era where a large range of services are delivered and consumed online including a large range of technology and entertainment services, speed matters a lot and sometimes it can be a leading differentiating factor for a company. A company that brings ideas to the table and products to the shelves faster than its competitors usually finds itself ahead of the others in the market.  In some industries where services have to be consumed instantly, speed matters more than ever. Apart from that, in some industries, businesses need to keep the shelf filled with the latest items in order to engage their customers and it is also a reason that speed is important.

Walmart has always placed a heavy focus on both speed and efficiency since these two factors are integral to running its business profitably. Some years ago, the company also stepped into e-commerce and acquired the Indian e-commerce brand Flipkart. Apart from that, it is also delivering e-commerce services in its domestic market. Walmart has also maintained a supply chain management model that fosters higher speed and more efficiency so that products are brought to the stores faster from the suppliers. Walmart is facing heavy competition from Amazon as well as the US-based physical retail brands like Costco and Target. In order to manage the competitive pressure, it is investing in e-commerce as well as growing its digital fulfillment network.  Its fulfillment network also plays an important role in ensuring that tasks are carried out and products are delivered to the customers’ doorsteps faster.

Dependability:

Dependability or reliability is in itself considered a sign of quality in this era. Dependability, reliability, or trust are synonymous with brand equity which is an important strength for any industry-leading brand including Walmart. How dependable your business is or how much your customers trust your brand affects your brand equity. However, there are several factors that affect dependability in each industry. For example, while the quality of raw materials and the final product will have a direct impact on the dependability of a business, in the other it is the timeliness of delivery of services that will affect dependability.

Keeping the promise you made to your customers also affects dependability. There is another factor that has kept growing in importance for businesses as well as customers in the twenty-first century and which also affects dependability is the overall level of customer experience. Brands that offer a superior customer experience overall are considered to be more dependable by the customers. Apple and Amazon are two great examples that have maintained very high-level customer loyalty because they deliver superior customer experience. However, with increasing competition in the physical retail industry, retailers like Walmart, Costco, and Target are also focusing more than ever on customer experience in order to retain their competitive position in the US retail industry.

As in the case of Walmart, customer service and customer experience have always remained an integral part of its business strategy. The company is known for being obsessive with lower prices which is the main factor affecting the popularity and customer loyalty of Walmart. However, just lower prices are not enough to maintain customer loyalty in this era since the other retailers like Costco or Target also focus on offering their customers lower prices. Walmart has also made customer service an important focus area to engage its customers and retain the level of customer loyalty it enjoys. Customer service is also a differentiating factor for Walmart and dedication to customer service differentiates the Walmart brand from other US-based retailers. Moreover, Walmart is a highly trusted brand for the US-based consumers and the trust that the customers place in the brand because the company has remained dedicated to product and service quality since its beginning.

Flexibility:

Flexibility means the ability to change what, how, and when operations do. There are four types of flexibility in general that are applicable to business operations. They include product/service flexibility, mix flexibility, volume flexibility, and delivery flexibility. Product/ service flexibility means the ability to introduce new or customized products or services. Mix flexibility means the ability to widen the product/services mix to cater to the customer needs better. Volume flexibility denotes the ability to change the output level to produce different quantities of products/services over time. Delivery flexibility on the other hand means the ability to change the timing of delivery. Overall, flexibility is an important aspect of operational performance and superior flexibility also denotes superior performance. Flexibility can also acquire different meanings in different industrial environments. For example, in a healthcare environment, the ability to introduce new types of treatment and to widen the range of available treatments or the ability to adjust more patients and reschedule appointments can all be a sign of flexibility. However, in the case of the automobile or retail industry, flexibility can mean different things.

As in the case of Walmart, its flexibility is reflected in the large product/services mix it offers as well as its global expansion. Walmart sells a vast range of products and the company has continued to expand its product range over the years in order to cater to the needs of a larger customer segment domestically as well as internationally. Overall, Walmart is a highly flexible company. Its flexibility is driven by several factors including its sales distribution network, its physical and technological infrastructure, a large pool of talented employees as well as its ability to understand customer needs and to deliver a seamless customer experience.

Cost in terms of operations performance mainly means the operating expenses incurred by businesses. However, the proportion of various operating costs can vary from industry to industry. For example, staffing costs may represent the largest costs for a transportation company but the costs of raw material may be the largest group of operating costs for an automobile brand. In the case of most companies, if their operating expenses are low, they can also keep the prices low for their customers. Not all companies compete in the market on the basis of price. Some companies compete on product quality, other companies compete on the basis of customer service and others on the basis of marketing or all of these factors. However, even the companies that do not compete on the basis of prices, they too are interested in keeping their operational costs low. If a company can reduce its operating expenses that will help it increase its profits because a penny saved equals a penny gained. The way in which operations need to be managed in order to keep operating expenses low requires focusing on areas where the company incurs the highest operating expenses.

Walmart’s cost of sales is its largest group of operating expenses. During fiscal 2020, the total cost of sales of the company grew to $394.6 billion as compared to $385.3 billion in 2019. operating selling, general and administrative expenses of the company were $108.8 billion in fiscal 2020. Its cost of sales constitutes the largest group of operating expenses for the company because it sells a large assortment of products that it sources from suppliers located in various corners of the globe apart from the United States. However, the company also uses its clout in the retail industry and its financial strength to source products at lower prices and pass on the benefit to the customers in the form of lower prices.

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MoSCoW Prioritization

What is moscow prioritization.

MoSCoW prioritization, also known as the MoSCoW method or MoSCoW analysis, is a popular prioritization technique for managing requirements. 

  The acronym MoSCoW represents four categories of initiatives: must-have, should-have, could-have, and won’t-have, or will not have right now. Some companies also use the “W” in MoSCoW to mean “wish.”

What is the History of the MoSCoW Method?

Software development expert Dai Clegg created the MoSCoW method while working at Oracle. He designed the framework to help his team prioritize tasks during development work on product releases.

You can find a detailed account of using MoSCoW prioritization in the Dynamic System Development Method (DSDM) handbook . But because MoSCoW can prioritize tasks within any time-boxed project, teams have adapted the method for a broad range of uses.

How Does MoSCoW Prioritization Work?

Before running a MoSCoW analysis, a few things need to happen. First, key stakeholders and the product team need to get aligned on objectives and prioritization factors. Then, all participants must agree on which initiatives to prioritize.

At this point, your team should also discuss how they will settle any disagreements in prioritization. If you can establish how to resolve disputes before they come up, you can help prevent those disagreements from holding up progress.

Finally, you’ll also want to reach a consensus on what percentage of resources you’d like to allocate to each category.

With the groundwork complete, you may begin determining which category is most appropriate for each initiative. But, first, let’s further break down each category in the MoSCoW method.

Start prioritizing your roadmap

Moscow prioritization categories.

Moscow

1. Must-have initiatives

As the name suggests, this category consists of initiatives that are “musts” for your team. They represent non-negotiable needs for the project, product, or release in question. For example, if you’re releasing a healthcare application, a must-have initiative may be security functionalities that help maintain compliance.

The “must-have” category requires the team to complete a mandatory task. If you’re unsure about whether something belongs in this category, ask yourself the following.

moscow-initiatives

If the product won’t work without an initiative, or the release becomes useless without it, the initiative is most likely a “must-have.”

2. Should-have initiatives

Should-have initiatives are just a step below must-haves. They are essential to the product, project, or release, but they are not vital. If left out, the product or project still functions. However, the initiatives may add significant value.

“Should-have” initiatives are different from “must-have” initiatives in that they can get scheduled for a future release without impacting the current one. For example, performance improvements, minor bug fixes, or new functionality may be “should-have” initiatives. Without them, the product still works.

3. Could-have initiatives

Another way of describing “could-have” initiatives is nice-to-haves. “Could-have” initiatives are not necessary to the core function of the product. However, compared with “should-have” initiatives, they have a much smaller impact on the outcome if left out.

So, initiatives placed in the “could-have” category are often the first to be deprioritized if a project in the “should-have” or “must-have” category ends up larger than expected.

4. Will not have (this time)

One benefit of the MoSCoW method is that it places several initiatives in the “will-not-have” category. The category can manage expectations about what the team will not include in a specific release (or another timeframe you’re prioritizing).

Placing initiatives in the “will-not-have” category is one way to help prevent scope creep . If initiatives are in this category, the team knows they are not a priority for this specific time frame. 

Some initiatives in the “will-not-have” group will be prioritized in the future, while others are not likely to happen. Some teams decide to differentiate between those by creating a subcategory within this group.

How Can Development Teams Use MoSCoW?

  Although Dai Clegg developed the approach to help prioritize tasks around his team’s limited time, the MoSCoW method also works when a development team faces limitations other than time. For example: 

Prioritize based on budgetary constraints.

What if a development team’s limiting factor is not a deadline but a tight budget imposed by the company? Working with the product managers, the team can use MoSCoW first to decide on the initiatives that represent must-haves and the should-haves. Then, using the development department’s budget as the guide, the team can figure out which items they can complete. 

Prioritize based on the team’s skillsets.

A cross-functional product team might also find itself constrained by the experience and expertise of its developers. If the product roadmap calls for functionality the team does not have the skills to build, this limiting factor will play into scoring those items in their MoSCoW analysis.

Prioritize based on competing needs at the company.

Cross-functional teams can also find themselves constrained by other company priorities. The team wants to make progress on a new product release, but the executive staff has created tight deadlines for further releases in the same timeframe. In this case, the team can use MoSCoW to determine which aspects of their desired release represent must-haves and temporarily backlog everything else.

What Are the Drawbacks of MoSCoW Prioritization?

  Although many product and development teams have prioritized MoSCoW, the approach has potential pitfalls. Here are a few examples.

1. An inconsistent scoring process can lead to tasks placed in the wrong categories.

  One common criticism against MoSCoW is that it does not include an objective methodology for ranking initiatives against each other. Your team will need to bring this methodology to your analysis. The MoSCoW approach works only to ensure that your team applies a consistent scoring system for all initiatives.

Pro tip: One proven method is weighted scoring, where your team measures each initiative on your backlog against a standard set of cost and benefit criteria. You can use the weighted scoring approach in ProductPlan’s roadmap app .

2. Not including all relevant stakeholders can lead to items placed in the wrong categories.

To know which of your team’s initiatives represent must-haves for your product and which are merely should-haves, you will need as much context as possible.

For example, you might need someone from your sales team to let you know how important (or unimportant) prospective buyers view a proposed new feature.

One pitfall of the MoSCoW method is that you could make poor decisions about where to slot each initiative unless your team receives input from all relevant stakeholders. 

3. Team bias for (or against) initiatives can undermine MoSCoW’s effectiveness.

Because MoSCoW does not include an objective scoring method, your team members can fall victim to their own opinions about certain initiatives. 

One risk of using MoSCoW prioritization is that a team can mistakenly think MoSCoW itself represents an objective way of measuring the items on their list. They discuss an initiative, agree that it is a “should have,” and move on to the next.

But your team will also need an objective and consistent framework for ranking all initiatives. That is the only way to minimize your team’s biases in favor of items or against them.

When Do You Use the MoSCoW Method for Prioritization?

MoSCoW prioritization is effective for teams that want to include representatives from the whole organization in their process. You can capture a broader perspective by involving participants from various functional departments.

Another reason you may want to use MoSCoW prioritization is it allows your team to determine how much effort goes into each category. Therefore, you can ensure you’re delivering a good variety of initiatives in each release.

What Are Best Practices for Using MoSCoW Prioritization?

If you’re considering giving MoSCoW prioritization a try, here are a few steps to keep in mind. Incorporating these into your process will help your team gain more value from the MoSCoW method.

1. Choose an objective ranking or scoring system.

Remember, MoSCoW helps your team group items into the appropriate buckets—from must-have items down to your longer-term wish list. But MoSCoW itself doesn’t help you determine which item belongs in which category.

You will need a separate ranking methodology. You can choose from many, such as:

  • Weighted scoring
  • Value vs. complexity
  • Buy-a-feature
  • Opportunity scoring

For help finding the best scoring methodology for your team, check out ProductPlan’s article: 7 strategies to choose the best features for your product .

2. Seek input from all key stakeholders.

To make sure you’re placing each initiative into the right bucket—must-have, should-have, could-have, or won’t-have—your team needs context. 

At the beginning of your MoSCoW method, your team should consider which stakeholders can provide valuable context and insights. Sales? Customer success? The executive staff? Product managers in another area of your business? Include them in your initiative scoring process if you think they can help you see opportunities or threats your team might miss. 

3. Share your MoSCoW process across your organization.

MoSCoW gives your team a tangible way to show your organization prioritizing initiatives for your products or projects. 

The method can help you build company-wide consensus for your work, or at least help you show stakeholders why you made the decisions you did.

Communicating your team’s prioritization strategy also helps you set expectations across the business. When they see your methodology for choosing one initiative over another, stakeholders in other departments will understand that your team has thought through and weighed all decisions you’ve made. 

If any stakeholders have an issue with one of your decisions, they will understand that they can’t simply complain—they’ll need to present you with evidence to alter your course of action.  

Related Terms

2×2 prioritization matrix / Eisenhower matrix / DACI decision-making framework / ICE scoring model / RICE scoring model

Prioritizing your roadmap using our guide

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walmart business model canvas

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  2. The Walmart Business Model Analysis

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  4. Walmart business model canvas|How Walmart makes money(2023)

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  21. What is MoSCoW Prioritization?

    MoSCoW prioritization, also known as the MoSCoW method or MoSCoW analysis, is a popular prioritization technique for managing requirements. The acronym MoSCoW represents four categories of initiatives: must-have, should-have, could-have, and won't-have, or will not have right now. Some companies also use the "W" in MoSCoW to mean "wish.".

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