With current operations in a worldwide network of retail stores, it is evident that Walmart runs a business model that enhances the business’s overall success.
The success witnessed by Walmart may result in queries on the operations as small businesses try to follow in the footsteps of the giant retail company. Many may ask, what’s Walmart’s business model? Well, here’s what I found out!
What Is Walmart’s Business Model In 2022?
Walmart’s business model revolves around brick-and-mortar stores and is currently expanding into eCommerce as of 2022. Reporting over $555 billion in sales in the past year, Walmart operates its businesses through three primary segments: Walmart US, Walmart International, and Sam’s Clubs. The company operates 10,500 stores and clubs in 24 countries under 48 banners and eCommerce websites.
If you want to get more information on Walmart’s business model, including the core strategies and why it’s unique to Walmart, keep reading!
What Is The Business Model Of Walmart?
Walmart’s business model is run by physical stores spread across the US and other selected countries, which it couples with eCommerce websites in ten countries.
In the US, Walmart operates through 157 distribution centers, while another 188 distribution centers run in Brazil, Argentina, Canada, Chile, Central America, China, Japan, Mexico, SA, and the UK.
Divided into three major units, Walmart’s business model is supported by the following segments:
Walmart US covers business operations in all 50 states of America, including Puerto Rico.
That said, the unit represents more than 60% of Walmart’s total sales from both physical and eCommerce stores.
Also, the segment provides consumers with daily necessities, including groceries, apparel, health, entertainment, and hardlines, among others.
Along with several financial services, Walmart’s business model provides money orders, wire transfers, prepaid cards, and bill payments.
Additionally, the stores have retail licensed and private label merchandise.
With that, Walmart US provides physical access to consumers through supercenters, discount stores, and other small store formats.
Moreover, customers have digital access to Walmart US through eCommerce websites and the official Walmart app.
In conjunction with the physical stores, Walmart couples with digital platforms to create programs such as “Pickup Today” and “Walmart Pickup.”
Walmart International covers the business operations in 26 other countries outside the US. That said, the unit generates approximately 25% of Walmart’s net sales.
Further, Walmart International operates hypermarkets, supercenters, supermarkets, warehouse clubs, and eCommerce websites in ten countries.
Also, the stores under Walmart International are operated through joint ventures and wholly-owned subsidiaries.
Additionally, physical access to the merchandise is made possible by 156 distribution centers.
Like the operations in the US, the physical stores pair up with digital access through programs such as “Click & Collect” in the UK and home delivery available in Mexico.
Sam’s Club represents Walmart’s membership-only warehouse club running in 44 US states and Puerto Rico. That said, Sam’s Club generates about 12% of Walmart’s net sales.
Further, this segment of Walmart’s business model takes care of membership-only warehouse clubs and can be accessed through samsclub.com.
With that, Sam’s Clubs provide consumers with a subscription service to individuals and business owners.
Like Walmart, Sam’s Club offers its members digital access to “Club Pickup” for curbside pickup services.
Moreover, Sam’s Club offers home goods, apparel, groceries, health and wellness, technology, electronics, and even fuel at some store locations.
In addition to the three major business segments and its eCommerce website, Walmart runs operations through the Walmart app that allows customers to search, purchase and pay for items.
What Are The Core Strategies Of Walmart’s Business Model?
The company’s motto drives the core strategy of Walmart’s business model, which is the following statement:
“leading on price, invest in differentiating on access, be competitive on assortment and deliver a great experience by the motto or EDLP (Everyday Low Prices).”
With a commitment to EDLP (Everyday Low Prices), Walmart’s core strategy is to control expenses which directly translates to more savings for the consumers.
Also, Walmart strives to operate an omnichannel approach in the business model to enable customers to access a broad assortment of goods at any time, regardless of their location.
Additionally, Walmart is committed to providing customers with a wide range of products, including groceries, electronics, and apparel, so that customers can consider Walmart as a one-stop shop.
What Are The Key Objectives Of Walmart’s Business Model?
The key objectives of Walmart business model include:
Lead On Price
Walmart is highly focused on providing customers with essential products at the lowest possible prices. This way, its products and services can be made available to the entire population.
To achieve this, Walmart purchases items from suppliers in large volume to increase its bargaining power and buy things at the lowest possible prices.
Moreover, Walmart organizes its redistribution system to ensure that goods received at the warehouse are sent directly to the customer or point of sale and not stored.
This way, the company can save on logistics costs.
Different Points Of Access
Walmart has diversified its access to the population through small-format stores, digital marketing, retail, and hard-to-access services such as pharmacies and clinics.
Wide Variety Of Merchandise
Walmart provides customers with a wide variety of items to uphold individual preferences.
With a great interest in customer satisfaction, Walmart strategizes on customer retention by offering them the best possible shopping experience.
That said, this strategy is made possible by enhancing employee motivation in the store.
Furthermore, Walmart provides a policy of money-back guarantee to customers who are not fully satisfied by the company’s products.
How Would You Describe Walmart’s Business Strategy And Model?
Walmart’s business model can be likened to the company’s philosophy, which is based on “everyday low prices.”
Ideally, the business model pursues a cost leadership business strategy facilitated by the economies of scale devised by the company.
In the cost leadership business strategy, Walmart maintains a constant improvement of assortment, prices of items, and access to merchandise sold by Walmart.
Ultimately, Walmart commits itself to offering a wide variety of items for the lowest possible prices and provides customers with the opportunity to select a convenient channel of purchase.
Also, the effective utilization of online sales channels further boosts all retail operations, resulting in an overall increase in the company’s revenues.
How Would You Characterize The Business Model Of Walmart?
Walmart’s business model and strategy can be characterized solely by the cost leadership approach.
To boost this model into successful business operations, the strategic level management constantly aims at associating Walmart’s competitive advantage with the price of items, merchandise access, assortment, and experience.
The following newly introduced strategies have fueled Walmart’s effort to boost the business strategy:
Increased Focus On Customer Service
To increase customer service and general customer experience when shopping, Walmart invests in hourly associates to provide higher wages, in-depth training, and increased career opportunities.
Improving Groceries At The Store
Over the last few years, Walmart has showcased a new commitment to increase groceries in stores due to the increasing number of health-conscious customers.
Currently, Walmart has been boosting its range of fresh produce and organic options.
Improving The Flexibility Of The Shopping Experience
Walmart strives to integrate brick-and-mortar with digital eCommerce operations.
For instance, Walmart recently introduced a feature that allows customers to order items online and pick them up from physical stores.
Moreover, this program offers text reminders when customers order something from the pharmacy.
Generally, Walmart maintains its competitive advantage through a sustainable and long-term business model.
That said, the company can replicate the business model into a new market and still emerge successfully.