Walmart Business Model
This paper focuses on analyzing Walmart Business Model and how the company manages to thrive in the competitive market. Apparently, based on the research done in 2017, Walmart remains the World’s largest company based on the amount of revenue generated by its activities. Walmart has more than 2.3 million employees making one of the world’s biggest employers. Walmart’s business activities are divided into three main categories; the Walmart International; the Walmart U.S; and the Walmart Sam’s Club. The company also offers its special products through different retail formats including hypermarkets, supermarkets, clubs, cash and carry, supermarkets, and restaurants. Walmart have always maintained its global leadership in its given segments by leading in both price and assortment. The company’s legendary ‘everyday low cost’ (EDLC) and ‘everyday low prices’ (EDLP) have helped it attain its success as world’s largest company (Brea-Solis, Casadesus-Masanell, & Grifell-Tatjé, 2012). The change in consumer preferences, revenue, market share and competitors are among the Walmart’s model that the paper focuses on.
Market share
Time line research indicates that the market share of the Walmart Company has increased considerably between 2008 and 2018. The company’s international share of the market has risen by 24% in 2018 amounting to close to 496 billion U.S dollars (In Bank, In Kenny, & In Stecher, A2018). The company’s gross margin rose during the 2018 quarter due to the proportional operations ongoing with its competitors to win larger apparels and share of groceries in the industry. Particularly, the Arkansas-based branch of the company has taken massive investment steps to ensure that the inventory fresh and stores are appealing to the customers. Walmart also have online sales which have grown by 23% during the period. According the CEO Doug McMillon "Including online grocery, it has been the key driver of our e-commerce growth and that will continue." The company has set its 2019 fiscal earnings per share at five dollars which will see its contribution to the world market grow by 40% in the coming year.
Customer Base
Walmart has increased its online sales and is still targeting to make heavy online sales especially to the higher personnel individuals and to the households. The company’s key resources are the intellectual properties that have kept the company going. The company operates various digital channels including its website through the consumers can access all the information on various activities and product offered. Additionally, it operates an e-commerce in over ten countries outside the US which support the delivery of its products (In Bank, In Kenny, & In Stecher, A2018). Alongside e-commerce, the company provides its customers access to assortment of its products including those not found in the physical outlets. Walmart has extensive physical network channels which brand the company’s product.
The product catalogue of the company is availed to the customers on self-service basis. However, some of the company’s products are available exclusively via the digital channels of the company. The online platforms enable the company to make purchases, manage account details, and arrange deliveries without directly meeting with the customers. Majority of the products sold to the customers are sold via the company’s mortar and brick which operate on the self-service basis.
Revenue
Walmart’s ruthless competitive strategy which is focused on availing products at lowest prices possible has yielded the company nearly five hundred dollars annual revenue. Apparently, the main sources of the revenue for the company come from the three previously mentioned segments of the company. Walmart’s business is categorized into three segments, U.S retailing, Sam’s Club Brand, and the International retailing (In Bank, In Kenny, & In Stecher, A2018). The U.S unit is by far the largest segment of the business comprising of 46oo stores which spread to 700 million square feet across the country. The segment generates up to 308 billion dollars accounting for 64% of the entire company’s revenue. The International retail segment is worth a quarter of the company’s annual sales fetching the company over 116 billion dollars. Lastly, the Walmart’s membership club generates 60 billion dollars of the total annual sales which is 12% of the company’s total revenue (In Bank, In Kenny, & In Stecher, A2018).
The segments of the company deal in variety of products ranging from hardline which consist of, automotive, stationery, hardware and paints, seasonal merchandise; apparels for all gender and of different ages; home products; health and wellness including optical services, over-the-counter drugs, pharmacy, and clinical services; entertainments which contain toys, cameras and supplies, photo processing services, cellular phones, movies, music, and video games. The company also generates revenues from services rendered on financial assistance, clinical services, movie streaming services, and health insurance services.
Competitors
Walmart is known for its legendary low prices principle for which it penetrates the market with low pricing. The success of this world’s largest company is not without competitions. The company faces stiff competition from other globally known companies. The first and close competitor is the Amazon which has its headquarters in Seattle, Washington. It was founded in 1994 and currently employees over three hundred and forty thousand employees with its revenue amounting to 136 billion dollars. Amazon offers competition on the online retains shopping. Currently, Amazon is ranked as one of the most innovative and successful companies in the world the next competitor is Alibaba, an e-commerce company that operates in wholesale and retail (Brea-Solis, Casadesus-Masanell, & Grifell-Tatjé, 2012). The third competitor is the home depot which sells garden products, building materials and remodeling products.
Walmart Supply Chain Management (SCM)
Walmart is putting a lot of emphasis on meeting the customer needs and tries to reduce the prices as much as possible using effective supply of chain management. The company’s efficiency in supply chain management is due to two key factors namely the computerized inventory system and the automated distribution center. This management chain has brought minimization of time hence meeting higher demands at within a short period of time. Walmart have had a very effective and responsive and most flexible system of distribution to transport goods form the docks to the store it has also educated its drivers with the necessary company code of ethics. One of the lethal tools that Walmart has used in its supply chain responsibility is the cross-docking system which is simply a method of handling goods. It is a method of supplying products at the right time and in the said quantity hence cutting down time wastage.
Walmart Customer Relationship Management (CRM)
Walmart, as a leading company uses big data to anticipate and respond to its consumers wants and needs to personalize the shopping experience with the Walmart company. For quite some time, brand constancy stated in the annual best retail brands report. According to Walmart’s ranking “the brands that have gained the most value is developing a strategic understanding of sales and customer data, so they can meet customer needs and desires better and faster than ever. They're also expanding beyond their core businesses to stay relevant to changing customer demands and are bridging the gap between their brick-and-mortar stores and online and mobile shopping options.”
References
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Brea-Solis, H., Casadesus-Masanell, R., & Grifell-Tatjé, E. (2012). Business model evaluation: Quantifying Walmart's sources of advantage
In Bank, M. C., In Kenny, B., & In Stecher, A. (2018). Walmart in the Global South: Workplace culture, labor politics, and supply chains.
Sommer, A. (2012). Managing green business model transformations. Berlin: Springer.
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