As an experienced e-commerce seller, I often get asked "What exactly is Walmart? What makes it so big and successful?" Walmart is not just any retailer – it‘s a global powerhouse that has transformed expectations on prices, selection, convenience and the overall shopping experience. In this comprehensive guide, I‘ll provide an insider‘s perspective on Walmart‘s operations, business strategy and what exactly makes this brand a category-killer.
To start, Walmart is the largest company in the world by revenue, with over $500 billion in annual sales. It operates over 10,500 retail stores under 56 banners in 24 countries and e-commerce websites serving millions more customers. The company was founded in 1962 by Sam Walton with the revolutionary mission of offering customers the lowest prices anytime, anywhere. Walton‘s vision was to buy products at the best possible cost and pass the savings to consumers. This every day low price (EDLP) strategy remains core to Walmart‘s identity even 60 years later.
A Retail Juggernaut Built on Scale and Obsession with Low Costs
To understand Walmart, you have to grasp the enormity of its operations. Walmart employs a staggering 2.2 million associates worldwide. In the U.S. alone, more than 90% of the population lives within 10 miles of a Walmart store which is mind-blowing retail penetration. How does Walmart support its everyday low price guarantee? By leveraging its massive size in every aspect of its operations.
Walmart‘s Distribution and Supply Chain
- Operates over 150 distribution centers globally
- Owns one of the largest private fleets in the world with over 9,000 trucks
- Pioneered cross-docking with products going directly from suppliers to shelves
- Leverages scale to negotiate lowest wholesale costs from vendors
This supply chain is optimized for cost efficiency and speed. Combined with its massive buying power, Walmart can buy products for less than competitors and rapidly get them into stores. Vendors line up to do business with Walmart, even if it means lower margins.
Walmart‘s Retail Presence
|Year||# of Stores||Revenue|
As this table shows, Walmart has grown steadily into a retail empire. Today it has more locations than Kroger, Costco, Target, and Home Depot combined. Walmart also continues expanding with 375 new stores slated just for 2022. The supercenter model combining groceries and merchandise under one roof makes Walmart a convenient, low-cost one-stop-shop.
- Store associates multitask to reduce labor costs
- Stores average 180,000 square feet and sell 142,000 items
- Food accounts for 56% of Walmart‘s U.S. sales
- General merchandise has lower margins but drives store traffic
Careful labor models ensure costs stay low in Walmart‘s massive stores. Having latest products in-stock and optimizing inventory turns also help Walmart earn profits on razor-thin margins. Food, consumables and promotions serve to get customers in the door and shopping.
- Pioneered satellite technology in the 1980s to analyze sales and manage stocks
- Remains an innovator in supply chain technology like blockchain, AI, drones
- Investing billions to integrate digital tools in stores and e-commerce
From the beginning, Walmart leveraged technology to enhance efficiency. Today, Walmart is pioneering solutions like scanning robots in stores and autonomous delivery trucks.
How Walmart Stacks Up Against the Competition
In the retail industry, everyone is competing for market share against Walmart – the 386 billion pound gorilla. Here‘s a rundown of how Walmart fares compared to its biggest retail rivals:
Walmart vs. Amazon
|# of Stores||10,500||–|
|Online Sales||$73B (13%)||$197B (42%)|
While Amazon surpassed Walmart in e-commerce, Walmart‘s brick-and-mortar footprint remains dominant. Walmart is also growing online sales rapidly through services like curbside pickup.
Walmart vs. Target
|Stores||Discount & Grocery||Mostly Discount|
|General Merch||Broad assortment||More curated|
Target positions itself as trendier than Walmart. But Walmart‘s scale provides unmatched assortment and lower prices overall.
Walmart vs. Costco
|Store Type||Supercenters||Warehouse Club|
|Brand Selection||Broad||Limited & Bulk|
Costco caters more to small business owners with bulk wares. But Walmart ultimately serves more individual shoppers.
Walmart vs. Kroger
Kroger competes well on fresh food and groceries but lacks general merchandise and one-stop convenience.
Tips for Selling Products to Walmart
As a major retailer, Walmart is a golden opportunity for merchants – but a challenging partner. Here are my tips for getting your products on Walmart‘s shelves:
Offer innovative products – Walmart looks for new, unique or patented products to excite customers.
Emphasize value – Show how you‘ll deliver better quality or lower cost than rivals.
Scale production – Walmart‘s volume demands require top suppliers and manufacturers.
Master e-commerce – Listing on Walmart.com is crucial to reach online shoppers.
Know the process – Navigating Walmart‘s backend and supply chain is complex.
Provide drop shipping – More brands now ship directly to consumers.
Commit long-term – Building the relationship beyond the initial order is key.
While Walmart looks easy from the outside, it‘s a complicated beast within. But the massive customer exposure is worth the hassle for many brands.
Inside Walmart‘s Store Formats, Merchandising and Operations
Beyond just opening cavernous stores everywhere, Walmart employs sophisticated retail science to drive sales. Here are some interesting facts about how Walmart positions and operates stores:
- Stores use layout maps resembling heatmaps to place hot products in high-traffic zones
- End caps and feature displays are prime real estate for promotions
- Eye-level shelves house bestselling national brands
- Sale signs and rebates drive urgency and traffic
- Specialized roles like greeters enhance customer service
- Detailed planograms map product placement to a tee
- Private label brands like Great Value drive loyalty and margins
Walmart combines both art and science to encourage customers to walk through the door and fill their carts. Sophisticated category management ensures the right product assortment in every store. Strategic merchandising promotes targeted products and steers shoppers to impulse purchases. It‘s retail mastery at its finest.
The Customer Experience – Both Beloved and Critiqued
Depending who you ask, Walmart represents the best or worst of American commerce. Here are some of the customer sentiments around the Walmart shopping experience:
- One-stop shopping convenience
- Savings on everyday necessities
- General merchandise selection
- Easy to browse massive aisles
- Pharmacy and other services
- Familiar shopping environment
- Always crowded, long lines
- Can‘t find help from employees
- Messy stores and shelves
- Limited parking and checkout space
- Not the best produce or meat
- Too bright and chaotic inside
Walmart evokes a wide range of reactions from customers. But the reality is over 200 million customers visit a Walmart store each week. The convenience and value keep shoppers coming back despite criticisms over the impersonal shopping atmosphere.
The Bottom Line – Walmart is a Retail Paradigm
Walmart has undoubtedly changed the game in retail. Through the power of its brand, scale and infrastructure, it has created a benchmark for low prices that competitors must bend to. Consumers expect Walmart‘s endless aisles of merchandise at a bargain. Strategic merchandising and retail science inform every aspect of store operations. And Walmart‘s supply chain has achieved wonders of efficiency.
At the same time, Walmart struggles with negative perceptions around labor, supplier relationships and its impacts on communities. But in the end, consumers vote with their wallets. The growth of e-commerce poses another challenge to Walmart‘s brick-and-mortar model. However, Walmart has the resources to adapt and appear primed to evolve. For better or worse, Walmart has defined modern retail. This iconic American brand seems poised to help customers save money for many years to come.