Walmart is one of the largest retail companies in the world. It was founded in 1962 by Sam Walton. The headquarter of walmart is situated in the United States. The company’s primary aim is to provide consistent discounts, loyal customer service, and fast, friendly service.
The Company targets to expand its business in large cities as well as spread retail stores throughout the world. The retail stores of Walmart are divided into four divisions Walmart Supercenters, Discount Stores, Neighborhood Markets, and Sam’s Clubs warehouses. More than 100 million customers are visiting these Walmart Stores.
That is very uncomfortable for small merchants and communities in America. Walmart reaches their town and provides low-cost offers and the best customer service. It is a terrible condition for small merchants and business people in America. To downtown merchants, Walmart comes and takes over all the small stores.
Walmart’s purchasing power, aggressive marketing, and low prices to the customer tend to pull out the business of small merchants. Gradually, Walmart’s dream to become the world’s largest retailer is thoroughly filing day by day. But, they increase their business through the wrong actions and do not respect the culture or language of the communities.
How Walmart Generates Revenue?
The Revenue Model of Walmart deals with the principle of buying in bulk in one go. In this system, they got a massive discount from the manufacturers. They sell in small quantities at low prices. By reducing the cost, they have high sales volume through which they have high earnings.
Walmart generates revenue by removing the middleman and selling their product directly to the customers and services to the business. The two primary sources of income are Product revenue and Service revenue.
Walmart’s revenue in the fiscal year ending January 2020 was $524 Billion.
Product Revenue
Walmart has a wide range of products in various categories:-
- In the grocery category, they have daily needs products, dairy products, frozen foods, bakery, baby products, beauty aids, and many more.
- Health and wellness category have products like Pharmacy products and clinical services.
- The entertainment category has products like electronics products, toys, cameras, movies, music, videos, and books.
- Stationary, paints, hardware, Automotive, sporting goods, crafts, and seasonal merchandise.
- Apparel categories include apparel for men, women, boys, and girls, shoes, jewellery, and accessories.
- Home appliances include home furnishing services, home decor, living, and horticulture.
Service Revenue
Walmart also provide services to generate revenue in various fields:-
- They provide financial services like prepaid cards, money orders, wire transfers, bill payments, etc.
- VUDU movie streaming services: This is a subscription-based OTT platform for buying and renting movies and watching TV shows on demand.
- Clinical Services include primary health care, Physical and Wellness checks, and Clinical lab tests.
- Health Insurance services
Business Model Of Walmart
There are different business models followed by successful companies that vary from time to time. Walmart’s business model is based on eliminating the middleman from the distribution channels. The advantage of removing the middleman is providing benefits to the consumer by offering lower-cost products. The main motive of Walmart’s business strategy company is to enter every segment of the market and dominate the market by providing products at a lower price.
The company’s primary marketing strategy is based on leading on price, being competitive, and delivering a great experience by the motto of Everyday Lower price.
Walmart has three critical segments.
Walmart U.S
Walmart U.S is operated in the U.S. They provide customers with products and services that are not present physically in stores. They provide their services via the website and mobile application. The website of Walmart company has a unique feature that provides a third party to sell products. The company operates on various platforms like supermarkets, discount stores, neighborhood markets, and e-commerce websites.
Walmart International
Walmart International is also divided into three sections: retailers, wholesalers, and other small projects. These sections are divided into various departments: supermarkets, warehouses, electronics, apparel stores, drug stores, digital retailers, and many more.
Sam’s Club
It is the online platform of Walmart’s company, i.e., “samsclub.com“. This club consists of memberships of the only warehouse retailer operations. This section includes warehouse clubs in the U.S, as well as samsclub.com.
Walmart’s Marketing Strategy
Walmart’s Business Strategy Analysis is one of the essential parts of any business, whether small or large. It is necessary to make an effective marketing plan to survive in the market. Walmart uses the principle of business marketing penetration method, which is used to capture the market by offering lower prices and competitive prices to consumers.
The company follows cost leadership which makes a massive profit for the company. The company provided low prices to the consumer and treated all the customers as king of the market to maintain the relationship between Walmart and the customer.
According to Walmart, four factors drive the customer’s choice of retailer:
- Price
- Access
- Experience
- Assortment.
One more reason for the success of Walmart is purchasing products from local manufacturers in bulk in one go and selling in small quantities. Buying from local manufacturers is the benefit for both. Buying more products from local manufacturers means they are creating more jobs and they reduce the unemployment rate. They should provide good quality products at a lower price to maintain a good relationship with customers and continue to get profits in business.
Walmart Video Ads
FAQ’s
What is the business model of Walmart?
Walmart’s business model is based on eliminating the middleman from the distribution channels. The advantage of removing the middleman is providing benefits to the consumer by giving lower-cost products.
What is the motive behind Walmart’s Business Strategy?
The main motive of Walmart’s business strategy company is to enter every segment of the market and dominate the market by providing products at a lower price.
What is Walmart’s Market Strategy?
The company follows cost leadership which makes a massive profit for the company. The company provided low prices to the consumer and treated all the customers as king of the market to maintain the relationship between Walmart and the customer.
How does Walmart generate revenue?
The earning model of Walmart deals with the principle of buying in bulk in one go. In this system, they got a considerable discount from the manufacturers. Walmart generates revenue by removing the middleman and selling their product directly to the customers and services to businesses.
What are the primary sources of revenue for Walmart?
The two primary sources of revenue are:
- Product revenue
- Service revenue
Does China own Walmart?
The Walmart branch in China is majority Chinese-owned. But predominantly, it is owned by Sam Walton’s many children.
Why is Walmart so cheap?
They sell in small quantities at low prices. By reducing the cost, they have high sales volume through which they earn high. Hence, by trading in high volume, they can sell it at a low price and still gain profit.
What are the sub-organizations under Walmart?
There are 16 sub-organizations of Walmart. Some of them are:
- Walmart Labs
- Seiyu Group
- Walmart Canada
- Sam’s Club
- Mas Club
- Lider
- Vudu
What are the top acquisitions of Walmart?
Walmart has acquired 28 companies. Some top acquisitions are:
- Flipkart
- Thunder
- Art.com
- Botmock
- MeMD
- Polymorph
- Aspect
Related Articles: Flipkart Case Study: Marketing and Advertising Campaigns
