Walmart Business Model: How A Goliath Still Innovates

The Walmart business model is focused on deliving excellence through its massive globally operations. Read on to find out more about the worlds largest retailer.

Gary Fox

Walmart Business Model Canvas

Walmart Business Model: How A Goliath Still Innovates

The Walmart business model involves offering the best prices though the huge scale of the world’s largest retail operations. Walmart offers an unparalleled combination of low prices, wide product assortment, and convenient shopping experiences. With its massive scale, efficient supply chain, and relentless focus on cost reduction, Walmart has become a dominant force in the retail industry. In this article, we explore the fascinating business model that has propelled Walmart to the top of the global retail market.

How Does Walmart’s Business Work?

The Walmart business model is based on offering a wide variety of products at consistently low prices, attracting cost-conscious consumers and encouraging high-volume purchases. The company operates a chain of hypermarkets, discount department stores, and grocery stores, serving millions of customers worldwide. Walmart leverages its immense purchasing power to negotiate favorable terms with suppliers, enabling it to maintain low prices while still generating profits.

Key Facts About Walmart

. Company name:
Founders:

Sam Walton.

Launch date:

July 2, 1962

Year founded:

1962

Company CEO:

Doug McMillon

Headquarters

Bentonville, Arkansas, USA

Number of employees
Ticker symbol

WMT

Annual revenue

$611 billion (2023)

Profit | Net Income

$11.292 billion (2023)

Market Cap

$484.61 billion (April 2024)

Useful Links for Walmart

Globe
Facebook 2
Tik Tok
Social
Social Media 2
Business
Pinterest
Youtube
Social 2

A Brief History

Walmart was founded in 1962 by Sam Walton, an entrepreneur who believed in offering the lowest possible prices to customers. Walton’s vision and leadership laid the foundation for Walmart’s growth and success. Over the years, the company has expanded its presence across the United States and internationally, to become a global retail powerhouse.

Key milestones in Walmart’s history include:

  • 1962: Sam Walton opens the first Walmart store in Rogers, Arkansas
  • 1968: Walmart opens its first distribution center and home office in Bentonville, Arkansas 1972: Walmart goes public on the New York Stock Exchange
  • 1983: The first Sam’s Club membership warehouse store opens
  • 1988: Walmart opens its first Supercenter, combining general merchandise and grocery items
  • 1991: Walmart becomes the largest U.S. retailer in terms of revenue
  • 1994: Walmart expands internationally, opening its first store outside the U.S. in Mexico
  • 2000: Walmart.com launches, marking the company’s entry into e-commerce
  • 2002: Walmart enters the Fortune 500 list as the largest corporation in the United States
  • 2007: Walmart surpasses $350 billion in annual sales
  • 2010: Walmart acquires Vudu, a digital video store and streaming service
  • 2016: Walmart acquires Jet.com for $3.3 billion, bolstering its e-commerce capabilities
  • 2020: Walmart launches Walmart+, a membership program to compete with Amazon Prime

Who Owns Walmart?

Walmart is a publicly-traded company, with shares listed on the New York Stock Exchange under the ticker symbol WMT. The company’s ownership structure includes a mix of institutional investors, mutual funds, and individual shareholders. The Walton family, descendants of founder Sam Walton, hold a significant portion of Walmart’s shares and maintain a controlling interest in the company. As of 2021, the Walton family owns approximately 50% of Walmart’s outstanding shares, ensuring their continued influence over the company’s strategic direction and decision-making.

Walmart Mission Statement

Walmart’s mission statement is “to save people money so they can live better.”

How Walmart Works

The Walmart business model is built on several key pillars that contribute to its success:

  1. Everyday Low Prices (EDLP): Walmart is committed to offering the lowest prices possible on a wide range of products, attracting price-sensitive customers and encouraging repeat visits.
  2. Efficient Supply Chain: Walmart has developed a highly efficient supply chain, leveraging advanced technology, data analytics, and strategic partnerships with suppliers to minimize costs and ensure a steady flow of goods to its stores.
  3. Scale and Purchasing Power: As the world’s largest retailer, Walmart has immense purchasing power, enabling it to negotiate favorable terms with suppliers and pass the savings on to customers.
  4. Wide Product Assortment: Walmart offers a vast array of products across multiple categories, including groceries, electronics, apparel, home goods, and more, making it a one-stop-shop for many consumers.
  5. Omnichannel Presence: Walmart has embraced an omnichannel strategy, integrating its brick-and-mortar stores with its e-commerce platform, allowing customers to shop seamlessly across different channels.
  6. Cost-Cutting Measures: Walmart is relentless in its pursuit of cost reduction, implementing various measures such as energy-efficient stores, optimized logistics, and streamlined operations to minimize expenses and maintain low prices.
  7. Focus on Customer Service: Despite its emphasis on low prices, Walmart strives to provide excellent customer service, with friendly associates, clean stores, and convenient services such as self-checkout and curbside pickup.

The Revenue Model of Walmart

The Walmart business model generates the following revenue streams:

  • Retail Sales: The primary source of revenue for Walmart comes from the sale of goods in its stores and online platforms, including groceries, electronics, apparel, home goods, and more.
  • Membership Fees: Walmart’s Sam’s Club division generates revenue through annual membership fees, which grant customers access to bulk purchases at discounted prices.
  • Financial Services: Walmart offers various financial services, such as money transfers, check cashing, and bill payments, generating revenue through fees and commissions.
  • Advertising: Walmart generates revenue by selling advertising space on its website and in its stores to suppliers and third-party advertisers.
  • Marketplace Commissions: Walmart’s e-commerce platform allows third-party sellers to list their products, generating revenue through commissions on each sale.

What is Walmart’s Business?

Walmart operates in retail, serving consumers across various markets, including the United States, Mexico, Canada, and other international locations. The company primarily offers various products at consistently low prices, catering to cost-conscious consumers. Walmart business model differentiates itself from competitors through its massive scale, efficient supply chain, and ability to leverage its purchasing power to maintain low prices. The company’s competitive advantages include its strong brand recognition, extensive store network, and ability to adapt to changing consumer preferences through its omnichannel strategy.

Key Features of Walmart’s Business Model

  • Everyday Low Prices (EDLP) strategy, focusing on consistently offering the lowest prices possible
  • Efficient supply chain and logistics, enabling cost reduction and timely product availability
  • Massive scale and purchasing power, allowing for favorable supplier negotiations and cost savings
  • Wide product assortment, serving as a one-stop-shop for consumers across multiple categories
  • Omnichannel presence, integrating brick-and-mortar stores with e-commerce capabilities for seamless shopping experiences

The Walmart Business Model Canvas

Detailed below is the Walmart business model canvas:

Walmart Business Model Canvas

The Walmart Business Model

Customer Segments Of The Business Model Canvas

Customer Segments

The Walmart business model caters to a wide range of customer segments:

  • Cost-conscious consumers: Shoppers seeking the lowest prices
  • Families and households: Groups purchasing a variety of products
  • Small business owners: Entrepreneurs buying supplies and inventory
  • Low to middle-income earners: Budget-minded individuals and families
  • Senior citizens and retirees: Older adults on fixed incomes
  • Value Proposition Of The Business Model Canvas

    Value Propositions

    The Walmart business model revolves around the value proposition of offering a wide variety of products at consistently low prices, making it an attractive choice for cost-conscious consumers. The company’s extensive product assortment and convenient store locations make it a one-stop shopping destination for families and households. Walmart’s focus on providing reliable product quality and a streamlined shopping experience further enhances its value to customers.

  • Everyday low prices: Consistently offering the most affordable options
  • Wide product assortment: Catering to diverse needs and preferences
  • Convenient shopping experience: Providing easy access and streamlined processes
  • One-stop shopping destination: Fulfilling multiple needs in a single visit
  • Reliable product quality: Ensuring dependable performance and value
  • Channels

    Channels

    The Walmart business model focuses on an omnichannel approach to reach and engage with its customers:

  • Brick-and-mortar stores: Physical locations for in-person shopping
  • E-commerce website and mobile app: Online platforms for remote purchasing
  • Pickup and delivery services: Convenient options for order fulfillment
  • Social media and digital advertising: Engaging customers through online platforms
  • Direct mail and print advertising: Traditional marketing methods for reach
  • Key Relationships Of The Business Model Canvas

    Customer Relationships

    The Walmart business model places a strong emphasis on building and maintaining customer loyalty. The company employs various strategies to foster a positive user experience. The main aspects of Walmart’s customer relationships include:

  • Self-service in-store shopping: Allowing customers to browse and purchase independently
  • Personalized online shopping recommendations: Tailoring suggestions based on customer preferences
  • Customer service and support: Providing assistance and problem resolution
  • Loyalty programs and rewards: Incentivizing repeat purchases and engagement
  • Feedback and reviews channels: Gathering customer insights and opinions
  • Key Activities Of The Business Model Canvas

    Key Activities

    The Alibaba business model involves key activities that are focused on managing complex ranges of products and services efficiently and effectively. The key activities for Walmart include:

  • Retail operations and store management: Overseeing daily functions and customer experiences
  • Supply chain management and logistics: Coordinating the flow of goods from suppliers to stores
  • Procurement and vendor relationships: Sourcing products and negotiating terms with suppliers
  • Marketing and advertising: Promoting the Walmart brand and offerings to customers
  • E-commerce and omnichannel development: Enhancing online and integrated shopping experiences
  • Customer service and support: Assisting customers and resolving issues
  • Key Resources Of The Business Model Canvas

    Key Resources

    The Walmart business model focus heavily on key resources that relate to its retail stores, investments in infrastructure and operations. These resources are critical to Walmart’s success and help support its various business operations. The key resources for Walmart include:

  • Extensive store network: Widespread physical presence for customer access
  • Efficient supply chain and logistics: Streamlined operations for cost reduction
  • Strong brand reputation: Widely recognized and trusted brand image
  • Skilled and diverse workforce: Knowledgeable and dedicated employees
  • Advanced technology and data analytics: Innovative tools for optimization and insights
  • Financial resources and scale: Substantial capital and economies of scale
  • Key Partners Of The Business Model Canvas

    Key Partners

    The Walmart business model relies on a network of key partners that play a crucial role in supporting the company’s operations, growth, and success. These partnerships span multiple industries and are global. Walmart leverages specialized expertise, resources, and capabilities to enhance its value proposition and deliver a seamless experience to its customers.

  • Revenue Streams Of The Business Model Canvas

    Revenue Streams

    The Walmart business model generates revenue through several key streams other than retail operations. The main revenue streams for Walmart include:

  • Retail sales of goods: Income from in-store and online purchases
  • Membership fees (Sam’s Club): Recurring revenue from wholesale club subscriptions
  • Financial services: Fees from money transfers, check cashing, and other offerings
  • Advertising: Revenue from in-store and online promotional placements
  • Marketplace commissions: Fees from third-party sellers on Walmart’s e-commerce platform
  • Wholesale and bulk sales: Income from large-quantity purchases by businesses
  • Cost Structure Of The Business Model Canvas

    Cost Structure

    The Walmart business model involves a heavy infrastructure coss essential to maintaining and growing its operations. The main components of Walmart’s cost structure include:

  • Walmart Business Model Patterns

    The Future of the Walmart Business Model

    1. Growth and Diversification: Walmart is actively diversifying its earnings through improved category mixes and business initiatives like advertising and memberships, which are expected to contribute to mid-single-digit sales growth over the next few years​ (Walmart Corporate News and Information)​. Their multichannel approach, including significant advancements in e-commerce, aligns with modern shopping habits, which could expand their customer base significantly​ (Finbold)​.
    2. Economic Resilience: Walmart has historically shown resilience in economic downturns, which is largely attributed to its focus on essentials like groceries and everyday items. This positions it well to weather economic uncertainties and possibly outperform during recessions​ (Finbold)​.
    3. Technological Investments: The company has made substantial investments in its supply chain and digital platforms, aiming to transform its business model to be more tech-powered and efficient​ (Walmart Corporate News and Information)​. These investments are anticipated to improve operating margins and create a more seamless customer experience, both online and in-store​ (Walmart Corporate News and Information)​.
    4. Financial Health: Financial analysts have positively revised Walmart’s price targets, reflecting confidence in the company’s fundamentals and growth potential. The consensus among analysts suggests a bullish outlook for the stock​ (MarketScreener)​.
    5. Challenges: Despite these strengths, Walmart faces significant challenges, including vulnerability to high food inflation and shifts in consumer spending habits, which could affect discretionary spending and overall profitability​ (Finbold)​.

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