Walmart is one of the largest retail corporations in the world, with a presence in 27 countries and a revenue of over $500 billion in 2021. Its business model has been successful in bringing value to customers and generating profits for shareholders. In this article, we will explore the Walmart business model and how it makes money.
Walmart Business Segments
Walmart operates through three primary business segments:
- Walmart U.S.: This segment includes the company’s retail operations in the United States, which includes both physical stores and e-commerce. It offers a wide range of products, including groceries, electronics, apparel, and home goods.
- Walmart International: This segment includes the company’s retail operations in markets outside of the United States. Walmart International operates in 27 countries, including Mexico, Canada, the United Kingdom, Japan, and India. The company’s international operations also include e-commerce platforms and financial services.
- Sam’s Club: This segment includes the company’s membership warehouse clubs, which offer bulk goods at low prices to businesses and individual customers. Sam’s Club operates in the United States and Puerto Rico and offers a range of products, including groceries, electronics, and office supplies.
In addition to these primary business segments, Walmart also operates other businesses, including financial services, health and wellness services, and e-commerce platforms. These businesses are part of Walmart’s strategy to diversify its revenue streams and provide customers with a wide range of products and services.
Revenues By Business Segment FY 2020-2022
| Segment | 2020 | 2021 | 2022 |
| Walmart U.S. | 341 | 369.96 | 393.25 |
| Walmart International | 120.13 | 121.36 | 100.96 |
| Sam’s Club | 58.79 | 63.91 | 73.56 |
*Net sales in billion U.S. dollars
Total Revenue in 2022
Walmart reported an annual revenue of $572.754B for 2022, which is a 2.43% increase from the previous year.
For the quarter ending October 31, 2022, the company reported revenue of $152.813B, representing an 8.74% increase year-over-year.
Over the twelve months ending October 31, 2022, Walmart’s revenue increased by 4.92% to reach $600.112B.
This growth is indicative of the company’s continued success in meeting the needs of its customers and providing them with products and services at competitive prices. As Walmart continues to invest in its business segments, expand its e-commerce capabilities, and enhance its in-store experience, it is poised for continued growth and success in the years to come.
Low-Cost Leadership
One of Walmart’s key strategies is its focus on low-cost leadership. The company achieves this by sourcing products directly from manufacturers, reducing supply chain costs, and utilizing advanced inventory management techniques. Walmart also focuses on reducing labor costs by using technology and automation, resulting in lower prices for customers.
Diversified Revenue Streams
Walmart’s revenue streams are diversified, with the company generating income from several sources. In addition to its retail operations, Walmart has a significant presence in the e-commerce industry, with its online marketplace Walmart.com. The company also offers financial services, such as Walmart Pay and Walmart MoneyCard, as well as health and wellness services.
Private Label Brands
Private label brands are another essential part of its business model. The company has a wide range of private-label products that are often sold at a lower price than name-brand equivalents. Walmart’s private label brands include Great Value, Equate, and Sam’s Choice, among others. These products account for a significant portion of Walmart’s revenue and contribute to the company’s low-cost leadership strategy.
Supply Chain Management
It’s supply chain management is another critical element of its business model. The company’s distribution centers and transportation network are optimized to ensure products are delivered quickly and efficiently to stores. Walmart also utilizes cross-docking, a logistics technique that minimizes the time products spend in the distribution center, reducing costs and improving inventory management.
Walmart’s Four Strategic Pillars
In 2017, Walmart introduced four strategic pillars that would guide the company’s growth and success in the coming years. These four pillars are Lead on Price, Invest to differentiate on access, Be competitive on assortment, and Deliver a great experience. Each of these pillars is designed to address different aspects of Walmart’s business and improve the company’s overall performance.
Lead on Price
This strategic pillar is based on Walmart’s long-standing commitment to providing customers with low prices. The company aims to be the lowest-priced retailer in the market by investing in its supply chain and operational efficiency to reduce costs. Walmart also works directly with manufacturers to negotiate lower prices and offers a price matching policy to ensure customers get the best deal.
Invest to differentiate on access
This strategic pillar focuses on expanding Walmart’s reach and providing customers with more convenient shopping options. Walmart has invested heavily in e-commerce and offers a range of options for customers, including home delivery, pickup in-store, and curbside pickup. The company has also introduced new technologies, such as Scan & Go and Walmart Pay, to make the shopping experience more convenient for customers.
Be competitive on assortment
This strategic pillar is focused on offering customers a wide range of products to choose from. Walmart aims to have a product assortment that is competitive with other retailers and offers exclusive products that cannot be found elsewhere. The company also offers a range of private-label products at a lower price than name-brand equivalents.
Deliver a great experience
This strategic pillar is based on providing customers with a positive shopping experience. Walmart aims to create a welcoming and friendly environment in its stores and invests in training for its employees to improve customer service. The company also offers a range of services, such as financial services and health and wellness services, to enhance the overall shopping experience.
By focusing on these four strategic pillars, Walmart aims to maintain its position as a leading retailer in the market and provide customers with a range of products and services at a low price. The company’s commitment to e-commerce and innovation has helped it adapt to changing consumer preferences and compete with other retailers in the market.
How Walmart Generates Revenues?
Walmart generates revenue primarily through the sale of a wide range of consumer goods in its retail stores and online through its e-commerce platforms. The company offers products across various categories, including groceries, apparel, electronics, home and garden, and health and wellness products, among others.
In addition to traditional retail sales, Walmart generates revenue through a range of other services, including financial services such as money transfers, check cashing, and bill payment. The company also offers healthcare services, including pharmacy services and vision centers, as well as photo printing services and tech support services.
Walmart also generates revenue through its membership-based warehouse club, Sam’s Club. Sam’s Club sells products in bulk at a discounted price to its members, who pay an annual membership fee.
The company has also been investing heavily in its e-commerce business to compete with online retail giants like Amazon. The company offers a range of online shopping options, including home delivery, pickup in-store, and curbside pickup, as well as a variety of exclusive products and services on its e-commerce platforms.
Overall, Walmart’s revenue is primarily driven by its retail operations, with additional revenue streams coming from its other services and its e-commerce business.
History of Walmart & Business Development Through the Years
Walmart is a retail giant that has its roots in rural America. The company was founded in 1962 by Sam Walton, who opened the first Walmart store in Rogers, Arkansas. Walton had a vision to offer low prices to customers and provide a better value than competitors. This vision has been the cornerstone of the Walmart business model and has helped the company grow into a global retail giant.
Early Years of Walmart
In the early years, Walmart had a small number of stores and focused on serving rural communities. The company’s first stores were located in small towns, and Walton believed that these areas were underserved by traditional retailers. Walmart’s strategy was to offer a wide range of goods at low prices, which quickly attracted customers.
By the late 1970s, Walmart had expanded to 276 stores and had become a major player in the retail industry. The company continued to focus on low prices, but also introduced new strategies to differentiate itself from competitors. Walmart began offering a range of private-label products, which were often sold at a lower price than name-brand equivalents. The company also invested in technology and supply chain management to improve efficiency and reduce costs.
Expansion and Growth
In the 1980s, it continued to expand, opening new stores in larger markets and adding new product categories. The company’s revenue grew rapidly, and by the end of the decade, Walmart was the largest retailer in the United States.
In the 1990s, Walmart expanded globally, opening stores in Mexico, Canada, and the United Kingdom. The company’s international expansion continued in the 2000s, with Walmart entering new markets in Asia, Africa, and South America. By 2021, Walmart had a presence in 27 countries and was one of the largest employers in the world, with over 2.3 million employees.
Walmart Today
Today, Walmart is more than just a retail store. The company has diversified its business and offers a range of services, including financial services, health and wellness services, and e-commerce. Walmart’s online marketplace, Walmart.com, is a significant part of the company’s business, and it has invested heavily in technology to improve its e-commerce capabilities.
Conclusion
In conclusion, Walmart’s business model is built on its low-cost leadership strategy, diversified revenue streams, private label brands, and supply chain management. The company’s focus on providing customers with low prices and value has enabled it to become one of the largest retailers in the world. As Walmart continues to innovate and expand its business, it will likely maintain its position as a leader in the retail industry.