Place (Distribution) is at the Heart of Walmart’s Success

   Sagar

Walmart is unarguably the largest and leading retailer in the global retail industry with the net sales of $482.2 billion in the financial year ending 2015. The success of the company is based on various elements and strategies, and the effectiveness can simply be noted from the fact that it serves nearly 250 million customers every week, managing and operating over 1050 retail stores across the world in over 26 countries with more than 71 brand identities and corporate banners (Walmart, 2015).sagar2

However, the moist important yet interesting fact about the Walmart is defined as its supply chain and distribution strategy which is also considered as the industry benchmark. The main reason is the fact there is no other corporate player in the global marketplace owning the similar size of business portfolio and along with such diversified market existence. It is also revealed from the research studies that the place and distribution strategy that is designed and executed by Walmart is not only the key to its success, but also a source of its competitive advantage.

The company also claims that the primary reason behind its fast pace growth, continuous financial success and diversified product, market and customer portfolio is its distribution strategy which is further supported by the logistics and operations. The effectiveness of Walmart’s distribution strategy can also be noted from the fact that it claims to be seriving more than 250 million customers every week, which in practical context can only be possible, if the strategy is truly effective (Walmart, 2015).

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The company i.e. Walmart has established highly automated and centralized distribution units which operate round the clock and 365 days. In order to ensure that customers in each of its targeted regions are served and entertained effectively, the company has established multiple distribution centres in every regional zone. For instance, in the case of United States, over 45 distribution units are established which are dedicated to import goods from around the world and ensure each of the store within the US is managed with the demanded products. These 45 regional distribution units are further supported by over 150 distribution centres that are in direct contacts with retail units across the region. It is also important to understand each of the distribution centres caters the need of 75 to 100 retail stores (Walmart, 2015). This distribution strategy can further be defined as hierarchy which operates in most unique and systemized way to ensure the errorless flow of products from the suppliers to customers at their door step.

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Taking the global distribution context into consideration, it is observed that the company in total has established 158 distribution centres which are claimed to be the keys to organisational success. Unlike any other retailer in the world, the Walmart’s distribution network is also claimed to be the world’s largest and most effective within the retail industry. Its logistics activities are performed with the help of more than 6,450 tractors and over 54,000 trailers which are operated by more than 7,000 drivers (Walmart, 2015).

sagar5Furthermore, each of its distribution centres has high-tech and modernized systems to moves hundreds of thousands of cases each day. In addition, each distribution centre caters 90 to 100 stores on average that are strategically located with an aim to provide rapid responses to the connected retail stores.

A part from the activities and operations within the context of distribution and place strategy, the company is also found to believe that its workforce assists it to generate enough power to cater its stores as well as every customer at the same time. Walmart therefore puts extra focus on its recruitment, selection, training as well as development and considers it as a part of its distribution strategy. Since the distribution activities involve the logistics too, the company ensures that each of its drivers is not only qualified, but also experienced. The strict company’s policy can be noted from the fact that it only hires drivers those have driven minimum of 300,000 accidental free miles (Walmart, 2015).

sagar 6sagar7In addition, the company also accepts its corporate social responsibility and ensures that its distribution and logistics activities are environmental friendly (Walmart, 2015). For this, the Walmart does not only follow the self-designed and self implemented code of conduct, but also ensures that the global standards in relation to corporate social responsibility are met at all times (Walmart, 2015).

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References:

Walmart, 2015, Our Story, retrieved 20th May 2015, <http://corporate.walmart.com/our-story/>

Walmart, 2015, Walmart Logistics, retrieved 20th May 2015, <http://corporate.walmart.com/our-story/our-business/logistics>

Walmart, 2015, Truck Fleet, retrieved 20th May 2015, <http://corporate.walmart.com/global-responsibility/environment-sustainability/truck-fleet>

Walmart, 2015, Reducing Carbon Emission in Our Stores and Global Supply Chain, retrieved 20th May 2015, <http://corporate.walmart.com/global-responsibility/environment-sustainability/greenhouse-gas-emissions>

By- Sagar Lakhisarani and Siyu Yue

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29 thoughts on “Place (Distribution) is at the Heart of Walmart’s Success

  1. Hi had heard about Walmart but i thought because of the more stores they are reaching more customers and low price than competitors they are leaders in retailing . Now from this blog all the confusion i had about functionality of Walmart & how they were managing and how is their logistics network for all this got an answer .Thanks for it . I agree with you any business who use supply chain must manage carefully . Reaching 250 million customers is a big thing and a business in 26 countries and there is lots a trials & strategies behind this ,we can see the recent supply chain of centralized and automated distribution now but they would have tried different methods earlier .So centralized and Automated distribution is their success factor which is used by many in their business. And also it can noted all their 90000 suppliers use same system and it just a initial investment for them which will be used with other clients as well .

    Liked by 2 people

    • I used to think earlier that Walmart has become the global leader just because of its more number of stores and low price strategy. But, after this research I came to know that it has achieved success by its strong distribution network. And, it should be because nowadays where there is such a high completition between companies. A reputated company i.e Walmart should have a good distribution strategy to win the market.
      Though I agree with you that reaching 250 million customers is a big thing which they have handled it quite easily ,because of their centralized and automated system. And Yes I agree that its just an initial investment which they will cover very rapidly.

      Like

    • In this assignment we thought the Walmart’s success caused by its place (such as distribution and logistics). I think the success of the Walmart and make it different with the other similar market is the largest retail industry and activity logistics.
      And i agree with the automated distribution is fantastic use. But i thought that unified the path to connect with distribution is the feature and method for Walmart to success as quickly as we known.

      Like

  2. Wow what an amazing company! The mind boggles how they are able to coordinate all of these activities to ensure that their customers are able to purchase what they want when they want. But having such a large company I can’t help thinking how much power they are able to wield when they hold such a competitive advantage of other competitions but also upon their suppliers. I am aware that in the US there are a number of consumer groups set up specifically to report on Walmart. Another website that provides an overview of some of these actions Walmart has taken Is http://www.corp-research.org/Wal-mart

    Liked by 2 people

    • Yes, its hard to imagine how they have managed such a huge system with a simple strategy. They have teached a lesson here that Nothing is Impossible. Serving 250 million people is not easy. I think their established centralized and automated system have played a winning game here.
      Thanks for your referring link though. I have also heard about this issue Walmart is facing. But, I also believe that with such a massive success, some criticisms are always going to follow.

      Like

    • Thanks for your link. Just like the words said,a person who makes no mistakes makes nothing. We focus on the success of Walmart, but we also know the weakness it.

      Like

  3. Interesting topic.
    Walmart’s corportate website calls ‘logistics’ and ‘distribution’ the heart of its operation, since Walmart keeps millions of products moving to customers every day of the year. Once a distribution centre is built, stores are gradually built around it to saturate the area and the distribution network is realigned to maximize efficiencies. The result is a ‘trickle-down’ effect: trucks do not have to travel as far to retail stores to make deliveries, shorter distances reduce transportation costs and lead time, and shorter lead time means holding less safety inventory. If shortages do occur, replenishment can be made more quickly because stores receive daily deliveries from distribution centres.
    Walmart’s distribution network utilizes a system of manufacturer storage with customer pickup. No inventory is stored at its distribution centres. Goods are picked up by trucks directly from manufacturers’ warehouses, thus eliminating intermediaries and increasing responsiveness. The use of trucks raises transportation costs but is justified in terms of reduced inventory.

    Liked by 2 people

    • Yes, with their strategy of strong distribution they have achieved this heights. Walmart has become so famous these days that even if its not in Australia but I believe most of the people are aware about this. Long back in 1980’s Walmart was voted amongst one of the best supermarkets in the world and still they are continuing their legacy.

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  4. It’s seems to me that there many competitive advantage is the sheer size and number of distribution centers. I would have like to maybe see a comparison with its closest competitor maybe another large supermarket chain because I would have assumed supermarkets such as Woolworths etc. would also have a large distribution network. But seeing as you say that Walmart’s advantage is in this area a comparison would have been interesting.

    Liked by 2 people

    • First of all, Thanks for your feedback. You are right it would have been great if I could have managed to get some information about its competitors. But, Walmart here is one of the top leading supermarket in the entire world. With its 11000 stores under 11 banners in 26 countries it can’t be compared to company like Woolworths. Though I believe that we can compare it with its competitors but not with Woolworths for sure.
      I believe that here strong distribution strategy works for Walmart, may be more number of stores or more number of sales could be an advantage for the groups like Woolworths and Wesfarmers.

      Like

    • Thanks for recommends, Walmart is an worldwide supermarket. The method of almost of the market may be similar,but Walmart use the best distribution to provide their stores all around the world. It will be much more complexity than domestic supermarket.

      Like

  5. Yes, I have heard about Walmart !. The evolution of Walmart’s supply chain includes three elements, according to a 2012 article from Arkansas Business: distribution practices, operating its own fleet of trucks and technology. Benefits from its supply chain efficiency result in time savings, more cost-effective inventory management and improved product forecasting, the article said.
    Walmart’s inventory management collects information from stores point-of-sale, data warehouse inventory and real-time sales into centralized database. Suppliers use this data to know when to ship more products. Walmart has also instituted a method that moves inventory directly from arriving or departing trucks without lengthy storage in warehouse. This means less cost for inventory storage, products spend less time in transit and reduced transportation costs. As mentioned in the blog Walmart use their own trucks and drivers, maintaining high standards. Their supply chain management is very similar to the main components of other supply chains: purchasing, operations, distribution and integration, but Walmart has refined the methods.
    I
    http://www.usanfranonline.com/resources/supply-chain-management/walmart-keys-to-successful-supply-chain-management/#.VV_aAbCJiUk

    Liked by 2 people

    • Thanks for sharing this article!
      It gave me more knowledge about this distribution system. I agree that due to its distribution practices, operating of their own trucks and technology have benefited them a lot. I personally liked their strategy of keeping strong network with their suppliers and cost saving technique for inventory costs.

      Like

  6. Well i have heard about Walmart. It is the largest supermarket in the world. But have no idea of the marketing strategies and supply chain of Walmart till now. The blog has gave me some idea on Walmart and the strategies it is implementing. Thanks for the blog.

    Liked by 2 people

    • Thanks for your postive feedback.
      Even I didn’t had the idea about its distribution and supply chain strategies. Its good to see that my blog helped you to increase your knowledge about Walmart and their different strategies.
      I really want to thank the unit chair of this subject because due to this blogging assignment I have learned a lot about different companies and their different ways to achieve success.

      Like

  7. Good post~
    Walmart’s distribution in 14 countries, and have to say, it has such a rapid development in a few decades, is a miracle retail.
    Walmart uses a warehouse management, thus the cost of goods sold to more fully reflect the scale. In retail, comfortable shopping environment, good service quality necessarily linked to higher prices, however low commodity price in the supermarket chain, the customers often can only get concessions on the purchase price, but can not enjoy a better quality service.
    For customers, they whether can buy all the required items in the store, can receive timely information on new product sales, can enjoy home delivery, free parking and other additional services, whether shopping accessible in any free time.
    In Walmat, consumers can experience the “one-stop shopping” a new concept. In the commodity structure, it seeks full of changes and features to satisfy various preferences of customers. Its many business projects, including food, toys, new clothing, cosmetics,household appliances, daily necessities, meat fruit and vegetable and so on.

    Liked by 1 person

    • Hi thanks for your comment.
      Yes, I agree with you completely on what you said. Walmart has achieved such a huge success in such a short period of time. While, many great supermarket companies like Coles and Woolworths started in early’s 19th century but still are way back when compared with Walmart.
      I was so amazed to read that Walmart started their first store on July 2, 1962. Still they are the world dominator today. It teaches us that price ditribution strategy is so important in today’s world.

      Like

    • Thanks for the feedback. We are proud to do this search to how the world’s first supermarket e distribution and successful. Walmart it is also the one of my favorite markets. Thanks for you like it.

      Liked by 1 person

  8. Yes!! I have heard about Walmart, This is very good example of distribution because a distribution business, often referred to as a wholesaler, helps move goods from a manufacturer to a retailer in a traditional distribution process. Walmart seems to have those qualification. Thats why they grow so quick. Thank you for sharing.

    Liked by 1 person

    • Thanks for your comment.
      Yes, even I believe that they grew so fast just because of their distribution strategy.
      Walmart is playing an very efficient role by cutting down margins and profits of wholesellers and other linked traders.

      Like

  9. Thanks for sharing about Walmart. I was under the impression that their success was due to their having many stores and low pricing strategy. It’s interesting to hear about their distribution channels & how everything is linked together. That explains why they are so successful and have that competitive advantage over their rivals. I also like the fact that they are very particular about the drivers they employ because having competent drivers means products are delivered on time and no money is wasted in paying for accidents caused by drivers.

    Liked by 1 person

    • Thanks for your comment.
      Yes, even I used to think that before doing research about this topic.
      I agree with you that they are also particular about minutes details like own drivers and vehicles. That is the reason they are so ahead of their competitors.

      Like

  10. Interesting post.
    Distribution channels in marketing are one of the classic “4 Ps” (product, promotion, price, placement a.k.a. “distribution”). They’re a key element in your entire marketing strategy — they help you expand your reach and grow revenue. and this is exactually what makes Walmart succeed in the market so far.

    Liked by 1 person

    • Thanks for your comment.
      I strongly agree with you in this. The 4Ps are very important for every big companies if they have a good control over like this then their success is assured.

      Like

  11. Walmart is one of those success stories that walks you through all that takes to being a global powerhouse from a regional retailer. Catering to 250 million customers every week with goods whatever they wanted and wherever they wanted is definitely an uphill task if it is not for their centralised and automated distribution strategies. With these kind of numbers, it is imperative to come up with a strategy maximising their efficiencies in distributing their merchandise. As someone rightly said “Look before you leap”, Walmart so far has weighed carefully its geographic and distribution feasabilities before setting their distribution units up in a new geographical location (One of the major factors contributing to its huge success over the years ). Their minimum distribution costs to their cost of sales speaks volumes as to how they fair better than their competitors . It definitely epitomised optimisation in the way it maximised its merchandise, minimised the fuel charges /the distances covered to deliver the products. It is interesting to know that , it has all the plans set if in case it has to face a shortage of goods ( daily deliveries ensuring quick replenishment ) or may be disaster ( set up a disaster distribution centres ) .

    It being one of the retailers which gave equal importance in building the loyalty with their employees as much as with their customers , definitely makes it everyone’s favourite and deserves to assume the leadership position in the market rightly !

    Thank you for an interesting share !

    Like

  12. A brilliant presentation of facts about Walmart, usually it is observed that once we are studying the marketing mix of an organization, more stress is on the product. But this article reveals behind the scenes story for WalMart and explains the importance of a sound supply chain and distribution strategy of the mammoth retailer. It is imperative to mention that it’s a beautiful example of how value is added in each activity performed, thus making distribution as a source of competitive advantage as the company is also able to achieve economies of scale in the long run.

    Like

  13. Great post!

    It is paramount for a company to have an effective distribution centre as this will determine how quick and effective the company can service their market. Walmart is the benchmark for many retailers. Operations for Walmart don’t stop, it operates 365 days a year around the clock.
    The workforce is highly trained as the operation department is a key that they relay on as a company. Walmart needs reliable people to keep growing and reaching their customers.

    Technology also plays a big part in Walmart success each distribution centre caters for 90 to 100 stores, all of them strategically located to provide fast response to their stores.

    All the aspects in the distribution place need to be the right practice for a company to be successful. The more case studies i read i realised how crucial the logistics are for a company.

    Supply chain is not rigid so companies can adopt models or practices from other companies to make it work for an specific business. Businesses have different demand depending on the nature of the company.

    Like

  14. Thanks for a most interesting blog. It highlights the advantage of vertically integrating logistics and distribution when it is paramount to ensure quality and consistency in these processes. Walmart is a great example of the benefits of such a strategy when its executed well.

    Like

  15. Good Post !!
    It summarizes most of the unknown facts about Walmart from a marketing perspective.Innovation likewise has enormous influence in Walmart achievement every dissemination focus provides food for various stores, every one of them deliberately situated to give quick reaction to their stores.But this article uncovers off camera story for WalMart and clarifies the significance of a sound store network and conveyance system of the mammoth retailer.

    Production network is not inflexible so organizations can embrace models or rehearses from different organizations to make it work for a particular business. Organizations have distinctive interest contingent upon the way of the company.Walmart utilizes a distribution center administration, therefore the expense of products sold to all the more completely mirror the scale. In retail, open to shopping environment, great administration quality essentially connected to higher costs, however low item cost in the market chain, the clients regularly can just get concessions on the price tag, yet can not appreciate a superior quality administration.
    Thanks for the blog !

    Like

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