Businessmodel of Walmart

Customer Segments

Walmart is the largest retail group in the US and globally, serving almost 260 million individual customers each week. The Company’s services are targeted at the mass market, principally comprising general consumers across multiple demographics. Recent reports, however, have stated that the Company’s typical customer is a white, non-hispanic female aged over 40 with an income of less than $50,000 per year.

Walmart’s Sam’s Club arm, in addition to serving individual customers, also serves small and medium-sized business, accommodating bulk orders of merchandise at wholesale process, enabling customers to sell products on at a small profit.

Walmart’s largest market is its native US, which accounts for the largest portion of the Company’s annual sales. The Company also serves a broad international network of customers, including in Africa, Europe, Asia Pacific, and Latin America.

Value Propositions

Walmart provides value to its customers in the following ways:

• Its industry standing, with the Company established as one of the largest retail groups in the world, operating a number of successful retail chains both domestically and internationally;
• Its competitive pricing and product range, with the Company offering products at low prices, often offering discounts and deals to customers, and stocking a wide selection of merchandise across multiple product categories;
• Its multi-channel sales network, with the Company operating a variety of sales channels, including its flagship Walmart stores and its Sam’s Club network, which offer different purchasing options for consumers;
• Its accessibility and flexibility, with the Company offering a range of digital sales channels, including online stores and mobile apps, in addition to the operation of its brick and mortar retail chains; and
• Its domestic and international reach, with the Company operating an extensive domestic network of retail outlets, as well as operating separate international chains across Africa, Europe, Asia Pacific, and Latin America. ### Channels

Walmart operates numerous digital channels. This includes its website at www.walmart.com, through which it provides information on its various services and activities, and operates an online store, through which customers can browse products, make purchases, and arrange deliveries. The Company also offers a mobile app that provides similar functionality and is available on Android and iOS devices. Walmart’s digital services – including Walmart Pickup, Pickup Today and Online Grocery – are integrated with its physical stores.

Walmart additionally operates e-commerce websites in 10 countries outside the US – including in Argentina, China, Brazil, India, and South Africa – which support delivery and click and collect options. Sam’s Club also provides its members access to a broad assortment of merchandise, including products not found in its physical outlets, and services online at www.samsclub.com, as well as through a related mobile application.

Walmart has an extensive physical network of retail channels, principally through its Walmart and Wal-Mart brands. The Company’s Walmart US segment operates retail stores across the US, including in all 50 states, Washington DC and Puerto Rico, with supercentres in 49 states, Washington DC and Puerto Rico, discount stores in 41 states and Puerto Rico, and Neighborhood Markets and other small store formats in 31 states and Puerto Rico. It also operates numerous Sam’s Club warehouses across the US.

Walmart operates physical retail outlets internationally, across Argentina, Brazil, Canada, Chile, China, India, Japan and the United Kingdom, as well as in various other jurisdictions through majority-owned subsidiaries, joint ventures and other controlled subsidiaries.

Walmart’s retail channels are supported by the Company’s own distribution and logistics infrastructure, including distribution centres and warehouses across the US and abroad.

Customer Relationships

Walmart offers much of its product catalogue to customers on a self-service basis, with certain products available exclusively through the Company’s digital channels. The Company’s online stores and mobile apps enable customer to make purchases, track orders, manage account details, and arrange deliveries without interacting directly with members of the Company’s sales staff.

The majority of the Company’s sales are made through its brick and mortar stores, which operate on a largely self-service basis. The Company, however, employs a large team of sales and customer service personnel who operates out of these stores and are available to customers to provide advice and assistance. Walmart also has dedicated customer service teams across its three operating segments, which can be contacted over the phone and via an online contact form.

Walmart and its various business units operate their social media accounts – including with Facebook, Twitter, Pinterest, Instagram, and YouTube – through which it is able to interact directly with customers.

Key Activities

Walmart is a consumer goods retailer, engaged in the operation of retail, wholesale and other units both domestically in the US, and internationally.

The Company divides its activities into three business segments: Walmart US, which operates retail stores across all 50 states in the US, as well as in Washington DC and Puerto Rico, with three primary store formats, as well as digital retail channels; Walmart International segment which comprises the Company’s retail operations across 27 countries outside of the US, including through joint ventures and subsidiary companies, across Europe, Africa, Asia Pacific, and Latin America; and Sam’s Club, which comprises the operations of the Company’s membership-only warehouse clubs across the US and Puerto Rico, as well as related digital retail channels.

Key Partners

Walmart collaborates with a range of partner companies across its three operating segments. These partners include:

• Supplier and Sourcing Partners, principally comprising suppliers of merchandise and produce, as well as providers of tools, technologies, and services;
• Marketing and Affiliate Partners, comprising various websites and online businesses that assist in extending the Company’s own marketing reach;
• Channel and Joint Venture Partners, comprising logistics and distribution service providers that support the Company’s own distribution network, and international retailers with which the Company operates sales channels through mutually-owned entities; and
• Strategic and Alliance Partners, comprising a range of companies and organisations with which the Company shares resources and collaborate son joint projects. Walmart recently partnered with JD, a Chinese ecommerce retailer, with a view to collaborating on online and offline retail solutions. The Company has also launched a partnership Uber and Lyft to test alternative grocery delivery services, and has a tie-up in place with ecommerce integration company CommerceHub.

Key Resources

Walmart’s key resources are its intellectual properties, its supply chain and logistics infrastructure, its online and mobile platforms and IT infrastructure, its international chain of physical retail outlets, its partnerships, and its personnel.

Walmart owns and leases an extensive portfolio of properties, including numerous brick and mortar retail stores across the Americas, Europe, Asia Pacific, and Africa, as well as distribution and logistics infrastructure, including warehouses, distribution centres.

Walmart owns a number of trademarks and patents. Searches of records published by the US Patent and Trademark Office identified numerous patent applications filed in Walmart’s name, including applications entitled ‘Automatic blocking of bad actors across a network’, Method and system for managing an electronic shopping list with gestures’ and ‘Merchandise event monitoring via wireless tracking’.

Cost Structure

Walmart incurs cost in relation to the management of its supply chain and acquisition of merchandise and produce, the maintenance and development of its digital retail platforms, the maintenance of its IT infrastructure, the operation of its physical retail stores – including occupancy costs, the management of its partnerships, and the retention of its personnel.

In 2015 the Company accrued cost of sales in the amount of $360.98 billion, including the acquisition of merchandise and stock, and selling general and administrative costs – including the payment of salaries and benefits to its global workforce of 2.3 million employees – totaling $97.04 billion.

Revenue Streams

Walmart generates revenue through the sale of goods and merchandise through the operation of various retail channels, as well as the collection of membership fees for its Sam’s Club operations. The Company sells products across six product categories:

• Grocery, including meat, produce, natural and organics, deli and bakery, dairy, frozen foods, alcoholic and nonalcoholic beverages, and various consumables;
• Health and wellness, including pharmacy, optical services, clinical services, and over-the-counter drugs;
• Entertainment, including, toys, cameras and supplies, cellular phones, movies, music, video games and books;
• Hardlines, including stationery, hardware and paint, sporting goods, and fabrics and crafts;
• Apparel, including clothes and shoes for men, women and children; and
• Home, including home furnishings, housewares and small appliances, and bedding. In 2015 Walmart generated annual revenue of $482.13 billion, down on the 485.65 billion recorded by the Company in 2014. The vast majority of this revenue, around $478.61 billion, was attributed to net sales across its multiple retail chains. The remaining revenue was attributed to the collection of memberships fees and other revenue.