Free Essay: Reason for Walmart Success and Their Essential Competitive Advantage

Walmart carried out a research about what retail services entail before starting up his first store. Drawing from his observation, he realized that being a discount retailer in a small town would work out. He then decided to open his first store which main aim was to offer high volumes at low prices. The high discounts he provided on prices made other small retailers to quit the market because they could not keep up with the low prices at Walmart's store. Being a monopolist in the market, he was then able to expand his business and even start up other stores in various small towns. Walmart was also very keen at observing his competitors' moves and borrowed ideas that were useful.

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The most important competitive advantage was selling his products at low prices. Walmart stores were able to achieve this by reducing the prices of his products and offering high discounts. His stores were located in small towns whereby there was less competition. He also embarked on expanding his region first before moving to new areas.

The reason why Large Retailers like Target and Kmart found it Hard to compete with Walmart and their target to Effectively Compete with Walmart

Kmart and Target had a hard time to compete against Walmart because his primary focus was to start large stores in small towns which his competitors used to ignore. He even recalls that Kmart said he could never start a store in a city which has a population of less than 50,000. Walmart also incorporated good ideas from his competitors into his own stores. Walmart kept his competitors on their toes by ensuring that he received the same service level and prices with that of the large retailers. To achieve this, he went public about his company whereby the stock sale funded him, and the money helped him set up a big warehouse which enabled him to buy his commodities in higher volumes than before. Walmart also invested in information technology (IT) and communication. The two systems enabled the company managers to easily communicate with all their stores instead of personally visiting thus saving on money and time. Locating their products in the distribution system was also easy. Walmart's automated distribution centers were also linked to their suppliers and their stores making it quick to restore the inventories. A system for tracking goods was installed which replaced the manual inspection that was there before. The radio frequency identification program made Walmart's distribution become more efficient and reduced cases of theft. Walmart also came up with a scan and pay system whereby a product would remain with a supplier until Walmart sold it. With all the systems put in place, the analysis showed that the expenses of inbound logistics had reduced in percentage as compared to that of the competitors. Employers at Walmart stores were hired directly from college or high school whereby they would then be trained accordingly by Walmart. Therefore, this helped to maintain the cost of labor at low levels.

Given a chance to be in charge of Target, I would ensure the products are offered at a reduced price than that of Walmart especially in areas where the stores are closely located. Comparable systems to those of Walmart would then be installed at Target to increase efficiency and quicken our services. Various stores would also be opened in almost all small towns to eliminate the monopoly state of Walmart stores in those areas. Staff who are being hired should be directly from the college or high school and then be trained according to Target's way of conducting their activities.

Walmart's Response to Increasing Competition Level

Merging of Jet.com and Walmart.com will make the site stronger than operating the two sites differently. The site will be more efficient because the manager will no longer have to divide attention to both Jet.com and Walmart.com. Therefore, the manager will offer the best of his ability. There will be a reduced cost of maintaining one site as compared to running two sites at the same time. Again, there will be no need of Walmart adapting the various approaches concerning price that is being applied in Jet.com.

The site will then focus on reducing shipping costs instead of offering low priced goods despite how far the customer is situated. Low cost of shipping translates to cut cost that the customer will incur. Therefore, the customers will be attracted to shop from this site because it has a lower cost of shipping compared to the other e-commerce sites.

Walmart will also focus on selling quality goods and not their low-quality products sourced from China. Also, Walmart will embark on the private branding of the commodities they are offering in the market. Moreover, Walmart will offer guarantees which are; refunding of money in case the customer is not satisfied with the product and allowing replacement of products by customers. Therefore, they will be able to win the trust of many individuals worldwide thus building an excellent reputation for their brand. Most people who shop online tend to purchase goods from the most popular brands because it is believed that those companies offer the best quality.