13 Reasons Why Walmart Is So Cheap!
Part of Walmart’s appeal is its famously low prices. But, have you ever wondered how Walmart manages to get it so cheap?
From its hours of operation to its unique supply chain, we’ve found the secret to keeping prices down at Walmart. Read on to find out 13 reasons why Walmart is so affordable!
13 Reasons Why Walmart Is So Cheap!
1. Walmart bulk purchase!
First, because of the sheer size of Walmart’s stores, you can save a lot of money on supplies!
By buying large quantities of items in bulk, they are able to save on the price of individual items, which allows them to sell their products at a cheaper price.
2. Walmart employs mostly part-time workers
Most Walmart workers have recently been made part-time, reducing wage costs. Back in 2016, Walmart rolled out a new rostering system that even cut hours for part-time employees.
3. They avoid employee unions
Walmart discourages union participation in its business structure, which allows Walmart to pay the minimum wage, reducing overall employee costs.
Even though Walmart’s minimum wage has been increasing over the years, a survey of employees found that 55% of part-time workers don’t have enough food to meet their basic needs.
4. American health laws mean cheaper food!
The US has fewer health laws than the UK and Europe.
As a result, lower-quality food products can be sold more cheaply in the United States. As a result, Walmart is able to sell the food at increasingly affordable prices.
5. Walmart is the largest distributor in the United States
Since Walmart is such a well-known global brand, people will definitely shop at it due to the loyalty and trust of its customers.
So it can be said that Walmart has a monopoly on the retail business, allowing them to sell at any price, no matter how cheap, because they are an established and trusted brand.
6. Companies offer personalized merchandise to Walmart
Some companies make personalized mockups of their items to meet Walmart’s pricing rules.
To keep costs down, these brands often use lower quality materials to reflect the lower prices, and eventually Walmart is able to sell these products for cheaper due to the bulk purchases!
7. Small shop decoration
Walmart opted for minimal store decoration to keep design costs down. This no-frills saves a lot of money when you consider how many stores Walmart has, allowing them to subsidize the price of the item!
8. STORE STRUCTURE
The actual design structure of the storefront is also cheap, allowing Walmart to save even more money! To reduce fixed costs, Wal-Mart uses cheap shelves and low-cost flooring. This means that any breakage can be easily replaced.
9. Walmart doesn’t have many ads
A company as large as Wal-Mart has limited television advertising.
Maybe it’s because it’s already a very well known brand, but whatever the reason, they were able to save money on the ad budget – focus more money on price cuts!
10. Furniture materials are lighter
By using lightweight materials in furniture and packaging, Walmart can lower retail prices and shipping costs for itself and its customers. IKEA uses a similar system, ensuring cheaper prices!
11. Walmart has an efficient supply chain system
Walmart has an extremely efficient supply chain that allows them to keep costs down by selling and supplying quickly.
Walmart uses a cross-docking system that eliminates the “middle man” so products often go directly from the manufacturer to the store, eliminating warehouse costs!
12. They provide a lot of shelf space for third-party suppliers
Walmart doesn’t carry much of its own items compared to other stores. Instead, they lease out a lot of shelf space to other suppliers who pay for their products to get into Walmart.
So Walmart makes money from it, and most likely gets a percentage of the total sales of those items too!
13. Walmart looks at the big picture
Walmart’s revenue is healthy, and the value of being known as an off-price brand outweighs the need to make a profit on each item.
Therefore, Walmart is happy to sell some products for less than the purchase price, because they believe that customers will also choose these products, and then they will profit from it.
It’s all about balance: if customers think they’re getting a great deal on one particular item, they’re more likely to buy something else! Walmart was then able to reimburse those product losses.
If you’d like to learn more, also see our guides on Walmart Statistics, Walmart’s Competitive Advantages, Why Walmart Is Considered “Junk” and Why Walmart Is Called “Warley’s World”.
in conclusion
The main reason Walmart is able to sell products so cheaply is its level of brand integration. Smaller businesses or startups do not have the same level of trust and validity in the public domain, so if they sell their product for a low price, there is no guarantee of revenue.
Unfortunately, cutting costs to compensate for product pricing also affects the employees who work there, as well as the quality of the items and materials you buy. While Walmart does have an easy-to-use return or exchange system, it’s important to remember that the price you pay often reflects the quality of the product.
