DTHE BENEFITS REAPED
Wal-Mart strongly believed and constantly emphasized on strengthening its relationships with its customers, suppliers and employees. The company was very vigilant and sensed the smallest of changes in store layouts and merchandising techniques to improve performance and value for customers. The company made efforts to capitalize on every cost saving opportunity. The savings on cost were always passed on to the consumers, thereby adding value at every stage and process.
Wal-Mart also enjoyed the benefits of low transportation costs since it had its own transportation system which assisted Wal-Mart in delivering the goods to different stores within (or sometimes less than) 48 hours. Transportation costs for Wal-Mart were estimated at approximately 3% of the total costs as compared to 5% for their competitors. Having its own transportation system enabled Wal-Mart to replenish the shelves four times faster than its competitors.
Wal-Mart priced its goods economically and the prices varied from day to day. The company enjoyed good bargaining power as it purchased huge quantities. This enabled it to price its products competitively and pass on the benefits to the consumers. The company offered higher discounts than any other retailer and they earned good revenues in the form of higher volumes. Low pricing ensured that the sales volumes were high and consistent.