The main reason why Walmart has become a leader in global retail industry is that it owns powerful
supply chain management and effective distribution strategy. It has reached incomparable success
using the administered vertical marketing system. If it decides to change to a more conventional
distribution channel, it may lose control of the whole process, along with its competitive advantage
of coordinating activities within its own system. Instead, each entity will operate independently,
seeking ways to increase their own benefits at the detriment of others. Conflicts and disagreements
will occur, decreasing profitability and efficiency for the entire channel.
The change will probably upset Walmart customers as well. The guiding mission of Walmart is to
help people save more money-–-it offers the lowest price to attract customers and focuses more on
bulk sales rather than a few
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. Without the original integration, Walmart may not be able to keep
this promise anymore. Prices will no longer be uniform and instead will be more difficult to
negotiate among channel members. Product categories are also likely to shrink due to the decline
of procurement. Therefore, numbers of loyal customers will probably be alienated. In addition,
Walmart has built strong reputation in people’s minds with reliable quality. Because of the
decentralized management, it is not easy to accomplish quality control and avoid defects of every
product. As a result, Walmart may even run the risk of destroying trust and satisfaction among
current customers.
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https://www.sellerapp.com/blog/walmart-selling-strategies/