Wal-Mart is the top retailer in the world. It has moved far ahead of its competitors in both sales and global reach. Wal-Mart started its ascendancy from its policy in the Saone of the reasons Wal-Mart went ahead of its competitors was the excellent use of logistics to replenish and transport merchandise. The system is called “cross-docking”. Basically this concerned the transportation of goods. These goods were delivered uninterruptedly to Wal- Mart’s warehouse. After delivery to the warehouse these goods were then dispatched to stores. This quick dispatch of goods resulted in keeping the goods inventory at almost zero.
This was a very significant step as it meant that Wal-Mart safeguarded itself from the risk of cost(s) associated with items / goods being damaged or becoming obsolete. This was a tradeoff between having goods sit in the inventory on one hand and having the same goods available for sale to be converted into cash. This has direct relation to the Cost of Goods Sold (COGS). The significance of logistics cannot be underrated with 158 distribution centers and a fleet of 6,500 tractors, 55,000 trailers and more than 7,000 drivers, the retail giant was on its way to capturing the market .This was part of a massive supply chain which has no rival.
The second aspect of the rise of Wal-Mart was its spread to outlying areas and remote areas which had been ignored by most retailers, who concentrated on metro or areas which can be termed developed. Wal-Mart had to sustain the market that it had developed in the outlying areas. Here is where logistics played a very significant role. The fleet of transports, the biggest in the field established a supply chain to even the most remote store. It accentuated the brand image of the company as well as kept inventories at warehouses low or almost zero.
One of the cardinal principles of commerce is profit and that relates to prices, supply and sale. Wal- Mart established these through logistics, and customer service, which was a major factor in the success of the retail store. Thus Wal-Mart had goods to sell at a competitive price and this was a big factor in the success of Wal-Mart. For this Wal-Mart carried out a survey and cost and price analysis of other stores in the area and priced its good lower than the smallest store. This generated volumes and massive sales that allowed Wal-Mart to become number one in the retail field.