This article aims to examine why acquisition cooperation as a corporate strategy of Walmart International in order to strengthen the technology-based market. To explain and answer the causes of Walmart companies using acquisition cooperation based on a supply chain perspective. The author will explain what acquisition is and how from a supply chain perspective why Walmart uses this cooperation strategy. The following authors elaborate in detail using official data from the Walmart website.
In 1962 Walmart was first established in Rogers, Arkansas then progressed until the 1980s, Walmart opened the first Sam’s Club which was a warehouse of goods with a computerized system that could enable faster and more accurate payments. In 1987 there were rapid technological advances, the company installed the largest satellite communications system in the United States connecting operations through voice, data and video communications. While in 1990 Walmart has successfully become the number one retail company in the United States with rapid technological development (Walmart, 2024). Currently, Walmart operates three business segments including; Walmart US, Walmart International, and Sam’s Club.
Walmart’s Net Sales Worldwide in Fiscal Year 2024, By Division
Sumber: T.Ozbun di Statista.com, 2024
Walmart U.S operates in all 50 American states, Washington DC and Puerto Rico. Walmart International operates in 18 countries outside the US such as Canada, Costa Rica, Mexico, India, and South Africa. While Sum’s Club operates in 44 American states and Puerto.
In the framework of cooperation between companies to expand their existence, there are three ways Walmart cooperates. The data displayed is data obtained from Walmart’s official website (2024), including first, Walmart expanded to areas outside the United States, namely, in 1994 to Canada, in 1996 opened stores in China and in 2022 opened a company in Florida. Second, making company acquisitions, among others; in 1998 Walmart acquired Asda, one of the largest supermarket chains in the UK. In 2009, it acquired the shares of D & S SA as the leading retail store in Chile. Until now Walmart has full control of the retail market in Chile. 2011 made an acquisition into South Africa starting from Massmart, Holdings Ltd. In 2013 Walmart acquired Bharti Walmart Privat Limited India. In 2015 acquired Jet.com ($3 M) which is one of the online retail companies. Through innovative technological advances this partnership increased Walmart’s sales by 63% and online inventory grew from 10 million items to 67 items. In the same year Walmart also acquired the shares of Yahodian, one of China’s leading e-commerce. In 2021 the acquisition led Walmart to successfully increase its stake by 51%.
In 2017, it acquired Shoes.com, a leading online footwear and apparel company. After that, Wal-Mart acquired a well-known retail company engaged in outdoor sports, Moosejaw ($%51 M). Moosejaw is best known as an e-commerce company but also has several stores. Wal-Mart acquired Modcloth, a vintage product business that focuses on women with large body sizes. The company started to falter as it pursued a retail sale strategy. The acquisition of Jet.com is a premium product of America’s leading online menswear retailer. Walmart’s strategy was to sell at a lower price. In 2018 Walmart made another acquisition of Flipkart India shares.
Third, sell shares and the Walmart company is acquired, this kind of cooperation process can occur due to the consideration of the conditions that the company must take. Walmart once sold shares in Seiyu Japan to KKR and Rakunten with only a minority stake of 15%. The purpose of this partnership was to accelerate technological development in Seiyu. While the acquisition case occurred in Walmart Argentina was acquired by Group de Narvaez in 2020. Consider the acquisition because the Walmart company analyzed the impact of the Argentine economic pandemic, where there was a currency crisis that affected people’s purchasing power, putting the company at risk.
Based on the description, three interesting things can be seen about Walmart’s cooperation, namely, first, acquisition is the most used strategy by Walmart to expand the company to other countries, compared to building the company directly. Second, Walmart mostly acquires well-known retail companies that dominate the market in a country. Third, most of the acquisition cooperation puts Walmart more into technology transfer for online-based market strengthening. The following graph shows Walmart’s worldwide sales from 2006 to 2024, the company has increased sales drastically from year to year.
Walmart’s Net Sales Worldwide from Fiscal Year 2006 to 2024
Sumber: T.Ozbun di Statista.com, 2024
According to Summer N. Levine, an acquisition is a transaction activity that occurs between two parties, where the party making the purchase will become the owner of most or all of the assets of the selling party. In the acquisition, in the structure and activities of the company; the acquiring company controls the activities of the acquired company. While the human resources of the acquired company can be retained or terminated, meaning that when a company makes an acquisition, the company has great control over the structure and activities of the company (Nabbal et al, 2023). When Walmart acquires a company, it indicates that Walmart’s position affects the entire company both in terms of company structure and activities.
While the supply chain is a series of business processes that connect several actors to increase the added value of products and distribute them to consumers. Each actor in the supply chain network can contribute in the form of inputs that can increase the value of a product. The supply chain is not only limited to factories and suppliers but also needs to look at the conditions of distributors, warehouses, retailers, and even need to look at consumer needs. In the book “Supply Chain Management” by Sunil Chopra and Peter Meindl (2016) explains that “supply chain design, planning and operation decisions play a significant role in the success or failure of a firm. To stay competitive, supply chains must adapt to changing technology and customer expectations”.
Indicators in supply chain activities are; supplier – manufacture – distributor – retailer – customer. Walmart is a retail company in the third position. In supply chain activities to become a retailer requires suppliers, manufacturers and distributors. The following is an overview of Walmart’s supply chain process first, Walmart provides products along with price information to customers. Second, customers who make purchases transfer funds to Walmart. Third. Walmart conveys point of sale data and replenishment orders to the warehouse or distributor, who will deliver the orders via truck back to the store. Fourth, Walmart transfers funds to the distributor and fifth, the distributor also provides pricing information and sends the delivery schedule to Walmart. The description above shows how supply chain activities as a retail company in making sales. A retail company like Walmart has sub-companies in a chain that complement each other. If a company like this builds a company outside its home country, it must ensure that the Walmart value chain as a retail company is available and operational. For that it is quite complicated and expends considerable capital to ensure the existence of suppliers, manufacturers, distributors and customers.
For this reason, based on the explanation above, the author concludes three things why for outward expansion, Walmart International companies make more acquisitions compared to building companies directly because, (1) making acquisitions makes Walmart not need to spend considerable capital to build from scratch regarding the availability of suppliers, manufacturers and distributors, because the acquired company already has the system, Walmart only needs to operate. (2) Making acquisitions makes Walmart easily control the company with the main focus of transferring technology, so that Walmart’s orientation is not to expand the company’s building but to expand Walmart’s technology-based market. In line with the supply chain perspective for companies to remain competitive, the supply chain must be in line with technological developments and consumer needs. In this era, consumers tend to need an online-based market so that technology becomes an indicator that plays an important role in a company. (3) Making acquisitions makes it easier for Walmart to control the market without fear of other competitors, so Walmart’s strategy is mostly to acquire well-known retail companies in a country. Based on the three considerations above, the author considers, this is the reason or cause of the Walmart company choosing to make acquisitions to expand into the international market.
