[kylewpppd]

This is anecdotal evidence from them coming to speak at my college, but... Walmart controls almost all of it's logistics. Whereas its competitors use other shipping companies, and have inventory sit in 3rd party warehouses, Walmart builds huge distribution centers that service multiple Walmart stores.

The distribution centers mean they can purchase huge levels of inventory at discounted terms. Running their own logistics means that they can break up pallets into smaller shipments appropriate for each store. So stores need less space to carry inventory, and they can purchase and store huge amounts at lower cost per sq. ft.

The other thing the logistics does is gives them an advantage in transportation cost. Although (I've heard) the margins in ground transport are slim, running your own ground transport saves money, allowing for lower prices to the consumer.

Walmart's size also contributes to their "efficiency". They can buy in larger quantities than their competitors and try to exert downward pressure on suppliers' prices. They can also nab exclusives and put them on the shelves for less than competitors.

[NegativeK]

To toss some info on the cost-cutting logistics pile, a friend of my dad was a buyer for Wal-Mart for a while.

According to him, Wal-Mart's corporate relocation assistance consists of a Wal-Mart truck and some random employees from a local store packing and stuffing your possessions in a semi.

[tptacek]

That's neat, if true. The long-haul truck drive is by far the most expensive part of a cross-country move; movers themselves are very cheap.

[brc]

Brilliant - I love it. If you're going to compete with a lowest-cost strategy, that's just how far you can take it.

[joezydeco]

My brother worked logistics for a large company that supplied product to WalMart.

Their distribution centers have timeslots for incoming trucks measured in ten-minute increments. You miss your ten-minute window to park the truck, you're locked out until they can find a space to fit you in.

[ippisl]

Also , by doing logistics for manufacturers and not the other way around, they make logistics for other retailers cost more(because of less scale), which increase the price of the competition.