Low price philosophy making small profit margins

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Wal Mart adopted this everyday low price philosophy making small profit margins on each item sold, but sells in greater volumes. It would be quite difficult for someone to come into the market and try to compete against Wal Mart because of Wal Mart;s economies of scale. However, Amazon has had a significant impact on Wal Mart's sales as they too have achieved economies of scale and have lower everyday costs with their online retail sales verses bricks-and-mortar storefronts. Amazon also has the advantage of its membership revenue source, which secures revenue even if a customer does not make any purchases. Wal Mart offers free shipping to their stores and recently reduced their $50 purchase price minimum to $35 for consumers to receive free shipping to their homes in an effort to keep/increase market share. What are your thoughts?

Reference no: EM131421769

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