How does Sam's Club have a competitive advantage with respect to how they distribute their products? This should include discussion of their distribution channel.

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kipling2448 eNotes educator| Certified Educator

Sam's Club, and the Walmart chain in general, has maintained an advantage over its competition through, among other factors (some ethnically questionable, such as Walmart's history of pressuring vendors to sell to Walmart at unfair prices), its enormous investment in the vast distribution network that supplies its retailers. By constructing an enormous chain of distribution centers -- the corporation currently maintains 158 such centers around the world -- each of which represents a considerable investment in real estate and operations budgets, Walmart is able to supply its retail stores quickly and efficiently. The company boasts of its fleet of trucks that are constantly in motion moving merchandise from warehouse to outlet, as noted in the following quote from its corporate website regarding its fleet of trucks and drivers:

"[E]very year they drive 700 million miles to make millions of deliveries to our stores and clubs. Each driver averages around 100,000 miles annually—that’s like driving around the world 4 times!"

Now, putting aside the carelessness of some its drivers, such as the one that struck the car in which actor/comedian Tracy Morgan was riding, and the one this educator observed swerving erratically along the freeway while the driver struggled to take photographs of the Minnesota countryside with his cell phone, that enormous fleet of trucks enables the company to ensure that each of its stores is fully stocked with the latest goods. The importance of inventory control to any company cannot be overstated, and Walmart, for all of its faults, places a great deal of emphasis on ensuring that its customers have access to the products they desire, and at the lowest prices possible. 

Sam's Club, as a major component of the larger Walmart corporation, specializes in bulk quantities. That, of course, is its draw, especially to large families and to organizations that require large quantities of goods. Shipping in bulk is a highly efficient way of distributing merchandise, as the products stack neatly on pallets that, in turn, load easily into the cargo holds of ships and into the back of the aforementioned trucks. Plus, buying in bulk saves the consumer, so the formula works on both ends of the distribution chain. That provides Sam's Club a huge advantage over its competitors, especially when the parent corporation's other practices, such as those regarding worker salaries and the above-mentioned practice of pressuring vendors to sell to Walmart at prices that undercuts those vendors' economic viability, are factored into the equation.

Walmart's and Sam's Club's distribution channel is a significant strength, and one that other retailers can only envy. Its distribution centers are enormous structures filled with merchandise and conveyor belts to move that merchandise efficiently. Its fleet of trucks enables flexible delivery schedules and rapid response times for the retail outlets. In short, the company has perfected its logistical operations, and that helps Sam's Club to prosper.