Why Does Walmart Choose Which Products To Offer For Sale In Its Stores

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1. How does Wal-Mart choose which products to offer for sale in its stores? Walmart choses what to offer in its stores by letting the consumer decide. One way Walmart could accomplish this is by using a system called consumer sovereignty. When anyone goes shopping in a Wal-Mart store and buys any one product or multiple products they are participating in consumer sovereignty or “dollar votes.” Consumer sovereignty or “dollar votes,” is a system run by the amount of products bought by the consumers. This means that Walmart depends on the buyer to decide what they want, or don’t want in the store by simply buying or not buying a product. This allows Walmart to see what the consumer is interested in. By understanding the consumers interest Wal-Mart…show more content…
Wal-Mart is often criticized for importing many of the goods they sell. Why do they buy goods from foreign markets? Walmart imports more goods because of comparative advantage. Comparative advantage is simply “doing what you do best and trading the rest.” Or the ability to produce some products at a lower opportunity cost than others. In this aspect of trade it is cheaper to import a certain good then it is to make it here in the United States. Adam smith said it best when stating “It is maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.” This quote in essence means, if certain goods where made here in the United States, it would take twice as much to produce it then to buy it somewhere else, and since price reflects” reality” it would intern drive up the cost to purchase that product. Thus, making it harder or less desirable in the eyes of the consumer. So trade is a good thing because it allows the consumer as well as the store itself to purchase goods at a cheaper price. Furthermore, because of this system we are able to shift resources on to specialized trade. Specialized trade, which simply put means, “Doing what we’re good at.” Means the United States can focus on producing goods at a lower opportunity cost. By doing this we free up resources and focus on exporting goods and making
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