The economics of scale is the cost advantages a company receives when production becomes economical, and costs are reduced. Economies of scale are essential to larger companies such as Walmart as they allow maximum output with lower overhead costs.

Walmart has an extensive network of stores, distribution centers, and logistics operations and owns an extensive fleet of delivery trucks, allowing for its continued product availability. At the same time, the business cost for these services, such as contracts, is reduced. Walmarts products are purchased in bulk and distributed effectively to its stores. This allows Walmart to offer lower prices to its customers than many of its competitors, which is a significant advantage in the highly competitive industry. Using innovative technology, such as supply chain automation and radio frequency tags, puts Walmart ahead of its rivals regarding technological advantages.

Additionally, Walmart can keep prices low by negotiating prices with its suppliers. According to Kelloway (2019), "Walmart sells 50 percent or more of all groceries in one in every ten metropolitan areas and nearly one in three "micropolitan" areas across the country." Walmart is likely the largest customer for its suppliers, which, in turn, makes negotiating prices a reasonably straightforward process. The ability to control the market and prices for customers while accumulating significant profits enables Walmart to continue its market dominance. Lastly, the economics of scale are of crucial relevance to companies such as Walmart because it keeps the advantages of keeping prices low, affecting other competitors. At the same time, profits increase, and production costs remain lower.