Why is oil at Walmart so cheap?

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I'm sure this has been answered before but couldn't find an article about it. But anyway why are name brand oils and filters at Walmart so much cheaper than at an auto parts store such as O'Reilly's? I can buy 2-5 quart jugs of let's say Valvoline full synthetic oil for [censored] near the price of one at a parts store. Motorcraft filters for one are also a few dollars cheaper.
 
One word: volume.

Walmart can move a lot more product than those auto parts stores, so they can afford to sell it lower, plus they can get a lower price from the oil companies to begin with (because of the huge amount they will buy)
 
two reasons:
- their purchasing power: they buy TONS of it and can (somewhat) dictate the price point to their suppliers
- they can operate on lower margins because they sell a large variety of products and are not reliant on one single product line for revenue
 
Thanks for the quick replies. I heard somewhere that the oil and filters sold at Walmart are lesser quality than the higher price ones at other stores hence the lower price. I figured Walmart name is way too big to be selling junk.
 
Originally Posted By: Weezybabydoll
I figured Walmart name is way too big to be selling junk.
There is plenty of junk being sold at Walmart, but oil is the same as everywhere else.
 
Originally Posted By: Quattro Pete
There is plenty of junk being sold at Walmart, but oil is the same as everywhere else.


Absolutely true. There have been rumors for years that Walmart got cheaper versions of the oils they carry, but if that were true we would have figured it out on here when we do our used oil analysis. But we can clearly see that the additive package in the oils we buy from Walmart are identical to those same oils bought elsewhere.
 
Originally Posted By: Patman
Originally Posted By: Quattro Pete
There is plenty of junk being sold at Walmart, but oil is the same as everywhere else.


Absolutely true. There have been rumors for years that Walmart got cheaper versions of the oils they carry, but if that were true we would have figured it out on here when we do our used oil analysis. But we can clearly see that the additive package in the oils we buy from Walmart are identical to those same oils bought elsewhere.


Johnny answered this rumor 10 years ago.
 
What makes you think Walmart prices are cheap? Check Rural King oil (and battery!) prices. A better question: Why did Advance, for example, quit selling oil at competitive prices, which they regularly did on sale with rebates up until roughly 15 or so years ago? They used to beat Wal-Mart prices consistently. So did Sears, sometimes, and hardware chains. I didn't have to go to Wal-Mart for best prices until maybe about 10 years ago, and then only when not near a Rural King.
 
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Originally Posted By: Mr Nice


Johnny answered this rumor 10 years ago.



I miss Johnny, he hasn't been on here for a very long time. I hope he's alive and well!
 
Never heard of rural King. I live in North Dakota where we don't have alot of stores besides the basics such at Walmart, Napa, O'Reilly's etc.
 
Originally Posted By: Weezybabydoll
Thanks for the quick replies. I heard somewhere that the oil and filters sold at Walmart are lesser quality than the higher price ones at other stores hence the lower price. I figured Walmart name is way too big to be selling junk.


I wonder where you read that. That's a pretty common line when people can't compete and it's the only thing they have left to knock the competition.

Basically Walmart is the largest retailer by far in the US. In 2014 they did 343 billion in sales. The number two retailer was Kroger with 103 billion, followed by Costco at 80 and Home Depot at 75. Get the picture? It's really about volume.
 
Originally Posted By: Patman
One word: volume.

Walmart can move a lot more product than those auto parts stores, so they can afford to sell it lower, plus they can get a lower price from the oil companies to begin with (because of the huge amount they will buy)


wrong I dont see many people in the wal mart oil aisle, but lots in and out of parts places
 
Rural King is a farm store

Luckily, I have a atwoods few miles down road and they sell the CHEAPEST oil I have EVER seen. Harvest King(Citgo) oil

$2.50 a QT for FULL SYN or $11 for 5QT jug

The HM semi-syn blend is $7.99 5qt jug or $1.69 a qt

Wish i would have discovered Atwoods long ago, Would have saved me $$$ on oil VS Wal-[censored]


Dave
 
Originally Posted By: Patman
Originally Posted By: Mr Nice


Johnny answered this rumor 10 years ago.



I miss Johnny, he hasn't been on here for a very long time. I hope he's alive and well!


I kept hoping he might come back. But i guess not.
 
Originally Posted By: edwardh1
Originally Posted By: Patman
One word: volume.

Walmart can move a lot more product than those auto parts stores, so they can afford to sell it lower, plus they can get a lower price from the oil companies to begin with (because of the huge amount they will buy)


wrong I dont see many people in the wal mart oil aisle, but lots in and out of parts places


I'm not sure that's a good metric for determining how much they sell. They can have low prices and make it up in volume. Those smaller auto parts chains like Advance Auto had less than 10 billion in revenue, Autozone had a tad under 11 billion. They're small potatoes compared to Walmart. Try reading some 10k's.
 
Originally Posted By: edwardh1
Patman said:
One word: volume.

Walmart can move a lot more product than those auto parts stores, so they can afford to sell it lower, plus they can get a lower price from the oil companies to begin with (because of the huge amount they will buy)


wrong I dont see many people in the wal mart oil aisle, but lots in and out of parts places


Well Wal-Mart is by a wide margin the number one of PCMO sales in North America. You must visit special stores or travel the multiverse.
 
Originally Posted By: edwardh1
Originally Posted By: Patman
One word: volume.

Walmart can move a lot more product than those auto parts stores, so they can afford to sell it lower, plus they can get a lower price from the oil companies to begin with (because of the huge amount they will buy)


wrong I dont see many people in the wal mart oil aisle, but lots in and out of parts places


Respectfully disagree. Walmart likely sells more PCMO than all the parts store in a town put together. Times all the WMs in the US. Huge volume.

It's well known in the gun world that Walmart is the largest seller of firearms in the US. How can that be, I don't see someone buying a gun every time I go by the sporting goods section but every time I go in Cabelas I see 4 or 5 people buying guns?
 
There have been 'rumors' passed around for decades
about so called lower quality of auto parts sold by
big box stores and discount outlets.
Nonsense put out by auto parts stores and chains.
No major oil company or spark plug company
would want to ruin their reputation by selling lower
quality/grade products. Heard those claims since late 60's.

My 2¢
 
Originally Posted By: Patman
I miss Johnny, he hasn't been on here for a very long time. I hope he's alive and well!


Me too,I miss Johnny
frown.gif
Such a super cool guy!!
 
For all of its aspirations to be seen as a 'hi-tech' business, engine oil is, and always has been a business that lives or dies on volume.

Getting that first litre of oil to market is extortionately expensive! It's not the cost of the oil itself that's significant but the vast amount of money you need to spend to get the oil 'approved'. The more approvals the oil has, the more money you commit up-front. Wholly new approvals are particularly costly because you essentially start from scratch to reinvent the wheel (albeit slightly different from the last one).

However once you have a marketable oil in place, the incremental costs of production drop like a stone and the race to 'fill your plants' begins, which is why a mega-retailer like Walmart is such a juicy, irresistible target and can command low wholesale pricing.
 
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