The Industrial Giant Reborn

Speaking of the retail industry, the first thing everyone thinks of is Wal-Mart, Carrefour, RT-Mart and other lifestyle supermarket chains, but in fact, lifestyle supermarkets are only a part of the retail industry, of course, it is a larger part.

Other retail giant industries include pharmaceuticals, home furnishing, appliances, electronics, and more. Even Watson's cosmetics industry is one of them, with a wide variety.

In later generations, the largest giant in the furniture industry is Home Depot. This company was only established in the late 1970s, but it did not successfully develop the domestic market, so its domestic popularity is very low.

It is said that the founder of Home Depot spent a long time researching Costco in the early stage of his business before creating his own business model.

"How did you know each other?" Chen Zhiwen asked.

Pierce said with a smile: "Bernie used to be a professional manager of Handy Dan, a home furnishing brand in the United States, and held the position of CEO. He has known me for many years. Last year, he left Handy Dan and wanted to start his own home furnishing company. Originally he wanted to rent a place in Costco, but I don’t think it’s good, because Costco is a membership model and focuses on serving VIP members. The number of members is much smaller than that of traditional supermarkets, and there is a need to buy furniture here. There may not be many, and it does not meet his business needs.

Later, he observed Costco for a few months, and he has been groping to learn the business model of Costco. In the end, he came up with his own business model, and I will let Bernie introduce it later. "

"Okay." Bernie nodded and said, "Mr. Chen, during the time I worked at Costco, I communicated with many customers and found that they often want to buy new furniture or need a little renovation at home. But the cost is too high. An ordinary wardrobe costs three to five hundred dollars in the United States. Even Costco's unique procurement model and integrated transportation model can't reduce the cost too much.

The fundamental reason for this is that the transportation cost from the manufacturing plant to the terminal sales location is too high. The first is that the cabinet is very large and takes up too much space. A container cannot hold much, but even if it is full of containers, there is not much. The weight may be only one or two tons, but the transportation cost is similar to dozens of tons of other goods.

The second is that the wooden cabinet is already a finished product, and the appearance has been treated so that it cannot be damaged, bumped, exposed to the sun, or drenched in water. In order to protect the appearance, you must be very careful during loading and unloading, transportation, and even in the supermarket warehouse. These will eventually be transferred to the cost.

Moreover, the complete wardrobe needs a lot of cost to be delivered from the supermarket to the customer's home. The transportation is too troublesome and labor-intensive, and the customer also needs to pay for this part.

So my plan is to build a supermarket, which is dedicated to importing wooden boards for wardrobes, connecting tools, processing tools, exterior paint and other supporting items, together with instructions, anyone can take these materials home, and then It takes an hour or two to assemble it by yourself. In this way, the supermarket does not need to purchase furniture from furniture companies, but buys various wooden boards. This kind of wooden boards are cheap and efficient in transportation. A truck can hold dozens of tons. No special care is required, as long as it is waterproof. After the customer buys it, he can basically transport it to his home by his own car, and there is no need to spend extra money to find someone to transport it.

Not only the wardrobe, but other similar sofas, beds, chairs and even all decoration materials can be operated in this way, and all the parts that can be separated can be separated to reduce the transportation cost. The only trouble that will increase is that it takes customers some time to assemble.

But many people in the United States have a lot of time, and many people like to do it themselves. For thirty or fifty dollars, you can buy things that used to be three or five hundred dollars. I think most people will be very welcome. "

"Your business model is very good." Chen Zhiwen nodded.

In fact, he also knows that Home Depot, including the later electronic retail giant Best Buy, is the king of the subdivision field, and the annual turnover will reach the level of hundreds of billions of dollars in the future.

Electronic product retailing has a lot to do with Chen Zhiwen's current main business. When the funds are sufficient in the future, especially with the talent training that Costco has cultivated in the past few years, he can enter this industry alone. After success, he can also Complementary trade with Midea and Xinghe is one of the strategic directions that require investment in the future.

The reason why I didn’t invest before and even now is because the funds in the 1970s were relatively tight and had better uses. Being able to mobilize funds to make Costco a success is already the ultimate within the scope of my ability.

The second is that it has not yet reached the era of the explosion of electronic products. In the past, Best Buy was definitely not the only brand in electronic product retail supermarkets, and there were many others. The reason why these chain electronic retail brands appeared in large numbers was because The explosion of personal electronic products led by computers, game consoles, music players, etc.

Only at that time, large-scale investment in the e-retail industry will form a stable business cycle, otherwise, premature investment will only be a pure waste of money, and it will not last at all.

But Home Depot, a giant DIY (do it yourself) furniture retailer, is not in Chen Zhiwen's consideration at all. No one can do all the business, and it is impossible for a traveler to have a memory cheat. When this company goes public, you can buy some stocks and earn some pocket money for fun.

Unexpectedly, the founder of Home Depot has such a deep relationship with Costco, and the business model may have come up with reference to Costco's minimalist cost control.

Pierce went on to say: "Eric, I knew you would agree to this business model for a while. After hearing Bernie's idea for the first time, I was shocked. This can really save too much cost. Now, if it is really successful, it will definitely be a revolution in the furniture industry, and it will have a greater impact than our Costco on the supermarket industry.”

"I also agree with your point of view." Chen Zhiwen nodded. Costco just optimized and slightly reformed the original retail model. The core is to reduce product categories and increase the purchase of individual products to reduce costs. Membership system to lock most of the purchase quota of member families.

But Home Depot's business model is to turn the table in the home furnishing industry. It does not need to purchase the same cabinets uniformly, but directly purchases raw materials such as wood boards, connecting mechanisms, paints, etc., which may reduce the transportation cost to one-tenth of the previous one. Just look at the cost reduction This one, what is Costco? Totally unworthy of comparison.

But the downside is that this model is not suitable outside of Europe and the United States, because only Europe and the United States have such high labor costs that everyone has to do various maintenance work at home. This is why Europe and the United States are the largest hardware tool markets. , because in Asia, wrenches, pliers, and flashlights basically only appear in factories, while in Europe and America, every family has them.

This is also the reason why Home Depot did not develop in mainland China or even Asia in later generations. The furniture and electrical appliances here are all delivered to the door, and the shipping cost is very cheap.

But just the European and American markets are enough to raise a Big Mac worth hundreds of billions of dollars.

Pierce and Bernie looked at each other, and there was a certain amount of joy in their eyes. Pierce said: "Eric, Bernie's idea is very good, but to complete this plan, it requires a lot of investment. First of all, we need to build a large supermarket. , Not to mention that it is as big as Costco, at least it can’t be lower than ordinary supermarkets like Walmart and Celtic. Otherwise, the space is too small to fit too many products. There are many types of wardrobes, and many types must be prepared. For customers to choose, and the wardrobe is only one of them, and other things also need a lot of space.

The second is to design specially. At present, the wardrobes, cabinets, chairs, etc. sold in various supermarkets are all patented. We only provide raw materials after dismantling for users to make their own, but they still need to be designed in advance. Patent infringement, and after the design is completed, it is necessary to purchase from raw material companies. In this regard, there are many varieties at first, but the quantity is small, so it is more troublesome, that is, more funds are needed. "

"Costco doesn't have such a supplier, does it?" Chen Zhiwen asked.

"No, although our Costco also sells furniture, we have no contact with the wood board factory, so we can't help much." Pierce shook his head and said.

"Then, Bernie, how much money do you need?" Chen Zhiwen asked after thinking about it.

"3 million US dollars, of which I will contribute 2 million US dollars. If 5 million US dollars, it is enough for me to rent two warehouses, recruit personnel, and purchase funds." Bernie obviously had prepared for a long time, and said: "As for the equity, I will I hope I can get 70% of the shares, because I need a controlling stake in the company. I want to be frank and clear now, but out of the principle of fairness, we can sign an agreement. After 5 years, I can return Mr. Chen 100 Ten thousand dollars."

"That is to say, I will lend you 1 million US dollars alone, invest 2 million, and then get 30% of the stock?" Chen Zhiwen simply calculated.

"Yes." Bernie nodded.

"Aren't you afraid that I will take your idea and start a company like this alone?" Chen Zhiwen said with a smile.

"Because I believe in Pierce, Pierce guarantees you that you are not that kind of person, and what I said is only the most basic business model. Only I know many details in it." Bernie said confidently.

"Actually, the so-called details are not very important. Your idea is the most important thing. If other people really operate it, even if it is not as good as your operation, they may still have certain results." Chen Zhiwen smiled and said: " However, Pierce is right, I am not such a person, I can agree to this investment, but there is no need to repay the million dollars borrowed, and then convert it into 5% of the stock, how about it?"

If you put your heart and soul into this industry, with this method, plus hiring professionals, it can be successful in theory, but what is the upper limit? The probability of being able to defeat all the giants and become the leader in the home furnishing retail industry is basically 0.

Tell an ordinary person all the plot outlines of the Three-Body Problem, then he may be able to write a good book, but he will definitely not be able to write the feeling of the real "Three-Body Problem", because the description of each person in it, everyone Inner monologues are definitely not something that everyone can write.

So what if you have all kinds of ideas? Even if Chen Zhiwen travels back to 1995, will he be able to create Alibaba or Fuji Xun? Impossible.

It is one thing to have a high-quality business idea, but to implement it step by step and be successful, that is a business leader, and this is the value of a person like Bernie.

At this time, idiots do it themselves, it is better to invest in future success. Besides, this is not a high-tech industry that will be restricted in the future, and it is completely eating meat with the founder.

Of course, negotiations are negotiations, and a certain amount of pressure must be put on the other party.

"Mr. Chen, if I give you 40% of the shares, I will lose my absolute controlling interest, and in the future, my company will still need to be refinanced and go public, which is not conducive to my business operations with peace of mind." Bernie said in comparison tactful.

"Understood, but in this way, I can give up the 10% of the voting rights and give them all to you, and if I raise funds or go public in the future, the shares in my hand will be diluted, and this part will naturally decrease. I can tell you, I only value economic benefits, and I am not interested in management rights. Let me say that Costco is already well-known in the United States for its scale, but I will not participate in management. Hong Kong is the focus of my career. "Chen Zhiwen said.

Although there are many "golden" industries in the United States, he will not pursue a controlling stake, except for a Costco. This is also because Pierce is old and has the idea of ​​​​selling the company at that time, so he bought it. He has absolute control, otherwise, if Pierce is as young as Bernie, he will definitely only invest.

Except for Costco, he will make profits in other industries through investment instead of operation, such as Apple and future high-tech industries, as well as traditional industries.

Of course, Midea, Red Bull, etc. branches in the United States are not included in this limitation, or they will acquire some mature industries in the future when they have strong capital. This is different from starting from scratch.

"In this case, I need to think about it." Bernie thought for a while, but still didn't make up his mind.

"No rush." ​​Chen Zhiwen nodded and said, general business investment can be settled within a month is considered very fast, Chen Zhiwen also knows the future, otherwise a person who doesn't know what kind of future will come to him to invest, he It will also be considered for a long time, and it is necessary to send people to the company to investigate and so on.

"Eric, our Galaxy Trade has a wealth of procurement resources, can you help Bernie in this regard?" Pierce said.

"Home furnishing raw materials may not be available for the time being. Hong Kong is not good at home furnishing manufacturing, and there is no industrial chain of wood processing. I will send someone to Indonesia to ask. Costco now purchases toilet paper from there, and Indonesia also has wood. As a big exporting country, it is estimated that a lot of wood in the United States also comes from Indonesia." Chen Zhiwen thought for a while and said.

It is unrealistic to do this in Hong Kong, but maybe we can try it after the opening of the country. At least in China, there should be no shortage of wood. Orders in this area are only processed into planks, which is not too difficult.

But this will have to wait at least two or three years later, but the time is quite suitable. After two or three years, Bernie's industry may expand as rapidly as Costco did at the beginning.

"That's right, at most it's just hardware tools." Pierce nodded and said.

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