The Industrial Giant Reborn

"Actually, I have been thinking about your question for a long time since I learned about Costco's business model last month." Sam Walton paused and said:

"From the perspective of business logic, this is indeed a very good business model. Using members to support supermarkets almost cuts off the possibility of these members going to other supermarkets. This trick is really powerful. If we Wal-Mart opened here Near a kind of supermarket, there is absolutely no competition, but it is still scary to think about it.

It’s just that the current Wal-Mart supermarket is running very smoothly. All stores are making profits and are undergoing rapid expansion. All the company’s funds and even credits are used for new stores. How do you plan to enter the warehouse supermarket market? How much money to invest?

If the investment is too small and the development is too slow, then it is better to open a Wal-Mart supermarket with peace of mind. If there is too much investment and a lot of money is consumed, who can guarantee that the warehouse-style supermarket can surpass the performance of the current Wal-Mart Supermarket? Although our family controls the supermarket, it is also responsible to other shareholders.

Besides, the talent team inside the company all understand the operation mode of a normal supermarket, how many of them understand warehouse-style supermarkets? In theory, warehouse supermarkets can make stable profits with enough members, but the premise is that you have to let hundreds of thousands or even millions of people pay tens of dollars in membership fees first, which is not so easy. "

"I also know that there are certain risks. I just think that Costco's current business model will be terrible if it succeeds. Once there will be conflicts with Wal-Mart in the future, our cost advantage cannot compare with the other party." John said with some worry .

Sam Walton shook his head and said: "Don't worry too much. I have analyzed this business model. This kind of warehouse supermarket can basically only survive in the big cities of Los Angeles and New York. Smaller and medium-sized cities may not be able to survive." Enough members can meet the basic needs of a warehouse-style supermarket, and our Wal-Mart, currently the main market is still in the expansion of small and medium-sized cities. Big cities belong to the sphere of influence of Kmart and Sears, and these two will also be our future. opponents, at least now, or even in ten years, will not worry about this problem.

Let’s talk about the future when it arrives. We may not be able to open stores to every corner of the country, and Costco may not be able to. The most important thing now is to make our existing business model successful. We do not have enough resources. At the same time Operating in two different directions, if you do so, there is a good chance that both will fail. "

"Maybe, I'm really overthinking." John Walton nodded and said, Wal-Mart is developing very well now, and its annual growth rate is basically the first in the country. At this time, the most important thing is to maintain the existing business Mode, take advantage of this advantage to increase the cost of controlling the procurement chain, and a large number of talents in this area within the company to complete the expansion.

"Actually, I don't care too much. This new warehouse-style supermarket is indeed very good, but it is not certain whether it will be successful. We need to observe it for a few more years." Walton thought for a while and then said: "Look at the Costco market. It shows that whether this business model can maintain a stable financial situation, small-scale and large-scale businesses are still different. If it really performs well, we will enter the market again. There will be enough resources to develop a second way."

"That's the only way to go." John nodded.

"Eric's acquisition of our stock made me discover the business model of Costco in advance. Otherwise, it would be too late to discover it after a few years." Walton said with a smile.

"Indeed, there are so many such small supermarkets in the United States, and it is impossible for us to know if they are not of a certain scale." John Walton said.

There are too many retail counterparts in the United States, and most of them know Celtic and Sears, which are large supermarket chains with branches all over the country. Because these supermarkets have businesses all over the country, they often advertise on radio stations covering the whole country. It is well-known, while other small and medium-sized supermarkets only cover one state or a few nearby states, and their popularity is within the scope of their business coverage. It is difficult for outsiders to know.

For example, Wal-Mart now has only 125 stores in the United States, most of which are still in its hometown of Arkansas. Based on this place, it is slowly spreading to surrounding states. This is the inevitable result of cost control. , is the most cost-effective, whether it is management or logistics.

Outside of these states, few people know about Wal-Mart, unless they are stock speculators, because Wal-Mart's financial data during this period was very good, which caused the stock price to rise a lot and became a popular stock.

Therefore, in Costco, which is centered on California, no one knows about it in other places, and even in California, if it is not developed into a member by Costco, it may not necessarily know.

Sam Walton said: "Today's matter has finally been successfully resolved. It is much easier than I imagined. I don't need to think too much about other things. I will contact this Hong Kong company tomorrow to see what kind of products they can provide. Appropriate Buy some, if the price is good and the quality is good, we can also cooperate, some products in Asia are still more cost-effective than those in the United States.”

"Okay, I will arrange this matter, and I have to give this new shareholder a little face." John Walton said with a smile.

It is often more efficient than a professional business team to make a general verbal cooperation with the boss of the other party. That night, Chen Zhiwen personally called Xu Weishan, who is in charge of Galaxy Trading in Hong Kong, and asked him to immediately bring his core team with him. Some samples headed to the US to come and talk to Walmart's purchasing department.

The boss has already made a cooperation intention, and the details of the products below are naturally taken care of by his subordinates.

The next morning, Chen Zhiwen left Bentonville and came to California, where the current headquarters of Costco is located.

Six months ago, Costco’s first large-scale warehouse supermarket opened in Los Angeles. After two months of development, it gained 25,000 members and its weekly turnover exceeded 250,000 US dollars. Regardless of the number of members or the turnover , are slowly rising.

When the first one was stabilized, Chen Zhiwen, who was far away in Hong Kong, asked Pierce to continue to open a branch. After many phone conversations, the Pierce team accepted the plan to open four more branches at the same time, in Berkeley, San Francisco, and Torun in California. These cities are among the top ten in California's economy.

It took about a month for Pierce's team to choose a place, then buy the land, and directly build the supermarket. Because the supermarket has simple requirements and no decoration requirements, the supermarket was built in three months on the premise that Party A gave the money readily. .

When Chen Zhiwen arrived, these supermarkets were already open for business, so he naturally couldn't go around all four of them, and only went to Costco in San Francisco once.

That night, the supermarket's business was pretty good, because the first month is free of membership, anyone can enter the store and enjoy member discounts at the same time.

"Is the speed of membership acquisition faster than it was in Los Angeles last year?" Chen Zhiwen asked when he was shopping with Pierce in the supermarket.