"Actually, I've been thinking about your question for a long time since I learned about Costco's business model last month." Sam Wal paused and said:
"From a business logic point of view, this is indeed a good business model. Using members to support the supermarket almost eliminates the possibility of these members going to other supermarkets. This is really a great move. If our Wal-Mart opens here There is absolutely no competition near a supermarket, which is scary to think about.
It's just that the current Wal-Mart supermarket is operating very smoothly. All stores are making profits and are undergoing rapid expansion. All the company's funds and even credit are used in new stores. How do you plan to enter the warehouse supermarket market? How much money to invest?
If the investment is too little and the development is too slow, then it is better to open a Wal-Mart supermarket with peace of mind. If the investment is too much and a lot of money is consumed, who can guarantee that the warehouse supermarket can surpass the performance of the current Wal-Mart supermarket? Although our family controls the supermarket, we are also responsible for other shareholders.
Besides, the company’s internal talent team all understands the operating model of normal supermarkets, but how many of them understand warehouse-type supermarkets? Theoretically, warehouse supermarkets can make stable profits with enough members, but the premise is that you have to get hundreds of thousands or even millions of people to pay tens of dollars in membership fees first, which is not that easy. "
"I also know that there are certain risks. I just think that Costco's current business model will be terrible if it succeeds. If there will be a conflict with Wal-Mart in the future, our cost advantage will not be able to compare with each other." 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 big cities such as Los Angeles and New York. It may not be able to exist in slightly smaller and medium-sized cities." We have enough members to meet the basic needs of a warehouse supermarket. As for Wal-Mart, our main market is still expanding in small and medium-sized cities. Big cities belong to the sphere of influence of Kmart and Sears. These two companies will also be our future. Our opponents will not worry about this problem at least now or even in ten years.
Let’s talk about the future later. We may not be able to open stores to every corner of the country, and Costco may not be able to either. 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 this, there is a good chance that both sides will fail. "
"Maybe, I really am too worried." 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. model, taking advantage of this advantage to increase the cost of controlling the procurement chain, and the large number of talents in this area within the company to complete expansion.
"Actually, I don't have to worry about it. This new warehouse supermarket is indeed very good, but it is not certain whether it will succeed. We need to observe for a few more years." Walton thought for a while and then said: "Look at the Costco market. Performance, whether this business model can maintain a stable financial situation, small-scale and large-scale businesses are still different. If the performance is really good, we will enter the market again. With Wal-Mart's current development speed, by then There will be enough resources to open a second path."
"That's the only way it can be." John nodded and said.
"Eric's acquisition of our stock allowed me to discover Costco's business model in advance. Otherwise, it would have been too late to discover it after a few years." Walton said with a smile.
"Indeed, there are countless small supermarkets like this in the United States. It is impossible for us to know about them unless they reach a certain scale." John Walton said.
There are too many retail counterparts in the United States, and most of them only know of Celtic and Sears, which are large supermarket chains with branches across the country. Since these supermarkets have operations all over the country, they often advertise on national radio stations. It is well-known, while other small or even medium-sized supermarkets only cover one state or several nearby states, and their popularity is within the scope of their business coverage. It is difficult for outsiders to know.
For example, Wal-Mart currently has only 125 stores in the United States, most of which are still in its hometown of Arkansas. It is based here and slowly spreads to surrounding states. This is the inevitable result of cost control. It starts from a small point and spreads to surrounding states. , is the most cost-saving, whether it is management or logistics.
Outside these states, few people know about Wal-Mart, unless they are stock traders. Because Wal-Mart's financial data during this period was very good, the stock price rose a lot and it became a hot stock.
Therefore, in Costco, which is centered in California, no one knows about it elsewhere. Even within California, those who are not developed as members by Costco may not necessarily know about it.
Sam Walton said: "Today's matter was finally solved successfully. It is much easier than I thought. There is no 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. If appropriate, If you purchase some at a good price and the quality is good, you can also cooperate. Some products in Asia are still more cost-effective than those in the United States."
"Okay, I will arrange this matter. No matter what, I have to give this new shareholder some face." John Walton said with a smile.
Deciding on verbal cooperation with the other party's boss is often much more efficient than a professional business team. That night, Chen Zhiwen personally called Xu Weishan, who was in charge of Galaxy Trading in Hong Kong, and asked him to immediately bring his core team with him to carry out the business of Galaxy Trading. Some samples traveled to the United States to come talk to Walmart's purchasing department.
The boss has already decided on the cooperation intention, so the details of the products below will naturally be taken care of by his subordinates.
The next morning, Chen Zhiwen left Bentonville and came to California, where Costco is currently headquartered.
Half a year 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 US$250,000. Regardless of the number of members or turnover, , are all rising slowly.
After the first one was stable, Chen Zhiwen, who was far away in Hong Kong, asked Pierce to continue opening branches. After many phone calls, the Pierce team accepted the plan to open four more branches at the same time, in Berkeley, San Francisco, and Toron, California. Santa Clara and Santa Clara are among the top ten cities in California.
It took about a month for the Pierce team to select a location, then purchase the land and build the supermarket directly. Because the requirements of the supermarket were simple and there were no decoration requirements, the supermarket was built in three months on the premise that Party A was willing to give money. .
By the time Chen Zhiwen arrived, all these supermarkets were already open for business. Naturally, it was impossible for him to visit all four of them. He only went to Costco in San Francisco.
That night, the supermarket's business was pretty good because membership was free for the first month and anyone could enter and enjoy membership discounts.
"Is the speed of acquiring members as fast as it was in Los Angeles last year?" Chen Zhiwen asked while visiting the supermarket with Pierce.
(End of chapter)
