Speaking of the retail industry, the first thing everyone thinks of is lifestyle supermarket chains such as Wal-Mart, Carrefour, and RT-Mart. But in fact, lifestyle supermarkets are only a part of the retail industry, and of course, a larger part.
Other retail giant industries include pharmaceuticals, home furnishings, appliances, electronic products, etc. Even Watson's cosmetics industry is one of them, with a wide variety of products.
In later generations, the biggest giant in the furniture industry was Home Depot. This company was only established in the late 1970s, but it did not successfully develop the domestic market, so its domestic popularity was very low.
It is said that the founder of Home Depot spent a long time studying Costco in the early stages of starting his business before creating his own business model.
"How did you meet?" Chen Zhiwen asked.
Pierce smiled and said: "Bernie used to be a professional manager of HANDY DAN, an American home furnishing brand. He held the position of CEO. I have known him for many years. Last year, he resigned from HANDY DAN and wanted to start a home furnishing company of his own. Originally, he wanted to rent a space within Costco, but I didn’t think it was a good idea because Costco is a membership model and only serves VIP members. The number of members is much smaller than that of traditional supermarkets, which requires the purchase of furniture. There may not be many that do not meet his business needs.
Later, he observed Costco for several months and kept exploring and learning Costco's business model. Finally, he came up with his own business model. Let Bernie introduce it later. "
"Okay." Bernie nodded and said, "Mr. Chen, when I was working at Costco, I communicated with many customers and found that they often wanted to buy new furniture or needed some minor decoration 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 purchasing model and integrated transportation model cannot reduce the cost too much.
The fundamental reason for this is that the transportation cost from the manufacturing factory to the terminal sales location is too high. The first is that the cabinet is very large and takes up too much space. One container cannot hold much, but even if the container is full, there is not much. The weight may only be one or two tons, but the transportation cost is similar to other goods of dozens of tons.
The second is that the wooden cabinet is already a finished product, and its appearance has been processed. It cannot be damaged, bumped, exposed to the sun, or wet. In order to protect the appearance, you must be very careful during loading and unloading, transportation, and even in supermarket warehouses. These will eventually be transferred to costs.
Moreover, it also costs a lot of money to deliver a complete wardrobe 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.
So my plan is to build a supermarket that specializes in importing wooden boards for wardrobes, connecting tools, processing tools, exterior paint and other supporting items, plus instructions. Anyone can take these materials home and It only takes an hour or two to assemble it yourself. In this way, supermarkets do not need to purchase furniture from furniture companies, but instead purchase various wooden boards. This kind of wooden boards is cheap and very efficient to transport. One truck can hold dozens of tons. There is no need for special care, it just needs to be waterproof. After the customer buys it, he can basically transport it to his home in his own car, and there is no need to spend extra money to find someone to transport it.
Not only wardrobes, but other sofas, beds, chairs and even all decoration materials can be operated in this way. All that can be separated can be separated to reduce transportation costs. The only added trouble is that it requires customers to spend time to assemble.
But many people in the United States have a lot of time, and many people also like to do it themselves. For thirty or fifty dollars, you can buy something that used to cost three to five hundred dollars. I think most people will welcome it. "
"Your business model is very good." Chen Zhiwen nodded.
In fact, he also knew that Home Depot, including the future electronics retail giant Best Buy, were the kings of the segment, and their annual turnover would reach hundreds of billions of dollars in the future.
Electronic product retail is closely related to Chen Zhiwen's current main business. When funds are sufficient in the future, especially with Costco's talent training in the past few years, he can enter this industry alone. After success, he can also Whether it is complementary to Midea or Galaxy Trade, it is one of the strategic directions that requires investment in the future.
The reason why I didn’t invest before or even now is because funds were relatively tight in the 1970s, and there are better uses for them. Being able to mobilize funds to make Costco a success is the ultimate within my ability.
The second is that we have not yet reached the era of the explosion of electronic products. Historically, Best Buy is definitely not the only brand that sells electronic products in supermarkets. There are many others. The reason why these chain electronics retail brands appear in large numbers is because The explosion of personal electronic products, including computers, game consoles, music players, etc.
Only then will large-scale investment in the electronics retail industry form a stable business cycle. Otherwise, premature investment will simply burn money and be unsustainable.
Home Depot, a DIY (do it yourself) furniture retail giant, is not in Chen Zhiwen's consideration at all. No one can do all the business, and it is impossible for a time traveler to have a memory golden finger. At most, when there is a chance, in When this company goes public, you can buy some stocks and earn some pocket money for fun.
But I didn’t expect that the founder of Home Depot would have such a deep connection with Costco, and the business model may have been based on Costco’s minimalist cost control.
Pierce continued: "Eric, I knew you would definitely agree with this business model. After hearing Bernie's idea for the first time, I was shocked. This can really save so much cost." If it really succeeds, it will definitely be a revolution in the furniture industry and have a greater impact on the supermarket industry than our Costco."
"I also agree with your point of view." Chen Zhiwen nodded. Costco has only optimized and made a small amount of reforms to the original retail model. The core is to reduce the types of goods and increase the purchase of individual goods to reduce costs. At the same time, it adopts Membership system to lock in most of the purchasing quota of member families.
However, Home Depot's business model is to change the table in the home furnishing industry. It does not need to purchase the same cabinets uniformly, but directly purchases raw materials such as wooden boards, connecting mechanisms, and paint. This may reduce transportation costs to one-tenth of the previous level. Just look at the cost reduction. What does Costco mean in this area? Totally unworthy of comparison.
But the bad thing is that this model is not suitable for countries other than Europe and the United States, because only in countries like Europe and the United States, labor costs are extremely high, causing everyone to have 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 the United States, every household will have them.
This is also the reason why Home Depot did not develop in mainland China or even Asia in later generations. Furniture and electrical appliances here are delivered to your door, and the shipping costs are very cheap.
But just the European and American markets are enough to create a giant worth hundreds of billions of dollars.
Pierce and Bernie looked at each other with a certain degree of joy in their eyes. Pierce said: "Eric, Bernie's idea is very good, but to complete this plan, a lot of investment is needed. First, a large supermarket must be built. , not to mention as big as Costco, at least it cannot be smaller than ordinary supermarkets such as Wal-Mart and Celtic. Otherwise, the space is too small and it cannot hold 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, other things also require a lot of space.
The second is to design specifically. The wardrobes, cabinets, chairs, etc. currently sold in various supermarkets are all patented. We only provide disassembled raw materials for users to make their own, but they still need to be designed in advance, and they cannot Infringement of patents, and after the design is completed, it is also necessary to purchase raw materials from companies. There are many varieties in this area, but the quantity is small, so it is more troublesome, that is, more funds are needed. "
"Costco's manufacturers don't have this kind of supplier, right?" Chen Zhiwen asked.
"No, although our Costco also sells furniture, it has no connection with the wood board factory, so there isn't much we can do to help." Pierce shook his head and said.
"So, Bernie, how much money do you need?" Chen Zhiwen thought for a while and asked.
"U.S. 3 million, of which I will contribute 2 million U.S. dollars myself. At 5 million U.S. dollars, it will be enough for me to rent two warehouses, recruit staff, and purchase funds." Bernie was obviously prepared, and added: "As for the equity, I I hope I can get 70% of the equity, because I need the controlling stake of the company. I want to be honest about this now, but out of fairness, we can sign an agreement. After 5 years, I can return Mr. Chen 100 Thousands of dollars.”
"In other words, I will lend you $1 million alone, invest 2 million, and then get 30% of the stock?" Chen Zhiwen did a simple calculation.
"Yes." Bernie nodded.
"Aren't you afraid that I will take your idea and open a company like this alone?" Chen Zhiwen said with a smile.
"Because I believe 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 of the details." Bernie said confidently.
"Actually, the so-called details are not very important. Your creativity is the most important. If others really operate it, even if they are not as good as you, they may still achieve certain results." Chen Zhiwen smiled and said: " However, Pierce's guarantee is correct, 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 devote yourself wholeheartedly to this industry, with this method and hiring professionals, you can theoretically succeed, but what is the upper limit? Whether it can defeat the giants of all parties and become the boss of the home furnishing retail industry, the probability is basically 0.
If all the plot outlines of The Three-Body Problem were told to an ordinary person, then he might be able to write a good book, but he would definitely not be able to write the feeling of a real Three-Body Problem, because the descriptions of each person in it, and the Inner monologue is definitely not something that just anyone can write.
So what if you have all kinds of creative ideas? Even if Chen Zhiwen travels back to 1995, can he create Alibaba or Tengxun? Impossible.
It is one thing to have a high-quality business idea, but to implement it step by step and be successful is to be a business tycoon. This is the value of people like Bernie.
At this time, idiots are just doing it themselves. It is better to invest in future winners. Besides, this is not a high-tech industry that will be restricted in the future. It is completely following the founders.
Of course, a negotiation is a negotiation, and you still have to put a certain amount of pressure on the other party.
"Mr. Chen, if I give you 40% of the shares, I will lose my absolute controlling rights, and in the future, my company will still need to be refinanced and listed, which is not conducive to my safe operation." Bernie said. Euphemistic.
"I understand, but this way, I can give up these 10% of voting rights to you, and if I raise funds or go public in the future, the shares in my hands will be diluted, and this part will naturally be reduced. I can tell you, I only value economic benefits, and I have no interest in management rights. I would say Costco, which is now somewhat famous in the United States, but I will not be involved in management. Hong Kong is the focus of my career. "Chen Zhiwen said.
Although there are many "gold" industries in the United States, he will not pursue controlling interests, except for Costco. This is also because Pierce is old and had the idea of selling the company at that time, so he acquired it. He has absolute control, otherwise, if Pierce was as young as Bernie, he would definitely only invest.
Except for Costco, he will make profits in other industries through investment rather than operation, such as Apple and future high-tech industries, as well as traditional industries.
Of course, Midea, Red Bull and other branches in the United States are not within this limitation, or they will acquire some mature industries in the future if they have sufficient 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.
"There's no rush." Chen Zhiwen nodded and said. A general business investment can be settled within a month, which is considered very fast. Chen Zhiwen also knows the future, otherwise a person who doesn't know what kind of person will come to him in the future wants to invest. He It will take a long time to think about, and you will need to send people from the company to investigate, etc.
"Eric, our Galaxy Trade has rich procurement resources, can you help Bernie in this regard?" Pierce said.
"Household raw materials may not be available for the time being. Hong Kong is not good at home manufacturing, and there is no wood processing industry chain. I will send someone to Indonesia to ask. Costco's current toilet paper is purchased from there, and Indonesia also uses 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 country is reopened. At least now, there should be no shortage of wood in the country. Even if there is a shortage, it can be imported. Maybe we can adopt the method of three to one to make up for the domestic supply. Orders in this area are only processed into wooden boards, which is not difficult.
But this will have to wait at least two or three years, but the timing is quite suitable. In two or three years, Bernie's industry may expand as rapidly as Costco.
"Yes, at most it's just hardware tools." Pierce nodded and said.
PS: Please give me a monthly ticket
(End of chapter)
