Ordinary supermarkets have a certain coverage, and large warehouse supermarkets basically cover a city, when a city has a successful warehouse supermarket, others open another one, the probability of failure is very high, especially when Costco's profit control is very low, others basically have no chance, even if it is a capital giant, this exclusivity is much stronger than McDonald's fast food restaurants.

To secure the position, you need two points, one is to cover enough cities, especially large cities, and the other is to reduce costs, which also requires more stores to increase procurement volume and reduce operating costs.

Therefore, even if the funds are relatively tight now, Chen Zhiwen must first build up the scale of Costco, even if it is a temporary loss. One of the things that worries him the most is whether the Walton family will notice the warehouse supermarket in advance because of his shareholding, but according to his estimate, it is unlikely that in recent years, Wal-Mart supermarket's business is developing rapidly, and it is necessary to invest all resources to expand and open new stores, and it is impossible to invest resources in other tracks at this time, unless the market really confirms that the performance of warehouse supermarkets far exceeds that of normal supermarkets and Wal-Mart's business model.

But in fact, this is not possible, although the warehouse supermarket can be operated well to achieve lower costs than Wal-Mart, but there are too many restrictions, in terms of the future, it is far less than Wal-Mart supermarket.

"Then let's settle down on the East Coast first, and then move on to the West Coast, Costco doesn't need to think about the smaller cities, and put down roots in the big cities first." Pierston paused.

"Yes, the same as my idea, according to the plan you said to cultivate talents, I estimate that it will have some effect in half a year to a year, and after three years, a lot of talents will be cultivated, and then the top 20 cities in the United States will be taken down, and then they will be the core, and then expand to nearby second-tier cities." Chen Zhiwen said confidently.

When we first started to do a good job in the market, although we had a relationship with Fedmart, many suppliers were still reluctant to supply a new supermarket before settling the bill, even if it could be delayed, they needed to pay back quickly. And now, with the success of the new Costco openings, the trust of suppliers has increased a lot.

Trust and confidence in many times is a large amount of money, when the supplier is willing to accept a period of time after the payment, the supermarket will enter a very asset-light operation model, when expanding, only need to get the cost of the store and the cost of personnel, the largest cost of all kinds of goods by the supplier first, which can make rapid expansion a reality, Wal-Mart is like this, any fast-growing supermarket is the same, otherwise, the huge amount of goods funds, can crush the supermarket capital chain.

Of course, another advantage of the goods collection cycle is that there is enough money in hand, and some risky radical supermarkets will even use this capital to expand new stores.

Costco is a large city, but it does not have high requirements for location, as long as all aspects are suitable, the speed of expansion will be much faster, and if the personnel are in place, it is not a problem to get the top 20 cities in the United States in two years.

"Although personnel training is also very tight, it is not too much of a problem, but if we are too scattered, there will be a new problem, logistics costs will increase significantly, especially we are different from ordinary supermarkets, we are not expanding from the inside to the outside at the geographical level, but diversifying investment, which leads to our inability to build logistics centers." Pierce voiced his worries.

"It's true, but it doesn't seem to have much to do, but to find a way to deal with logistics companies, or part of it will be delivered by our own fleet, or branches in other cities, and give more local purchasing rights." Chen Zhiwen thought about it, and there was no good way.

Normal supermarkets, such as Wal-Mart, are from a city, to a nearby city, to a nearby state, this model, can make the procurement chain run locally, reduce logistics costs, and more stores, will set up their own logistics center, the supplier's goods are concentrated in the logistics center, and then according to the needs of each branch, to calculate how to transport the most cost-effective, in order to maximize the cost to reduce logistics costs.

Similarly, Celtic supermarkets, which dominate the United States, also have logistics centers in many parts of the United States, as well as their own large fleets to reduce logistics costs.

When a small supermarket or a few supermarkets, you don't need to think about this problem, just outsource, but the scale is large, the branches are scattered far away, you must consider this cost, especially Costco, because it can only be opened in big cities, and the degree of dispersion is definitely the most in the history of retail.

The logistics cost, is one of the largest costs of large chain retail supermarkets, in the non-Internet era, generally accounted for 8% of the turnover, to the Internet era, the computing power has been greatly improved, the cost can be controlled at about 3%, this is a huge gap, it is rumored that in the early 80s, Wal-Mart spent hundreds of millions of dollars to purchase a large number of computers and launch a satellite to the sky, in order to be able to reduce the transportation cost of Wal-Mart logistics, and it was successful, This is also one of the strong guarantees that it will gradually dominate the retail industry.

"I've probably calculated that there are about 30 cities on the East Coast that meet the requirements of our first investment, and we can build a logistics center in California first, which will be responsible for the West Coast, and the East Coast side will grant a certain amount of independent purchasing rights, and then build a second one when there are more of them," Pierce said. ”

Chen Zhiwen nodded, and asked again: "Now there are 5 supermarkets, all of which are directly delivered to the branches by suppliers?" ”

"Yes, now the number of branches is small, plus the volume of our single product is okay, some suppliers are delivering by themselves, and others are going to UPS logistics, but if we open another branch, we may go to Nevada or Arizona, then we can only rely on us." Pierce said.

"How much investment does that logistics center need?" Chen Zhiwen asked. Logistics problems are a big problem when there are more branches, and in the United States, large trucks are expensive, and truck drivers are paid more.

"The logistics center does not need to be in a prime location, the cost of land and construction is not very high, and the large investment is the investment in internal equipment and trucks, as well as the cost of personnel." "A conservative estimate is that a $5 million investment is needed," Pierce said. It also takes two to three million dollars a year to operate, because our supermarket model is different from traditional supermarkets, and the company's logistics team can't estimate the exact value based on their previous experience. ”

(End of chapter)