In fiscal year 2016, Alibaba, the world's most profitable e-commerce giant, generated 42.7 billion RMB in profit with over 36,000 employees, averaging 1.17 million RMB per person. In comparison, 7-Eleven Japan, with just over 8,000 employees, achieved an average profit of about 1.16 million RMB per person, rivaling Alibaba. Despite a downturn in retail profits, how does 7-Eleven achieve such high efficiency? Even during Japan's most severe economic recession, why has 7-Eleven Japan sustained growth for 41 consecutive years? Why can its efficiency rival that of Alibaba, which is known for its profitability? Liu Peng, founder of Gan Jing Me, succinctly summarized the core of 7-Eleven's high efficiency: ****High sales per square meter: Small area, prime location High labor efficiency: Fewer staff, lower costs Strong support: Powerful supply chain, dense sales network He believes that the so-called advantages of the internet are fully demonstrated in 7-Eleven's convenience store model: Ultimate Experience Model △ 7-Eleven convenience store Products: We sell what customers need. Location: We layout according to customer convenience. In retail, there's a saying: "There are only two convenience stores in the world: 7-Eleven and all others." This is because it insists on meeting customer needs. 7-Eleven's predecessor was the Southland Ice Company, founded in the U.S. in 1927, operating 16 hours a day from 7 a.m. to 11 p.m., selling not only ice but also milk, eggs, bread, and other daily necessities popular with local residents. This was the beginning of the world's convenience stores. — Comment — 7-Eleven founder Suzuki's business philosophy is to "think and act entirely from the customer's standpoint." "You think for me" is not as good as "stand in my shoes." Professional Sharing Model When we talk about the sharing economy, we think of Uber, Airbnb, and other emerging companies. In fact, the best sharing economy is the sharing between professionals doing professional work. This model's efficiency and effectiveness far exceed sharing idle resources for amateur tasks, and it offers better experience and more security. △ The value of sharing is not co-owning resources but using them. 7-Eleven Japan employs only about 8,000 full-time staff; the rest are employees of franchisees, manufacturers, and suppliers. 7-Eleven has almost no directly operated stores, none of its 171 dedicated factories are its own, and its 150+ logistics centers and delivery vehicles are not its own either, yet it has become a retail enterprise with nearly 10 billion RMB in profit. The entire sharing economy employs over 400,000 people, with over 300,000 working in franchise stores and over 100,000 in factories and logistics. The joint distribution system breaks down the walls between manufacturers and enterprises, and transcends product categories to form a joint distribution system. Uniqlo, Asia's largest apparel retailer, allows online orders to be picked up at most 7-Eleven stores in Japan. — Comment — Sharing is the most fundamental aspect of the internet spirit. The value of resources lies not in ownership but in use; only use can realize the value of resources. The Ultimate Goal of Franchising: A Community of Shared Destiny Headquarters and franchisees come together because of aligned interests and wholeheartedly commit due to shared fate. 7-Eleven provides franchisees with five types of empowerment: product development empowerment, operational empowerment, IT empowerment, logistics empowerment, and financial empowerment. In 7-Eleven, there is a group of staff, each responsible for 7-8 stores, providing frontline operational guidance as consultants. These are OFCs (Operational Field Consultants), dedicated to enhancing the operational capabilities of small store owners. In the contract between 7-Eleven and franchisees, there is a commitment clause of "minimum guarantee to franchisees" that most other franchise chains worldwide do not adopt. 7-Eleven headquarters bears 80% of the electricity costs for daily operations of franchise stores; and 15% of the loss from discarded fresh food like boxed meals. Why? Take nighttime lighting as an example: since there are fewer customers at night, reducing lighting during late-night hours to save electricity seems plausible. But how can such a store make customers feel safe to enter? The same applies to air conditioning. Convenience stores like 7-Eleven have many products requiring refrigeration. If temperature management is relaxed to save a bit on electricity, how can food safety be ensured? 7-Eleven's model does not focus on immediate gains but on long-term interests, and it does not distinguish between your interests and mine but pursues common interests. — Comment — In contrast, some domestic brands are "connected but not locked, locked but not firm," and most are merely "connected by name." Productism: Clean and Delicious is the Key 7-Eleven's food products have the highest sales volume, and their greatest features are freshness, deliciousness, and cleanliness. Production, distribution, and storage are strictly managed according to "time" and "temperature." Each 7-Eleven distribution center has a frozen food distribution center and an ambient temperature food distribution center. In the joint distribution centers established in various regions, 7-Eleven classifies products into four temperature zones for intensive management: frozen (minus 20 degrees Celsius), such as ice cream; chilled (5 degrees Celsius), such as milk and lettuce; constant temperature, such as canned goods and beverages; and warm (20 degrees Celsius), such as rice and bread. — Comment — Most of the food sold at 7-Eleven: bread, boxed meals, ice cream, beverages, and even 100-yen cups of freshly ground coffee, are delicious while ensuring food safety. Rapid Iteration and Low-Cost Trial and Error 7-Eleven headquarters recommends about 4,800 SKUs in total, with individual stores selling about 2,900. Each week, 100 new products are introduced, and the annual product turnover rate is about 70%. In fiscal year 2016, 7-Eleven Japan's inventory turnover days were only 10.1 days, turning over 36 times a year, faster than Amazon, the best in the U.S. "Hypothesis, practice, verification" is the foundation of 7-Eleven's rapid iteration. In winter, 7-Eleven stores in Hokkaido allocate significant space to sell ice cream, and local businesspeople mockingly ask, "Who would eat ice cream in the dead of winter?" But Suzuki says, "If the heating is on high, customers would probably be happy to have some ice cream!" — Comment — Such rapid product iteration and turnover are supported by a philosophy and system of continuous low-cost optimization. Many companies either stick to old ways or make drastic changes; how can their risk resistance be high? Use Newcomers for New Things In 2013, 7-Eleven celebrated its 40th anniversary. Suzuki proposed a new direction for the second phase: "close and convenient," and began a complete shift in strategy toward creating new customers. To this end, 7-Eleven formed a second product department composed entirely of newcomers with no business experience, including the manager, totaling five people. Among them, two had joined the company only in spring 2011, and none had experience in product or sales departments—no experts with business experience. — Comment — Suzuki says, "To do new things, it's best to have newcomers with no experience." Only newcomers have no ceiling; the fearless are bold and daring. Informatization and Big Data Those who master market information will control the entire industry. 7-Eleven is a store, but it is also a big data company. 7-Eleven continuously upgrades and updates its information systems. Now, the latest sixth-generation system has an investment of up to 3 billion RMB. To further improve the daily operations of each store, in addition to the original inventory data, POS data, out-of-stock data, and waste data, the sixth-generation system provides three types of data to assist franchise stores in ordering, serving as references for hypothesis formation: location data, facility data, and long-term data. Location data: Surveys the number of households around each store (within a 350-meter radius, a 5-minute walk); if there are businesses, it surveys their employee numbers. Facility data: Determines whether there are schools or hospitals near the store, which helps in setting hypotheses for daily ordering. Long-term data: Presents trends and movements based on past data. This data is particularly effective when OFCs provide advice to franchise stores. — Comment — Information will determine the survival of enterprises. Without information, many resources become useless. Many big data processing companies can only be called "multi-data." The two keys to big data are precise data collection and scientific data processing. Our big data journey must be based on actual needs. Marketing Frontline (guanggaojie8), Restaurant Boss Insider (cylbnc), compiled from Lianshang.com and Gan Jing Me The 2017 (3rd) FMCG + Internet Conference will be held in Chongqing in November 2017. The conference will focus on the theme "New Forces, New Ecology," inviting 1,000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions to explore new chapters of cross-border integration! Click the link below to review the highlights of the first and second FMCG + Internet conferences: 2016 "FMCG + Internet" Summit Forum -END-