There is a supermarket like no other:
The company's daily thought is not how to make more money, but how to make less!
The most common complaint is long queues, and the boss often has to come out and apologize!
Returns are accepted without asking why. Whether you've eaten it, worn it, or used it, the answer is: return! Return! Return! This supermarket called Costco is finally opening in China! On September 8, Costco officially confirmed that its first store in mainland China will land in Shanghai, and its Tmall flagship store will open a week earlier. As soon as the news broke, Walmart couldn't sit still, Carrefour couldn't sit still, and RT-Mart, China Resources Vanguard, all couldn't sit still! This isn't a wolf coming; it's a gluttonous snake! In 1983, the first Costco opened in the United States. Over more than 30 years, it has grown rapidly, becoming the world's second-largest retailer, closely following Walmart. Behind its success are ten amazing (niu bi) traits of Costco! Trait One: Thinking Daily About How to Make Less Money All bosses worldwide pursue gross margins, but only Costco thinks: how to earn a little less! This year's gross margin is 10%, can we reduce it to 9.5% next year? 9% the year after would be even better! Costco's gross margin is so low you can't imagine—averaging only 10%, and if it exceeds 14%, it requires CEO approval. What does this mean? For example, if a T-shirt costs $10 to purchase, it sells for only $11. $11!! Is there anything more conscientious than this? Let's compare with Walmart. Walmart's gross margin is generally 40%-60%, meaning that T-shirt with a purchase price of $10 would sell for around $30 at Walmart! That's simply profiteering, right? Costco has a signature combo that never changes: hot dog + soda. This combo is very cheap, has been $1.50 for over 30 years, and has sold billions of units. In fact, Xiaomi's extreme cost-performance in China was learned from Costco! Trait Two: Return Anytime, Anywhere, Casually Most supermarkets or specialty stores have a 7-day return policy. If it's over 7 days, sorry, you're too late, no returns! But at Costco, returns are accepted without asking why, with no time limit. As long as you're not satisfied, you can return or exchange anytime! Even half-eaten cookies, worn clothes, used appliances—if you're not happy, return, return, return! For Costco, many returns are not bad. On the contrary, it believes returns help improve product quality. Because suppliers with too many returns will definitely feel pressure and will pay more attention to quality in the future. Trait Three: Hiding Best-Selling Items Ordinary supermarkets usually place the best-selling products in the most prominent positions. When we enter a bookstore, bestsellers are always in the best spots. But this quirky Costco often hides hot-selling items in the most inconspicuous corners. For example, its private brand KS nuts once set a record of selling 3 tons in 3 days, very popular. But Costco places them in a corner of the non-food area, requiring a full circle to find them. Because many of its products, especially private brand bestsellers, have large production capacity but even larger sales volume, and they can easily sell out. So it hides them to sell slowly, ensuring a steady stream. Trait Four: Membership Card Can Be Used as ID What if you forget your ID when boarding a plane or going abroad? Costco tells you: That's not a problem! Costco prints the member's photo and name on the membership card. It cooperates with North American government agencies and has obtained permission from TSA to allow passengers to use other documents besides passports to prove their identity. So its membership card can be used as ID at both the Canada Border Services Agency and U.S. Customs. For this trait, many countries' passports are ashamed to compare, right? Trait Five: Afraid Customers Won't Take Advantage and Cry When we visit ordinary supermarkets, we often see that sample portions are too stingy! Small cups, small pieces, not enough to fill the gaps between teeth! But Costco stipulates that sample portions must be large enough, not afraid of customers eating. As long as a tasting event is held, the day's sales of that product can increase significantly by 2 to 3 times. Many foodies take a bit here and a bit there, basically solving a meal! It turns out there really is a free lunch in the world! Trait Six: The Supermarket Is Not Big and Comprehensive Costco has only 3,800 active SKUs, which is about one-tenth of Walmart's. This means that for each subcategory, there are only 2 or 3 choices, and only products with "best-seller" potential are allowed on the shelves. For example, it only offers three models of microwaves: low, medium, and high-end, and only a few brands of toothpaste. The advantage of this approach is that the scale of inventory for each item is huge, naturally allowing it to negotiate better prices from suppliers. In fact, Costco's purchase prices are much lower than other wholesalers, so the prices passed on to consumers are even lower, and it also saves them the cost of choice. Trait Seven: Free Medical Care, Stealing Hospitals' Business Costco members can get free check-ups at its medical center, Costco's Hearing Aid Centers, with no charges for cleaning or follow-up appointments. Of course, currently limited to ear care. Costco's medical system is quite comprehensive. If a customer's health insurance doesn't cover all medications, they can buy them there at prices much lower than market rates. Trait Eight: Putting Appliance Installers Out of Work Costco has a motto: Take your own path, leaving others with no path to take! Many people like to buy appliances at Costco, but when they get home, they don't know how to install or use them. What to do? In such cases, the usual approach is to call the appliance company, but whether they are willing to come is another matter. For example, a colleague of the brand officer recently bought several large appliances from JD.com. After several phone calls and a week of waiting, no one came to install them. In the end, they had no choice but to return them. It was too troublesome! But Costco provides free technical support to help customers solve all problems, leaving appliance company installation staff with nothing to do! Trait Nine: Not Only Takes Care of You, But Also Your Car Costco's business scope is very broad. For example, it has gas stations where members get very cheap gas. It also sells cars, selling 465,000 cars last year, making it the second-largest car dealer in the U.S. To this end, Costco promises that if you buy tires there, you get free air and tire alignment services for life. This is not so convenient elsewhere! Trait Ten: Employee Satisfaction Rivals Google In U.S. employee satisfaction surveys, the second highest is not Apple, not Facebook, not Intel. That's right! It's Costco, second only to Google. It's worth noting that employee satisfaction in retail companies is very hard to achieve, and Costco's employee benefits exceed many top Silicon Valley companies. A Costco cashier earns $20.89 per hour, which is almost twice that of Walmart and three times that of ordinary supermarket employees. Moreover, 88% of its employees enjoy company-provided health insurance. Costco's employee turnover rate is only 5%. Treating employees well means treating customers well, giving employees higher motivation and happiness, reducing turnover, and enhancing the company's public image. This image is something that money spent on advertising can't buy! Just like Haidilao, where employees have high income, service naturally earns customer praise, except for last month's "mouse incident." Because of its top-notch service, Costco employees have been praised by Obama. Stop! After writing so much, Costco sells things so cheaply and provides so many services that exceed expectations. How does it make money? After listing its ten "quirky" services, let's talk about Costco's "scheming boy" profit model! In fact, doing all those services, Costco has only one goal—to attract traffic, pulling all passersby into its membership system. To enjoy its ultimate service, you must first become a member, and becoming a member requires paying a membership fee. Costco's fees are in two tiers: $55/year and $110/year. Don't underestimate this fee of tens to a hundred dollars; it has over 80 million members worldwide! And it's paid annually! In the past quarter, Costco's revenue was $28.2 billion, with net profit of $968 million, of which membership fees contributed $644 million, accounting for 67%. Because of Costco's extraordinary service, its membership renewal rate is extremely high—an astonishing 90%! That means out of 10 members on average, 9 will renew the next year! In the U.S., the rise of e-commerce has also caused physical retailers to complain. Brands like Walmart and Macy's have been hit by store closures. However, Costco has successfully resisted the retail recession with its unique membership system + low gross margin + the "quirky" model we listed above. In this way, it has turned Americans' offline shopping into a kind of faith. Perhaps Lei Jun (雷布斯) said it well: "When you enter Costco, you don't need to pick, don't need to look at prices, just close your eyes and buy. This is a kind of faith!" The 3rd (CFIC) China FMCG + Internet Conference will be held in Chongqing in November 2017. The conference will closely 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 jointly explore a new chapter of cross-border integration! Core topics of this conference:
How can the FMCG industry achieve new growth opportunities through B2B
How to build a new supply chain behind new retail
How can intra-city logistics help B2B achieve leapfrog development
Highlights of this conference:
The industry's first "2017 China FMCG B2B Industry Competitiveness White Paper"
Case sharing of excellent transforming and upgrading distributors
Conference + exhibition upgrade, Hall 6 Internet Technology Exhibition strengthens docking
Alibaba Retail Link, GLP Finance, Eternal Asia Supply Chain, Best Store Plus, Yi Jiu Pi, Hai Ding—leaders from various fields will deliver speeches and share pioneering views.
Registration is now open. Long press the QR code below or click "Read Original" to register. Add friend and note "Conference Registration" Click the link below to review the highlights of the 1st and 2nd FMCG + Internet Conferences: 2016 "FMCG + Internet" Summit Forum -END-