American Fortune Life

Costco is a membership-based warehouse supermarket. Only members or consumers brought by members can enter and consume.

Costco's low gross profit margin is due to its innovation in the retail business model, which maintains the price of the goods sold at par. The gross profit only needs to roughly offset the daily operating expenses, and the company's profits are almost all from members. fee.

Costco members are divided into non-executive members and executive members. In the United States and Canada, the annual fee for non-executive members is US$55, and the annual fee for executive members is US$110. Compared with non-executive members, executive members can enjoy a cash rebate of 2% of the sales amount within one year, up to a maximum of $750, and other benefits.

Costco’s membership card offers the most attractive services. Not only are there many types of services, such as traveling, seeing a doctor, changing tires, booking hotels, and even buying insurance and financial management, you can enjoy a lot of VIP services. In fact, it has already broken through. Scope of retail services. The most attractive thing for members is that there is a gas station dedicated to members at the entrance of the Costco store. The discount is very strong, and it is much lower than the market price of oil. Therefore, many members often go here to refuel, of course, shopping by the way .

"...The business philosophy is a major strategic direction for enterprise development, especially in the retail industry, where competition is becoming increasingly fierce. The future retail industry must have the ultimate supply chain and the ultimate customer experience. The market competition will become more intense. It's so easy when you serve as God."

Regarding the sudden decision of his boss, Alvitre did not directly raise objections because he was pessimistic about the future of the retail industry. Instead, he began to introduce Costco patiently, and also because he wanted to invest in the company Costco. He has conducted in-depth research on the stock of Costco, so he has a very clear grasp of Costco's information.

"Costco's success can be summed up in three points. It has made excellent products, lowered prices to an extremely low level, and at the same time achieved services beyond expectations. This is a good interpretation of the essential laws of retailing.

In the traditional retail industry, profit is directly related to product sales, so purchase price, selling price, sales volume, etc. need to be considered.

For example, Wal-Mart reduces purchase costs through bulk purchases, builds a strong supply chain and logistics system to reduce operating costs, and the core is to increase profit margins.

The service intermediaries represented by Lianjia rely on commissions drawn proportionally from the price of the subject matter to make profits, and sell a house to obtain an intermediary fee of 2.7% of the house price. The profit is directly related to the price of the subject matter.

Costco, on the other hand, is more pure. It collects a fixed membership fee in advance, and its profit level is only related to the number of members, not directly related to the sales of goods and gross profit level.

Its threshold is advanced, so that the membership customer base is more focused, only focusing on the broadest middle class in the United States, and the services provided are also more focused. More importantly, the prepayment mechanism, in addition to providing continuous and stable cash flow for business activities, will also form a "buffet effect" psychologically, effectively increasing user purchasing activity. "

"Middle class..."

Listening to Alvetrie's introduction, Andy's understanding of the company Costco has become more in-depth. In fact, the reason why he wants to acquire a supermarket chain is also to better improve the internal chain channels of the assets, so that his The products produced by the company can complete a self-circulation, and this requires a series of all external sales channels.

Whether it is newspapers, magazines, books, or various peripherals of games and movies, as well as mineral water, milk, champagne and red wine, and various products produced on farms, with the horizontal expansion of his business territory, he must find a way to revitalize the entire industrial chain ,

These resources cannot be allowed to go to waste.

Costco is undoubtedly the best acquisition target, and the most important thing is the class that Costco chooses to serve, the middle class.

What does the middle class want?

The middle class is not the wealthy class, but the middle class of society. There is social pressure to be promoted to the top, and the time cost is high, but they are more pursuing experience, quality, and cost performance. Many e-commerce companies follow the four-character strategy of "many, fast, good, and economical". In fact, the middle class pays more attention to "good" and "economical".

The middle class pays more attention to cost performance than other classes. They are willing to pay a premium for high-quality design and experience, but the premise must be value for money. That's why Costco positions itself as a warehouse membership store, not a luxury store.

"If I started buying Costco now, how much would it cost me?"

Hearing the boss's question, Al couldn't help but sigh in his heart. As an asset investment ratio, Costco may be more optimistic than Wal-Mart, but when it comes to acquisitions, for the traditional retail industry impacted by Amazon, He is really not very optimistic.

"Currently, the market value of Costco is about 20 billion, and the closing price last Friday was 44 US dollars. Since 2003, the stock price of Costco has been rising steadily. The biggest setback is the financial crisis in the United States. On May 15, 2008, it reached After 74.45 US dollars, it fell all the way, and reached the lowest point of 38.44 US dollars on March 9, 2009, with a cumulative maximum drop of 48%.

That's when we bought a 3 percent stake in Costco. "

"Ha, it has risen by six dollars in four months, and the trend is not very strong." Andy laughed, although his words were teased, he was not mocking at the time, although the United States had rebounded, and it had been fluctuating downwards for the past two months. It is already a good stock that can maintain the rising trend.

"In this case, how many more shares do I need to acquire to become the largest shareholder?"

"At least more than 23% can become the largest individual shareholder, but this does not make you the chairman of Costco, because the founder and chairman of Costco, Jeffrey Bro Terman and co-founder Jim Sinegal jointly own almost 40 percent of the shares.

These two founders are the spirit of Costco and the root cause of Costco's success. They can obtain the support of more than 50% of the equity. "Alvitley said a little helplessly.

"Tsk tsk, it's a solid piece!" Andy couldn't help frowning and poking his mouth, muttering.

"No way, the two founders are deeply loved and supported by the company and shareholders, which stems from Costco's corporate culture." Alvitley said, "Actually, Costco's success is very unlikely. Events are difficult to predict. However, Costco can develop smoothly under the pressure of Wal-Mart because of its business model and genius management.

Costco is a typical example of becoming a leader in the industry through genius management. The annual sales of the company’s one store in South Korea reached 400 million US dollars. The success of Costco is the result of wise management, corporate ethics and hard work. extremely rare. "

Hearing this, Andy couldn't help but become more interested. You know, the business model is relatively easy to understand. After all, many people know the truth that the only thing that can't be broken is fast. It is the competitive secret of many leading companies in the industry, and the lower the gross profit margin, the higher the management requirements.

Only a few companies will choose a high gross profit margin policy, use better quality, higher prices, and more expenses to earn high difficulty and brand premium money.

But genius management can only be understood through long-term observation. Management with "wise management, corporate ethics and hard work" is rare, and it is extremely difficult to judge in advance.

This kind of management mode is worthy of Andy's investment, because it is the basis for building a century-old enterprise. As for power, Andy can also hold it in his hands. After all, he can make Howard Schultz, the founder of Starbucks, Continue to control most of the power of Starbucks and manage Starbucks, then he can also allow another such enterprise to exist.

Costco's largest shareholder, he is bound to win!

"How much liquidity can I use now, in the United States."

"$10.3 billion."

"Tsk tsk, there are still so many that have not been spent? Then first spend 5 billion to buy the shares of Costco. Of course, if someone is willing to sell the shares of Costco in their hands, the price is right, as much as they want, and become the first After becoming a major shareholder, the power can be delegated, but Costco must be an industry owned by me, Andy Smith!" Andy said with sharp eyes and a firm tone.

"Understood." Seeing the boss's resolute attitude, Alvetrie also knew that persuasion was useless, but fortunately, it was not a mess, and the think tank was busy again in the next period of time.