Costco is a member-based warehouse supermarket. Only members or consumers who bring extra members can enter the store.

Costco's low gross profit margin is derived from its innovation in the retail business model, maintaining the parity of the goods sold, as long as the gross profit can roughly offset the daily operating expenses, and the company's profits are almost entirely derived from its members fee.

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

Costco's membership card is the most attractive service. Not only is it diverse, such as travel, seeing a doctor, changing tires, booking a hotel, or even buying insurance and wealth management, you can enjoy a lot of VIP services. In fact, it has already broken through. The scope of retail services. The most attractive thing for members is that Costco stores have gas stations dedicated to members at the door. The discount is very strong, and the price is much lower than the market price of oil. Therefore, many members often deliberately come here to cheer, of course, just shop by the way .

"... The business philosophy is a major strategic direction for enterprise development. Especially in the retail industry, competition is becoming increasingly fierce. In the future, the retail industry must be the ultimate supply chain and the ultimate customer experience. When it comes to serving as God, everything becomes so easy. "

Regarding the abrupt decision of his own boss, Arvitelli did not directly raise his objection because he was not optimistic about the future of the retail industry. Instead, he began to patiently introduce Costco and also invested in Costco. Has studied in-depth about it, so he has a clear understanding of Costco's data.

"Best of Costco's success is nothing more than achieving three points, making the product extremely good, reducing the price to a very low level, and at the same time achieving the service beyond expectations, which is a good interpretation of the essence of retail.

In the traditional retail industry, profits are directly related to the sale of goods, so the purchase price, sale price, and sales volume need to be considered.

For example, Wal-Mart reduced the purchase cost through bulk purchases, built a strong supply chain and logistics system to reduce operating expenses, and the core was to increase profit margins.

The service intermediary represented by Chain Home relies on proportionally drawing commissions from the price of the target object to make a profit, and sells a house to get a 2.7% intermediary fee for the house price. The profit is directly related to the price of the target object.

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

Its threshold is ahead, which makes the member audience more focused, focusing only on the broadest middle class in the United States, and providing more focused services. What's more important is that in addition to providing a continuous and stable cash flow for business activities, the prepaid mechanism will also form a "buffet effect" in psychology, effectively increasing the user's purchasing activity. "

"Middle class ..."

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

Whether it is newspapers, magazines, books, or various peripherals of game movies, as well as mineral water, milk, champagne, wine, and various products produced by the farm, as his business landscape expands horizontally, he must find ways to revitalize the entire industrial chain. , These resources cannot be wasted.

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

What does the middle class want?

The middle class is not the affluent class, but is in the middle of the society. There is social pressure for promotion to the top and the time cost is high, but they are more pursuit of experience, quality, and price ratio. Many e-commerce's four-character strategies of "more, faster, better, and province" are actually more focused on "good" and "province" by the middle class.

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

"If I start buying Costco now, how much will I pay?"

Hearing the boss ’s question, Al could n’t help sighing. As a ratio of asset investment, Costco may be more optimistic than Wal-Mart, but the real thing is acquisition. For the traditional retail industry that was hit by Amazon, He is really not very optimistic.

"The current market value of Costco is around 20 billion, and the closing price last Friday was $ 44. Since 2003, the stock price of Costco has been rising steadily. The biggest setback was the US financial crisis, which reached on May 15, 2008. After 74.45 US dollars fell all the way, and reached a low of 38.44 US dollars on March 9, 2009, the cumulative maximum decline reached 48%.

That is, at the time, we bought 3% of Costco shares. "

"Ha, it has risen by six dollars in four months, and the trend is not very strong." Andy laughed, although the language was ridiculous, it was not taunting at the time, although the United States has rebounded, and it has been oscillating downward for the past two months. Being able to maintain the upward trend is already a good stock.

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

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

The two founders are the spirit of Costco and the root cause of Costco's success. They can get more than 50% equity support. "Arvitelli said helplessly.

"Well, it's a piece of iron!" Andy groaned as he frowned.

"No way, these two founders are deeply loved and supported by the company and its shareholders, which stems from Costco's corporate culture." Arvitelli introduced, "In fact, Costco's success is a small probability Incidents are difficult to predict, and Costco can develop smoothly under Wal-Mart's repression, relying on business models and genius to manage victory.

Costco is a model that has become a leader in the industry through genius management. The company's annual sales in a store in South Korea reached $ 400 million. Costco's success is the result of wise management, corporate ethics and hard work. Extremely rare. "

Hearing here, Andy couldn't help but be more interested. You must know that the business model is easier to understand. After all, martial arts in the world, the truth is not broken. Many people know the same. In business, such as low gross profit margin, high turnover, small profits but quick turnover. It is the secret of competition for many industry leaders, and the lower the gross margin, the higher the management requirements.

Only a few companies will choose a high gross margin policy, with better quality, higher prices, more spending, earning difficult, brand premium money.

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

A touch of this management model is worth the investment of Andy, because this is the foundation for building a century-old enterprise. As for power, Andy can hold it in his hands, after all, he can make Howard Schultz the founder of Starbucks. Continue to control most of Starbucks' power and manage Starbucks, then he can allow another such company to exist.

Costco's largest shareholder, he is bound to get it!

"How much liquidity do I have now, the United States."

"$ 10.3 billion."

"Well, there are so many that have not been spent? Then take out 5 billion to buy Costco's shares. Of course, if someone is willing to sell Costco shares in their hands, the price is appropriate, how much is how much, and it becomes the number one. After a large shareholder, power can be decentralized, but Costco must be an industry of my Andy Smith! "Andy said sharply and firmly.

"Understand." Seeing that the boss's attitude was so resolute, Arvitelle also knew that persuasion was useless, but fortunately, it was not a mess. For the next period, the think tank was busy again.