Costco is a member-based storage supermarket, and only consumers with additional members can enter the consumption.

Costco's low gross profit margin comes from its innovation in retail business model, maintaining the goods sold at par. As long as the gross profit can roughly offset daily operating expenses, the company's profits almost all come from membership fees.

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 US$55, and the annual fee for executive members is US$110. Compared with non-executive members, executive members can enjoy 2% of sales in one year, up to $750 cashback, as well as some other discounts.

The services that Costco membership cards can enjoy are the most attractive. Not only are they diverse, such as traveling, seeing a doctor, changing tires, booking hotels, and even buying insurance and financial management, they can enjoy a lot of VIP services. In fact, they have already broken through the scope of retail services. What is most attractive to members is that there is a gas station dedicated to serving members at the entrance of Costco's store. The discount is very high and it is much lower than the market oil price. Therefore, many members often come here to cheer here, and of course they shop by the way.

"...Business philosophy is a major strategic direction for enterprise development, especially in the retail industry. Competition is becoming increasingly fierce. The future retail industry will definitely have the ultimate supply chain and ultimate customer experience. The competition in the market will become more fierce. When users and customers are truly treated as God, everything will be so easy."

Regarding his boss's abrupt decision, Alvetle did not directly object to the future of the retail industry because he was not optimistic about the future of the retail industry. Instead, he began to patiently introduce Costco. He also had in-depth research on it because he wanted to invest in the stocks of Costco, and so he had a very clear understanding of Costco's information.

"Costco's success comes down to three things, making the product excellent, reducing the price to extremely low, and at the same time making the service beyond human expectations, which well interprets the essential laws of retail.

In the traditional retail industry, profits are directly related to commodity sales, so purchase price, sales price, sales volume, etc. need to be considered.

For example, Walmart reduces purchase costs through bulk procurement, builds a strong supply chain and logistics system to compress operating costs, and the core is to increase profit margins.

Service intermediaries represented by Lianjia make profits by taking a proportional commission from the price of the subject matter and selling a house to obtain an agency fee of 2.7% of the house price. The profit is directly related to the price of the subject matter.

Costco is more pure, and charges a fixed membership fee in advance. The profit level is only related to the number of members, and has no direct relationship with the sales of goods and gross profit level.

Its threshold is put forward, allowing the member customer base to focus more, only focusing on the widest middle class in the United States, and providing services is also more focused. And more importantly, the prepayment mechanism, in addition to providing continuous and stable cash flow for business activities, will also form a "buffet effect" in psychology, effectively improving user purchasing activity."

"Is the middle class..."

Listening to Alvetre's introduction, Andy's understanding of Costco's company is more in-depth. In fact, the reason why he wanted to acquire a supermarket chain was to better improve the internal connection channels of the assets so that the products produced by his company could complete a self-circulation, which required a connection of all external sales channels.

Whether it is newspapers, magazines, books, games and movies, as well as mineral water, milk, champagne and red wine, as well as various products produced on the farm, as his career map expands horizontally, he must find ways to revitalize the entire industrial chain and not let these resources be wasted.

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

What does the middle class want?

The middle class is not a wealthy class, but is in the middle class of society. There is social pressure to advance to the higher level and the time cost is high. However, they pursue experience, quality, and price ratio more. Many e-commerce four-character strategy of "more, fast, good, and saving", but in fact, the middle class pays more attention to "good" and "save".

The middle class pays more attention to cost-effectiveness than other classes. They are willing to pay a premium for high-quality design and experience, but the premise is that it is worth the money. This is also the reason why Costco is positioning itself as a storage membership store rather than a luxury store.

“If I start acquiring Costco now, how much does it cost?”

Hearing his boss's question, Al couldn't help but sigh in his heart. As an asset investment ratio, Costco may be more optimistic than Walmart, but if you really want to talk about acquisition, he is really not optimistic about the traditional retail industry that has been impacted by Amazon.

"Currently, Costco's market value is around 20 billion yuan, and the closing price last Friday was US$44. Since 2003, Costco's supermarket stock price has been rising steadily. The biggest setback is the US financial crisis. It reached US$74.45 on May 15, 2008 and then fell all the way, and reached its lowest point of US$38.44 on March 9, 2009, with a cumulative maximum decline of 48%.

That is, at that time, we bought three percent of Costco shares.”

"Ha, it has risen by six dollars in four months, and the trend is not very strong." Andy smiled. Although he was joking, he was not ridiculed at the time. Although the United States had rebounded and had been fluctuating and downward for the past two months. It is already a good stock to be able to maintain a rising trend.

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

"It's at least more than 23 percent to become the largest individual shareholder, but that doesn't make you the boss, because Costco's founder and chairman Jeffrey Brotmann and co-founder Jim Sinegal jointly hold about forty percent of the shares.

These two founders are the spirit of Costco and the fundamental reason why Costco is successful. They can obtain more than 50% of the equity support." Alvetre said helplessly.

"Tsk tsk, it's a piece of iron!" Andy couldn't help but frown and smashed his mouth, muttering.

"There is no way, these two founders are deeply loved and supported by the company and shareholders, which stems from Costco's corporate culture." Alvetre introduced, "In fact, Costco's success is a low-probability event, and prediction is difficult. Costco's ability to develop smoothly under the suppression of Walmart depends on the business model and genius management victory.

Costco is a typical example of becoming a leader in the industry through genius management. The company's annual sales in a store in South Korea reached US$400 million. Costco's success is the result of wise management, and the comprehensive results of corporate ethics and diligence are extremely rare."

Hearing this, Andy couldn't help but become more interested. You should know that the business model is easier to understand. After all, many people know that the truth that fast is not broken in the world is the same. In business, such as low gross profit margin, high turnover, small profits and quick turnover are the competition secrets 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, more expenses, and make money with high difficulty and brand premiums.

Genius management can only be understood through long-term observation. Management teams with "wise management, corporate ethics and diligence" are hard to come by, and it is extremely difficult to make a decision in advance.

The management model of Tadan is worth Andy's investment, because it is the basis for building a century-old enterprise. As for power, Andy can also keep it in his hands. After all, he can let Howard Schultz, the founder of Starbucks, continue to control most of Starbucks' power and manage Starbucks, so 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, from the United States."

“$10.3 billion.”

"Tsk tsk, there are so many things that haven't been spent? Then let's take out 5 billion to acquire Costco's shares. Of course, if someone is willing to sell the Costco shares in his hands, the price is appropriate and you need as much as you want. After becoming the largest shareholder, the power can be decentralized, but Costco must be an industry under my Andy Smith!" Andy said with a sharp look and a firm tone.

"I understand." Seeing the boss's attitude so firm, Alvetre also knew that persuasion was useless, but fortunately it was not a mess. In the next period of time, the think tank was busy again.
Chapter completed!