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Chapter 567: There is profit margin, but what about sales?

Xingsha City.

Tianfu District Electronic Science and Technology Park, Wanyan Technology Co., Ltd.

CEO's office.

"Kang."

"What on earth do you do for food?"

“Why are sales not going up?”

"You are all good-for-nothings. The company doesn't pay you to sit in the office and play cards, drink and brag. Starting tomorrow, the headquarters will issue a notice asking all agents in all regions to take the lead in doing ground promotion for me. I don't care what method they use, whether it's cheating or forcing people to buy our VCDs, they must increase sales for me. Otherwise, every one of them will be counted as one. Those who fail to meet the performance standards will be replaced and all rebates will be cancelled. There is no room for negotiation."

A cup of steaming hot coffee was knocked over by the furious Jiang Wanli, who slapped it on the table. The coffee liquid spilled all over the table, filling the room with fragrance.

But no one cares about it.

Because the angry Jiang Wanli was now turning into a troll, scolding several senior executives in the company who had anything to do with sales.

Don't blame him for being angry.

It has been almost two and a half months since Wanyan's company's VCD player was last featured on CCTV's financial channel's "Fortune First Scene" program with Lu Yang. Taking advantage of this opportunity, he made the dictatorial decision to launch the company's VCD player on the market simultaneously with the news report without any hesitation.

The effect was quite good at the beginning.

Perhaps because of the CCTV brand, many dealers from all over the country called to inquire, and some even placed orders directly and signed agency contracts, hoping to take advantage of the word-of-mouth.

So the order record for the first month is quite impressive. Although it is less than 5000 units, the numbers are close.

But think about it, this is a high-end electronic product with a retail price of 5600 yuan per unit. With such order data in the first month, isn’t it impressive enough?

Take off alright!!!
As long as we keep it up like this, it doesn't have to be much, as long as the order data is stable every month, then in a year it will at least exceed 6 units, right?
Let's calculate another set of data. The first generation of Wanyan VCD is 5600 yuan per unit. This is the retail price set by the company. It certainly cannot be counted as the company's net income. All of it goes into the company's account. The agents and distributors in various places must take a portion of its profits, right?

And it has to be a big one, because you have to make concessions. If you don’t, in the early stage of your new product launch, if there is no huge profit, no one will take the risk.

Data shows that the profit margin that Wanyan Company gives to dealers in various regions is an average price of 1500 to 2000 yuan per unit. Depending on the strength of the dealer, this average price also has a slight difference.

How much does it cost for Wanyan Company to produce a first-generation VCD at this stage?
The company also has data statistics, and the main cost comes from a decoding chip that must be built in, which comes from C-Cube, a company owned by Chinese tycoon Mr. Sun Yansheng. The price of a single chip is as high as 1200 yuan.

From this we can see that Sun Yansheng’s idea is the same as Jiang Wanli’s, both of which are to recover their R&D costs in the short term through high and profitable order prices.

Because it is irreplaceable and temporarily unique, you have to grit your teeth and buy it even if the price is high.

Apart from this decoding chip, the rest of the components are easy to find. So taking all the factors into account, the overall manufacturing cost of Wanyan Company's first-generation VCD (WY-3000) is approximately between 2200 yuan and 2500 yuan per unit. There is a question of yield rate. The higher the yield rate, the more cost can be reduced.

The data is here, and the situation is clear at a glance. Wanyan Company's own production cost takes the median value of 2350 yuan per unit, and then deducts the 1500 yuan paid to the middle agent, and the total cost does not exceed 3800 yuan. It sells for 5600 yuan per unit, and the company can make a profit of 1800 yuan for each unit sold.

Assuming that the order data of 5000 units in the first month is taken as the annual sales average, there will be 6 orders in a year.

60000×1800=1.08 million.

It’s easily over 100 million, right?
As long as the profit exceeds 100 million, then everything will be easy. This means that the company will have plenty of working capital and can do more things. Moreover, this is only the first year, the second year, and the third year. With this foundation, Jiang Wanli has the confidence that he can do it better and better, and it is only a matter of time to recover the R&D costs.

At that time, what will the shareholders, especially that guy named Lu, have to say?

Who dares to say that Jiang Wanli only knows product development but not company management?
He obviously did a great job!!!

Unfortunately, ideals are full, but reality is very skinny. The impressive product order data in the first month does not mean that it can maintain its impressive data in the second month. Facts have proved that although the exposure rate on CCTV programs is very high, it is just a gust of wind. After the gust of wind, the heated discussion from the outside world has subsided. In addition, the retail price of Wanyan Company's VCD player is not much cheaper than those of foreign brand VCRs, which caused the embarrassment of its order data in the second month.

How many are there?

It's pitifully low, less than 1000 units. Why does this happen?
In fact, the reason is simple.

Because the agents and dealers in various places were so enthusiastic at the beginning. Just think about it, they can earn a difference of 1500 to 2000 yuan from selling one machine. With such a high profit, wouldn’t they order more?
After all, it is a brand that has been on CCTV and has been certified by an authoritative column. Since you have decided to be its agent and want to make more money, you must not order less but more. Because if this product really sells well, the factory orders will definitely have to wait in line, and it will not be so easy to get the goods. Maybe the queue will be until next year, which will make these foreign dealers miss many opportunities to make big money.

One person had this idea, and two other people had the same idea, so they all unanimously did not specify just three or five units to sell in the first order, but instead ordered a lot of them just for the advertising effect of the CCTV program.

But now you see, the initial boom has passed, and the sales of the product in the market has gradually decreased. The VCDs in the hands of the dealers have been sold for a month, and although a part of them have been sold, the more they sell, the more uneasy they are, because the sales of this product have been continuously declining, rather than rising. Before the goods in the warehouse are sold out, no one dares to spend money to stock up on it.

No one is so stupid, because this situation is completely opposite to the previous one. Since sales continue to decline, the factory's orders will definitely not be so tight. If they are not tight, they can buy spot goods directly. So is there a need to stock up?
The answer is definitely not.

Jiang Wanli only saw the hot orders for the product in the first month after it was launched on the market, but paid little attention to its retail sales data in the market, whether this data was growing or continuing to decline.

Under the reversal of polarity.

On the one hand, the company headquarters only saw the impressive order data for the first month, so they put a lot of effort into the factory's production, striving to provide long-term shipment guarantees for the hot orders in the second month.

On the other hand, the Wanyan brand VCDs on the market have fallen into a continuous downturn after a brief sales boom.

Many dealers have not yet sold out their inventory. Although they have made money, after all, they can earn 1500 to 2000 yuan for each unit sold, which is extremely violent. But if the company headquarters calls them to urge them to stock up more goods, they are unwilling to do so.

After all, no one is a fool!
Obviously, your product sales are not as good as before, and the inventory has not been sold out yet, so everyone will choose to be cautious. After all, only the money that goes into your own pocket is yours. If you still spend money to stock up on a large amount of goods when you know that product sales are already sluggish, you are using your own money to fill the company's hole, and no one would do that.

"Boss Jiang, I don't think it's good for the current situation to make things difficult for all the agents. Our first month's order data is impressive, but it's mostly due to the advertising effect of CCTV programs. The public is talking about it, but this level of discussion will definitely decrease. It's reflected in the agents' retail sales, and its shipments are also continuing to decline. It's not surprising. I think we only have two choices next."

Mr. Liu, who is in charge of the marketing department, made a suggestion despite Jiang Wanli's saliva.

Mr. Liu was also an old acquaintance of Jiang Wanli. He was his right-hand man who was poached from Weisheng Modern Television Company. They had worked together many times before. So when Jiang Wanli slammed the table in anger, everyone else lowered their heads and dared not speak, but Mr. Liu dared to speak.

Jiang Wanli was panting heavily, his mouth dry from cursing. He subconsciously picked up the coffee cup on the desk, but before he could bring it to his mouth...

He looked down and said, "Damn it, make me a new pot."

The secretary who was lowering his head beside him timidly took the empty coffee cup from him.

Jiang Wanli calmed down a bit at this point. He stared at Mr. Liu and said, "Old Liu, you know there are a lot of goods piled up in the warehouse now. We can't lose any time. We must open up sales channels. If you have any ideas, please tell me now."

Mr. Liu was silent for a moment and then said, "There are two ways, but you may not agree."

Jiang Wanli said self-deprecatingly: "It's already this time, the situation is urgent, as long as it is beneficial to the company's product sales, why would I not agree to it?"

He handed over all his secrets.

Because there are no outsiders here, they are all the team that Jiang Wanli brought over from Weisheng Modern Television Company.

Everyone knows that his relationship with the major shareholder is now very tense.

If product sales are not satisfactory and continue to be sluggish, the major shareholder will definitely have something to say on the board of directors. He may even ask them to step down and replace them with the major shareholder's own team.

This is something that no one present wants to do.

From this point of view, Jiang Wanli is in the same trench with them.

Seeing the general manager pressing the issue, Mr. Xu no longer kept the secret and told the truth:

"It is difficult for us to support the high retail prices of branded VCD machines with our average annual income. We should follow the advice given by Mr. Lu and significantly reduce the retail prices of our branded machines.

I think that in addition to dealers giving up part of the price difference to middlemen, we ourselves should also set an example and give up some of our profit margins.

Adding these two together can greatly reduce our retail price space and also further stimulate people's desire to buy.

Finally, I would like to say that since CCTV exposed our products, we have not yet carried out large-scale product promotion.

I think it's time.

Why not spend some money on advertising on CCTV and try to let more people across the country know about the excellent performance of our products? "

Mr. Xu became more and more excited as he spoke, and his voice became louder and louder, but the office became increasingly quiet, so quiet that you could hear a pin drop, and no one dared even to breathe.

Very simple.

These two suggestions are just rehashing what Director Lu of the company said.

But it just so happens that Director Lu doesn't get along with our current CEO.

Already had a falling out.

Who dares to breathe?
I don’t dare!
Everyone could only silently give Mr. Xu a thumbs up in their hearts and admire his courage for saying these words in front of the boss. They then prayed that the boss would get angry and not affect innocent people like them.

Jiang Wanli's face did turn pale at first, which was a very bad look, and he looked very murderous. But after Mr. Xu finished speaking, he calmed down and lowered his head to think for a moment.

He raised his head and said, "We can't lower the price. This will have a huge impact on the brand power and credibility of our products.

I have already contacted Mr. Sun Yansheng, trying to get him to lower the price of the decoding chips he sells to us. He has a share in this company, and I believe he can't always hold us back. If I can convince him to lower the price, it won't be too late for me to lower the price as well.

As for advertising promotion, I agree with you about advertising on CCTV.

How about this, CCTV's autumn advertising recruitment fair will be held in a few days, you come with me, I'll also invest this time, and we'll be determined to win and get the bid back.

Damn it, I just don’t believe that after winning the bid, the product sales data can’t go up.”

To win the bid for CCTV, one would have to spend at least 40 to 50 million yuan. No wonder Jiang Wanli got a little angry and even swore in public. This was his last chance.

If it doesn't work again and the product sales data doesn't go up, then it is very likely that the company will have problems with its capital chain.

Lu Yang has been going very smoothly recently. First, the third quarter financial statements of Xiao Shentong were released, and several shareholders of the company received 300 million yuan in dividends alone. Later, news of financing came out. Huaden High-Tech, which has foreign capital background, Zhao and Qian, local family businesses in Pengcheng, and Pengcheng Hi-Tech Investment, which has the background of Pengcheng State-owned Assets Supervision and Administration Commission... and other capitals have entered the market.

Recently, it has been mentioned over and over again on TV news and in newspapers.

Compared to Lu Yang's smooth sailing in recent times, Jiang Wanli's life has been extremely unsuccessful. With this comparison, how can he still be in a good mood?

(End of this chapter)