Reborn in 08, a heretical cultivator starting a business

Chapter 166 Alibaba's Big Move, Wang Junshan Flips the Table
"Integrating the four major express delivery companies (STO Express, YTO Express, ZTO Express, and Yunda Express) is a great idea!" Alibaba COO Li Yong's eyes lit up.
"In the past, the competition in e-commerce was mainly about the scale of users, while the timeliness of logistics was not important."

"Currently, logistics on major platforms are slow. Even JD.com only offers next-day delivery for its self-operated products in four or five major cities with warehouses."

“For non-self-operated or other cities, it’s the same as other platforms. Including delivery time, it takes four or five days within the province, about a week for cross-province, and maybe half a month for remote areas.”

"But Wang Junshan doesn't care about martial ethics. He's building ten international warehouses across the country, in addition to the existing eight central warehouses. He'll then lease some more central and transit warehouses to achieve nationwide coverage!"

"Vipshop and U-Group International's logistics efficiency can achieve next-day delivery in most cities, two-day delivery in other cities, and four-day delivery in the farthest cities."

"This is terrible! It's like flipping the table!"

"They're here entirely because of Taobao and Tmall's very lifeline!"

Jack Ma nodded:

"That's right. On average, it takes about five days from ordering to receiving a package on Taobao. Vipshop and U-Group International take about one day on average, and in cities with large warehouses, delivery can be done within half a day. There's no comparison at all. Consumers will also abandon Taobao and Tmall and turn to Vipshop and U-Group International."

"Therefore, logistics must be accelerated."

“But our merchants are scattered all over the country. Building ten large warehouses in one place, like Future Technology, to expand from a broad area to a wider market, won’t work.”

"But if we integrate the four major express delivery companies (STO Express, YTO Express, ZTO Express, and Yunda Express), consolidate their warehouses across the country, share logistics and distribution, and establish a point-to-point network, then there won't be any problems!"

Everyone nodded, but then someone else spoke up:
"Integration isn't that easy either. The four major express delivery companies (STO Express, YTO Express, ZTO Express, and Yunda Express) are competitors, vying for orders and customers from each other."

"They even got into quite a few fights!"

"To integrate them now and have them share warehousing resources and logistics capacity is really a pipe dream."

Jack Ma nodded: "This is indeed a difficult matter, but it has to be done."

"Taobao merchants are as numerous as stars in the sky, and we can only integrate the warehousing and logistics of STO Express, YTO Express, ZTO Express, and Yunda Express."

Even if it's difficult, we have to do it.

"Only by integrating them can we improve logistics efficiency and compete with Vipshop!"

"Investment can be made when necessary."

Li Yong strongly agreed: "Wang Junshan's 50 billion yuan over three years can only build ten international warehouses. He's just playing around with it and doesn't have many friends."

"And Alibaba can also invest 5 billion yuan over three to five years to acquire shares in STO Express, YTO Express, ZTO Express, and Yunda Express, or even take control of them!"

"In this way, we can leverage the power of the major shareholders and Taobao's C2C monopoly authority to forcefully suppress the four major express delivery companies (STO Express, YTO Express, ZTO Express, and Yunda Express), achieve unified warehousing and transportation capacity sharing, comprehensively accelerate logistics, and counter future technologies!"

"As for the name, I've already thought of it: Cainiao Logistics."

Jack Ma smiled and said, "Cainiao Logistics, that's a good name. Integrating the four major express delivery companies (STO Express, YTO Express, ZTO Express, and Yunda Express) into Cainiao Logistics will completely crush future logistics. However, we still need to plan the specifics of how to operate it carefully."

"Is it an investment or a controlling stake? Is it a joint venture to build warehouses, or do they provide the warehousing while we provide the technology and platform?"

"If we're going to build warehouses, we need to plan out the proportion of self-built warehouses, the budget, and so on."

"President Li, this matter is entrusted to you. You are fully responsible!"

"Yes, Chairman, I am confident that I can make Cainiao Logistics a success, and I will never let future technologies overtake us by taking shortcuts."

"Ah."

Jack Ma nodded, a sigh escaping his lips.

"Actually, right now is the lowest point for the stock prices of STO Express, YTO Express, ZTO Express, and Yunda Express, making it a good time to buy at the bottom."

"Unfortunately, this was also when Alibaba's stock price was at its lowest, so we didn't have the money to buy at the bottom!"

Hearing this, everyone fell silent.

If Alibaba were rich enough, it wouldn't need 5 billion in five years.

We can take out 5 billion yuan now and take advantage of the low prices to directly buy up a large number of shares of STO Express, YTO Express, ZTO Express, and Yunda Express, and even gain control of them!
Unfortunately, I don't have any money!

Once Alibaba has more money, the stock prices of the four major express delivery companies (STO Express, YTO Express, ZTO Express, and Yunda Express) will likely rise accordingly.

That's just how some things are.

Taobao Mall President Zhao Deyu breaks the silence:
"Investing in STO Express, YTO Express, ZTO Express, and Yunda Express to build Cainiao Logistics is a very feasible plan, but we need to proceed gradually."

"In addition to the logistics battle, we also need to take action against Vipshop at the business level to suppress Vipshop's development."

Jack Ma nodded: "Old Zhao, do you have any good suggestions?"

"Simple, precise cloning, close-quarters combat!"

"Vipshop's biggest feature is its brand flash sales, which help major brands clear out their stock at discounts and earn commissions."

"It is precisely by relying on this model that Vipshop not only did not lose volume during the economic crisis, but instead grew against the trend."

"Brand flash sales, Vipshop can do it, and so can we at Taobao Mall!"

"I suggest immediately allocating resources to create a similar module on Taobao Mall, launching brand flash sales and clearance sales to compete with Vipshop for brand merchants, customers, and the brand flash sale market!"

As soon as he finished speaking, someone immediately chimed in: "That's a good idea. That's how Vipshop got started. We have to suppress it."

"Yes, follow Vipshop's path and leave Vipshop with nowhere to go."

However, some people disagreed:

"We can't do that. Our Taobao Mall mainly focuses on brand stores and high quality, so the prices are all high."

"If we do brand flash sales, it will directly affect the sales of the brand's flagship store and our profits, which would be a losing proposition."

"That's right. For example, Nike shoes start at 400 yuan on Nike's flagship store on Taobao Mall, with an average price of 700 yuan."

"If Nike launches a special sale, with prices starting at 200 yuan and averaging 300 yuan, similar to Hongxing Erke and Anta, would Nike agree to that? Would Nike fans agree to that?"

"How will we sell our other Nike shoes that aren't discounted?"

"More importantly, Nike is just a microcosm; other brands will face the same problem."

Li Yong nodded in agreement: "This is a very important matter and cannot be handled carelessly. Brands like Nike and Adidas choose to clear out their surplus stock, discontinued sizes, and out-of-season products at discounted prices on Vipshop instead of having them heavily discounted on their flagship stores on Taobao Mall, precisely to avoid disrupting the normal price system."

"If we do brand flash sales, it's hard to say whether it will succeed; we'll definitely ruin the brand's reputation."

"The consequences would be unimaginable!"

"This matter needs to be handled carefully," Jack Ma declared decisively.
“Vipshop mainly operates on a self-operated model and started by selling branded goods, so we don’t need to worry. But Taobao Mall is a hub for big brands, and we have a commission-based model, so we have to consider the brands’ opinions. We’ll put this on hold for now.”

"Let's talk about it when we come up with a solution that satisfies both sides."

The night is like water.

After dinner, Wang Junshan returned to his room and started playing League of Legends.

Shen Huaijin angrily washed the dishes, getting angrier with each wash:

"Why would I give up being a perfectly good rich kid to come and buy groceries, cook, wash dishes, and act as his maid?"

"When I'm at home, I have a nanny to take care of me, you know!"

"That despicable Wang Junshan!"

"You won't get breakfast tomorrow!"

After washing the dishes, Shen Huaijin was still angry, so he picked up the Hello Kitty and punched it away.

But the next morning, before Wang Junshan even got out of bed, Shen Huaijin got up to cook:
"It's not for that heartless person, I'm making it for myself."

"I just made too much and shared some with him!"

Then he ladled out 70% of the cooked rice and sent it to Wang Junshan.

Upon waking, he smelled the aroma of food. Wang Junshan smiled and said:

"This secretary is really something. She always has a sharp tongue but a soft heart!" "She's also easy to coax and not spoiled at all."

After finishing his meal, Wang Junshan went straight out the door.

There's no need to clean up the dishes; the school beauty will come and take them away and wash them herself.

If other boys saw this, they would definitely feel uncomfortable.

But for Wang Junshan, it's just part of his daily routine.

The driver had already stopped downstairs. Wang Junshan got into the car and headed straight for Haier Group.

Tang Zhi sat beside Wang Junshan, reporting on the latest progress:

"Boss, the negotiations regarding the investment in Haier RRS Logistics have made some progress after more than a week. However, we still can't reach an agreement on the most crucial price."

Haier insisted on calculating based on a PE ratio of ten times that of Ririshun's net profit, which is 30 billion.

Tang Zhi, however, believes that an 8x PE ratio and 24 billion is a reasonable price.

The two sides talked for more than a week but failed to reach an agreement.

"It's alright, I'll handle it." Wang Junshan returned to Binhai City to sign the Binhai International Warehouse agreement and happened to stop by Haier on the way.

Negotiations are necessary, but just talking isn't enough; a judgment must be reached!

If negotiations fail, sentence the other party to death; then negotiations will surely be successful.

Although the number of international warehouses for future technologies will reach twelve or thirteen, there is still a lack in the area of ​​large home appliances.

For large appliances, international warehouses are not effective.

Cities close to the international warehouse can ship directly from the warehouse, but for cities far away, direct shipping from the international warehouse takes four or five days.

Large appliances are slow to be transported, which takes a lot of time.

But with Haier Ririshun, things would be different.

Future Technology's international warehouses are each 30 square meters, and there are only about ten of them in total.

RRS's warehouses are much smaller, with central warehouses ranging from 5 to 10 square meters and regional warehouses ranging from 2 to 5 square meters.

However, there are many of them, dozens.

Every first- and second-tier city has a central warehouse, and many third-tier cities also have regional warehouses.

We can ship from the nearest location, which will make the delivery much faster.

This is also why Wang Junshan had to acquire Ririshun, to fill the gap in future international warehouses in other cities!
Of course, it was also to thwart Alibaba and JD.com, cutting off their prospects of developing large home appliances through RRS.

Half an hour later, Wang Junshan arrived at Haier Science and Technology Park.

Chairman Zhang, accompanied by several senior executives, personally greeted them.

He also took Wang Junshan on a tour of Haier's R&D center, workshops, and RRS Logistics.

Wang Junshan laughed and said, "Haier Brothers, I grew up watching this cartoon."

"Hahaha." Chairman Zhang laughed heartily.

The two sides then entered a small conference room and began closed-door negotiations.

"Chairman Wang, to be honest, I am very optimistic about the cooperation with Future Technology."

"I am also very much looking forward to the comprehensive strategic cooperation with Haier," Wang Junshan said with a smile.

Chairman Zhang beamed with joy: "So, the general direction is fine, the key is the final price."

"To be honest, although Haier Electric's market value is currently less than 20 billion due to the financial crisis, it is recovering rapidly."

"Most importantly, Ririshun's assets are severely undervalued."

“Chairman Wang, you’re in charge of the future international warehouse, you understand the market. RRS’s 150 million square meters of warehouse space is worth 20 billion, plus the logistics and distribution network, it’s 30 billion, really not expensive.”

Wang Junshan nodded: "If 150 million square meters of warehouse space is all self-built, it is indeed valuable, but how much of Ririshun's space is leased?"

Chairman Zhang fell silent: "..."

Wang Junshan had it thoroughly investigated; at least 20% of the 150-square-meter warehouse was leased.

The actual storage area is only 120 square meters.

"In addition, depreciation is also a problem. Some of RRS's warehouses are old. The asset value cannot be calculated as if they were brand new."

"To be honest, the cost of building a large new logistics park with a warehouse area of ​​30 square meters is only 2.4 million yuan, which is 800 yuan per square meter on average."

"Including equipment, trucks and other supporting facilities, the total investment is only 3 million yuan, averaging 1000 yuan per square meter."

"Haier's warehouses are outdated, so the price can be lower. Of course, considering that it is a mature system and profitable, it can be calculated at 1000 per square meter. The 12 million square meters of self-owned warehouses are valued at 120 billion."

“Ririshun’s logistics is also worth some money, estimated at 7 million, totaling 19 billion, which is a reasonable price.”

"???"

Chairman Zhang was completely taken aback: "Chairman Wang, this kind of calculation is meaningless."

"Ririshun has not only asset value, but also time value and strategic value."

“Indeed, according to your calculations, fixed assets and logistics may only be worth 19 billion.”

"But even with 19 billion yuan in funding, it would take at least six months to build such a large warehouse. And at least two years to build such a powerful distribution system that reaches 2800 counties across the country, extending to villages!"

"With RRS, Vipshop's large appliance logistics can reduce its development time by two years. How much more money can it make?"

"Two years of time cost, two more years of profit, Chairman Wang, is it too much for me to add 500 million to the valuation?"

Wang Junshan nodded: "Not excessive."

"In addition, if RRS were to be used for the logistics of other companies, or for the logistics of small businesses, its valuation would be only 24 billion."

"But Ririshun belongs to Haier. The presence of the Haier name means that Ririshun will never lack orders and will always be profitable."

"Haier is a golden brand. Adding another 3 million to its valuation, is that alright?"

"no problem."

"This year, RRS's revenue is expected to reach 50 billion yuan, with a profit of about 3 million yuan!"

"I'm asking for a valuation of 30 billion, is that too much to ask?"

Wang Junshan nodded: "Not excessive."

Chairman Zhang breathed a sigh of relief, thinking that his approach had intimidated Wang Junshan, and that he would invest based on a valuation of 30 billion. However, Wang Junshan smiled faintly.
"Now that Chairman Zhang has finished his calculations, it's my turn to do it."

Chairman Zhang's heart skipped a beat, but he still said, "Chairman Wang, please."

“Chairman Zhang, as you said yourself, Ririshun’s revenue this year is only 50 billion, and its profit is only 30 million. Even with a PE ratio of 10, the valuation is only 3 billion. That’s too low.”

"Once the future technology strategy invests in Ririshun, Vipshop's warehousing and logistics orders for large home appliances can be handed over to Ririshun."

"Subsequent installation orders and after-sales service orders can also be assigned to RRS!"

"Then next year, Ririshun's revenue will not be 50 billion, it can double."

"The profit isn't 3 million anymore, it's 8 million!"

"So, what will Ririshun's valuation be then? Chairman Zhang, why don't you do some more calculations?"

(End of this chapter)