America's No. 1 financial conglomerate

Chapter 392 Mode

Craig's inspection team left so suddenly that even Chen Hongping and his companion were a little dumbfounded.

Looking at the empty office, the air still seemed to hold the faint scent of their previous conversation. The two subconsciously exchanged a glance, their eyes revealing deep confusion and bewilderment.

Why do you insist on going to Dongguan first? Who exactly is in Dongguan? Why are you in such a hurry?

Since you're already here, can't you secure the clothing order first before heading to other regions for inspection?

They insisted on following the plan, with Guangdong as the first stop, followed by Fujian, Zhejiang, and Jiangsu, and then they planned to do a lot of shopping and inspections along the way.

Ding Haitao really wanted to say, "If you're going to follow the plan, you should have landed in Guangzhou on the first day! What the hell are you doing here in Jinjiang, just trying to freeload?"

"You think they'll come back?" Ding Haitao broke the silence in the office, asking Chen Hongping with a hint of unease in his voice.

Chen Hongping hesitated for a moment, then slowly said, "Foreigners, aren't they all so rigid? Since they've made an inspection plan, they'll most likely follow it, so they'll definitely come back."

To reassure Ding Haitao and to boost his own confidence, Chen Hongping quickly added, "Don't worry, this order is guaranteed."

In Chen Hongping's view, even though the domestic export environment is not good now, many manufacturers may accept orders even if they lose money.

But it wouldn't make sense for him to leave without even hearing the quote, so he was more inclined to believe the other party's explanation.

While Craig's team was busy in China preparing for the procurement of self-operated goods, Ernst in North America was also busy, planning the establishment of a famous new e-commerce company—Flash Sale—with Affiliate Scott.

"The basic framework of the company's personnel has been established, the heads of the core departments are in place, and the recruitment of team members is progressing smoothly. Next, as long as the website development is completed smoothly and meets the standards for online operation, we can officially launch the online business of the flash sale platform."

Affili Scott had only some exposure to e-commerce and understood some basic operating models of the industry, but he had never been deeply involved in the actual operation of e-commerce. Faced with a brand-new e-commerce platform like Flashbuy and the grand development blueprint described by Ernst, Affili Scott was still somewhat apprehensive.

It wasn't that he lacked confidence in his management abilities, nor that he didn't believe Ernst's assessment of the vast future prospects of the e-commerce market. His concerns were more focused on professional issues. He feared that his professional knowledge in the e-commerce field was insufficient, that he wouldn't be able to keep up with Ernst's pace, and that he would struggle to cope with various professional challenges that might arise during platform operation, thereby affecting the development of the flash sale platform.

The two giants in the North American e-commerce market, Amazon and eBay, both started small and went through a buffer period of continuous exploration and gradual improvement during their development.

Being able to identify operational problems in a timely manner before the business scale has fully expanded, and taking effective measures to solve the problems based on market feedback and its own actual situation, gradually accumulating experience and optimizing the business model.

However, Ernst's plan for the flash sale platform was not one of small-scale, gradual development.

With an initial investment of hundreds of billions of dollars, any missteps in development direction or operational strategy could result in incalculable losses.

"Don't worry, problems are inevitable in business development. The key is that we can identify and solve them in a timely manner. Besides, for flash sale platforms, the most troublesome marketing problem has already been solved, so what else do you have to fear?"

The biggest problem for businesses is marketing. If products can't be sold, all the talk about advanced management and cutting-edge technology is nonsense.

If you can achieve the highest sales volume in the market and a monopolistic market share, even if your company is full of garbage, others will still rush to visit and learn from you.

This is an advanced management model.

"As I mentioned before, every year during Black Friday and when Macy's launches its Christmas discounts, Americans are willing to line up outside the mall hours in advance for the discounts."

"Since consumers are willing to spend a lot of time queuing for discounted goods, why wouldn't they choose to shop online in a more time-saving, effortless, and potentially more affordable way? This fully demonstrates that the online shopping market has enormous potential and a very broad future prospect. There is no need to worry about sales volume in the early stages."

Affili certainly knew that this was a huge market with a promising future.

However, he still had some questions. "I'm not worried about the market prospects, but I'm a little confused. Why do you believe that the future e-commerce market will definitely be dominated by the CtoC model, but insist on using BtoC on the flash sale platform?"

Ernst had mentioned to him on several occasions that the ultimate goal of Flash Sale was to create a comprehensive e-commerce platform that would attract numerous individual merchants to join and allow them to sell their products to other consumers through the Flash Sale platform.

However, during the preparation of the flash sale platform, Ernst invested a large amount of money in purchasing goods and promoting B2B.

The toC model involves selling purchased goods directly to consumers through a platform's self-operated model, which is similar to the operating model of traditional department stores.

This puzzled him greatly. If Ernst was optimistic about the future development of the CtoC model, why did he choose Bto in the initial stage?

Why not adopt the C model, instead of combining the two models to achieve dual development?

"Because of reputation, quality control, and appeal," Ernst answered.

"Our flash sale platform is a brand new e-commerce website. For the vast majority of consumers, we have no prior operational experience or market reputation to speak of, and consumers have almost zero awareness of us."

"Furthermore, online shopping is still a relatively new concept for consumers compared to traditional offline shopping. They tend to have lower trust in online shopping, worrying about issues such as poor product quality and inadequate after-sales service. Under these circumstances, consumers' trust in our flash sale platform will further decrease, which is extremely detrimental to the initial development of our platform."

Ernst paused to allow Affili to better understand his idea, then continued, "And adopting B..."

In our self-operated to-C model, all suppliers are personally selected by our platform, and all products undergo our professional testing process. Through this approach, we can ensure product quality to the greatest extent possible, providing consumers with high-quality goods and a superior shopping experience.

"Once consumers are satisfied with the quality of the products sold on our platform and the shopping experience, they will gradually develop trust in us, thereby building a good reputation for the flash sale platform."

"In my opinion, reputation is the lifeline of Internet products. Only by having a good reputation can one gain a foothold in the fierce market competition."

Ernst slightly raised his chin towards the desk. "You've seen the report on the North American home textile and knitwear market. The complaint rate for home textile and knitwear products in North America exceeds 1.13%, which is an alarming figure and fully demonstrates the serious product quality problems currently existing in the North American home textile and knitwear market."

"What is the reason?"

Before Afei could answer, Ernst said directly, "Offline department stores control the sales channels and pricing system for home textiles and knitwear. They occupy an absolute dominant position in the market, so they lack a sense of urgency to improve product quality and service levels."

After hearing Ernst's explanation, Affili Scott agreed wholeheartedly, confirming that department stores indeed lacked a sense of crisis regarding distribution channels.

For department stores, their main competitors are other department stores in the same industry, and their sense of crisis only comes from competition among peers.

Even if some department stores are forced to close down due to poor management or other reasons, new department stores will enter the market to fill the gap.

Moreover, these newly entered department stores are not significantly different from the previous department stores in terms of product prices and business models, and still have problems such as lax control over product quality and inflated prices.

Consumers have no other choice but to go to offline department stores to buy daily necessities. This gives department stores an absolute advantage in their relationship with consumers, gradually creating a situation where large stores bully their customers.

A complaint rate of 1.13% may not seem high, but when considered in the context of the huge sales volume of home textiles and knitwear in North America, the underlying issues are quite serious.

Tens of millions of home textile and knitwear items are sold every day in the United States. With a complaint rate of 1.13%, this means that more than 100,000 products are complained about by consumers every day, a figure that is quite shocking.

Ernst continued, "It is precisely because of these problems in the current North American market that we have an opportunity to develop our flash sale platform. Through our B2C self-operated model, we strictly control product quality and provide consumers with high-quality goods and services, making it easy to establish a good reputation among consumers."

"Once we have a good reputation, we will be able to attract more consumers to shop on the platform and gradually build a large user base. When the number of users on the platform reaches a certain scale, our flash sale platform will naturally become very attractive to individual merchants who want to expand their sales channels."

"In order to join our platform and gain more customers and sales opportunities, these individual merchants will try their best to meet the various rules and requirements set by our platform. For example, they will strictly follow the platform's standards in terms of product quality control and after-sales service guarantees, including the return policy that we plan to implement."

"If we rush to open up the CtoC model now and allow a large number of individual merchants to join the platform, the quality of goods will inevitably be uneven. Some merchants will definitely choose to source goods from small workshops in Vietnam and other places in order to pursue higher economic benefits and reduce costs, which will ultimately affect the reputation of our flash sale platform."

"This is undoubtedly a fatal blow to a flash sale platform that is just starting out."

"If we first accumulate enough users and establish a good market reputation through the B2C model, then we will have more initiative when opening up the C2C model. We can require these individual merchants to implement policies that protect consumer rights, such as the seven-day no-reason return policy, and minimize the possibility of individual merchants selling inferior goods as superior ones."

Although Ernst's analysis was clear and logical, Afei still had a concern: "Have you considered the investment issue? According to your current plan, we not only need to invest a lot of money in bulk purchasing goods to ensure the smooth progress of the B2C model, but you also plan to build those so-called advance warehouses. Do we really have enough funds to support the implementation of these plans?"

If it's simply about purchasing goods, flash sales can store the purchased goods in warehouses in coastal port cities.

Once consumers place an order online, it is packaged and shipped directly from the port warehouse.

Ernst insisted on establishing some kind of advance warehouse plan, which would require building various warehouses in inland cities, undoubtedly greatly increasing the initial investment and operating costs.

"We simply don't have any data to support this. Do you know how much additional shipping costs these goods incur?"

Could Ernst not know that advance stockpiling relies on data? To put it simply, it involves analyzing data to determine which items will sell well in which regions at which times, and then stocking up in advance.

But many things can be known without data.

"The data will come sooner or later, and we're just making some basic preparations."

Ernst's advance ward was the most basic version 1.0, relying not on data, but on common sense.

For example, since the weather is cold in the north, down jackets can be sent in large quantities to advance warehouses in various parts of the north before winter.

Every summer, the southern beaches become a top tourist destination, which means you can bring in a ton of swimsuits and water toys.

Logistics in the United States are slow, and before Ernst could establish his own logistics system, he had to use this method to speed up flash sales.

"But you need to understand how much financial pressure we'll be under. We're not like Walmart or other supermarkets; brands won't give us large amounts of collateral." This is what Afei is most concerned about.

If Ernst were to do it this way, how many goods would be needed to ensure a sufficient flow of supplies?

Ernst said nonchalantly, "So I never intended to negotiate payment delays with those brands."

"What do you mean?" Affil was confused again.

It's normal for retail supermarkets to hold onto payments from brand owners, typically settling accounts three to six months after the previous quarter.

Ernst didn't even intend to delay payment; even Walmart doesn't have such a large amount of capital to dare to do that.

"We can find secondary distributors; they have inventory and are under pressure to collect payments." This is the target Ernst chose.

"We can definitely talk to them about cooperation, let them put their products on our website for sale, and we'll take a cut."

"As soon as the customer clicks 'receive' and the funds arrive in their account, we will settle the payment with them directly."

"Branded products, especially electronics, are unlike home textiles, where there's absolutely no need to worry about product quality. Even if there are small-scale returns and exchanges, brand owners can't just ignore them and risk damaging their reputation."

Afei's eyes lit up, and she suddenly realized, "So our funds didn't go towards purchasing branded goods at all; we didn't have any copyrighted products like music or movies, or consumer electronics."

No wonder. Affili was wondering why Craig's purchase order was full of low-priced clothing, home textiles and other products.

Now he realized that Ernst had planned this all along.

I must say, this move is truly brilliant.

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