America's No. 1 financial conglomerate

Chapter 403 Retail Industry

The champagne in Massim's crystal glass had long since lost its bubbles, much like his waning patience. He simply couldn't understand why Ernst was so enthusiastic about Cicero.

"Ernst, I want to know what you think." Massim finally broke the silence, his eyes filled with resentment.

I was waiting for your long-winded explanation, but you're so nonchalant about handling cigars.

Are you trying to whet my appetite?

play me?

"BJ's store is more than ten times the size of Stop & Shop, and its product range could fill a football field. There's no reason for you to skip the steak and insist on eating bread, is there?"

Ernst, seeing Massim getting anxious, chuckled softly, the ash from his cigar gently falling into the ashtray. "You've made a mistake that every American capitalist makes: equating big with good."

"BJ's is big and has a wide variety of products, but it's a membership-based store like Costco, which means it can't reach all users online. It's like having a security door installed."

Massim frowned, finding this argument untenable. "What about supermarkets like Walmart? There are tens of thousands of large supermarkets like Walmart across the United States, and they don't have the concerns about membership systems. Don't they meet your requirements?"

"Walmart?" Ernst said, as if he had heard an interesting joke. He put down his cigar and said, "I had someone do a test. Starting from mansions in fifteen major cities across the United States, it takes an average of 65 minutes to drive to a large supermarket like Walmart to buy a carton of milk, while a store like Stop & Shop can be reached in 30 minutes."

"Time is efficiency; this determines how many orders a store can deliver each day."

What is a community?

A community is one where you can buy bread 500 meters to the left of your building and get milk within a 10-minute walk.

Stop & Shop is a neighborhood store that's practically ubiquitous in the United States, with a location typically within a three-kilometer radius.

But what about Walmart? In most cities, you're lucky to find one or two stores; in some places, you have to drive an hour to see its sign.

Expecting Walmart to deliver as quickly as neighborhood stores? That's like asking an elephant to do ballet—not impossible, but definitely not a good look.

If your product isn't convenient and doesn't have a price advantage, why would users buy it?

"Offline stores make money off lazy people. You have to wait a whole day to buy things online, but you can get it done in 30 minutes at a nearby convenience store. The prices are the same, and it's even cheaper and more convenient to go out and buy things. Who would choose online?"

Ernst started instilling his online-offline theory into Massim, which completely stunned him. He couldn't believe that the retail industry could be run like that.

Even when Ernst told him to sell online like Amazon and have it delivered to his door, he wouldn't be surprised.

But what on earth is this online ordering and nearby convenience store delivery model?

"No," Massim quickly shook his head. "How are you going to solve the delivery problem? Making those community stores handle delivery is just increasing their costs. Do you think they'll agree to that?"

"I hire people, and the community store pays the bill."

We must control the riders, because they are not only riders, but also the foundation for Flashbuy's future development in the express delivery industry.

Once they are familiar with the terrain and procedures, they can simply change their clothes and become deliverymen. Flashbuy can then naturally enter the express delivery industry, which is much better than starting from scratch.

Massim found his brain was about to give way. He rubbed his temples, feeling that Ernst was treating him like an idiot and insulting his intelligence.

"Do you think everyone else is stupid? Shop owners sell things, and not only do they take a commission from you, they also have to pay for delivery?"

"That's why I said we need to achieve scale." Ernst picked up the champagne on the table, took a small sip, and his eyes revealed confidence. "When we integrate enough community stores and achieve economies of scale, delivery costs will decrease."

"Although the store owners will have to pay delivery fees, their sales will increase significantly, so they will still make a profit in the end."

"Going public?" Massim's mind was struck by something, and his eyes lit up instantly.

He sat bolt upright, staring intently at Ernst. "You mean, if we can unify one-third of these community convenience stores, we can completely expand our offline coverage. Then, as more and more people experience the convenience of delivery, these stores will create a siphon effect, squeezing out half of the remaining two-thirds of the community stores."

"This way, the sales of the community stores we integrate will increase significantly. Even if the profit margin is low, it's acceptable. Then we can launch this integrated monster on the stock market and fleece the retail investors?"

Ernst didn't speak, but simply smiled and nodded, tacitly agreeing with Massim's guess.

There are two ways for a company to exploit its users: one is to steadily make money from them, and the other is to go public and sell shares to those users.

"Your idea has potential."

However, after the initial excitement, Massim calmed down.

However, while there was potential, he had reservations about Ernst's online-to-offline e-commerce model.

Even if the other party makes a lot of promises, it is still an unproven model. Will it really succeed?

"Would you invest?" Massim asked with some anticipation. To integrate into a large number of community stores, the East Coast alone would require at least a billion dollars.

If you include the West Coast and the entire inland area, it would be impossible to get less than several billion US dollars.

The Boston consortium couldn't possibly come up with that much money; they'd probably just be playing around on the East Coast.

Even on the East Coast, they were uncertain unless Ernst got involved.

Although he was optimistic about the project, he valued Ernst the person even more.

Compared to this unproven model, Ernst's business acumen is what's more worthwhile to invest in.

"If the Boston consortium is just looking to make an investment, then I'm willing to participate," Ernst said without hesitation.

Participation was definitely an option. If it weren't for the fact that there were too many and too varied community stores, requiring a local strongman to take the lead, Ernst might not have necessarily brought them on board.

Bringing the Boston Consortium on board was not only about solving funding issues, but more importantly, about leveraging their connections and resources.

Upon hearing this, Massim felt a sense of relief, but then a wave of anxiety washed over him.

"vote?"

After going around in circles, we finally arrived at the ballot.

As Ernst just mentioned, a city's community convenience stores and delivery personnel can number in the hundreds or thousands, or at least a hundred or two hundred, depending mainly on the size of the city.

These people may not mean much to an election in a city, but what about to a state or even a country?

Take Massachusetts for example. It has 39 cities and 312 towns. If each town employs an average of 200 people, that's 70,000 jobs.

How many people are there in Massachusetts? Only about seven million. This means that controlling 1% of the state's votes can change a lot of things.

In the United States, votes mean power; controlling the votes means controlling the discourse.

If every state were like this, Ernst's e-commerce platform would be no less influential than Walmart.

At that time, whether it's a donkey or an elephant, as long as they don't completely break off relations, they will all act according to his wishes and give him face.

Ernst did not deny it, but his tone carried a hint of ambition that was not easily detected: "In the United States, the retail industry is an absolute ceiling for election campaigns. No president would dare to introduce any policies specifically targeting the retail industry."

In the United States, about 10% of the workforce works in the retail industry, and at its peak, it accounted for as much as 15% of the total national employment.

If indirect and induced employment are included, the retail industry contributes more than a quarter of all jobs in the United States.

Even in the automotive and pharmaceutical industries, the number of jobs offered is far less than that in the retail industry.

Massim fell silent. He reached into the cigar box Ernst had placed on the table, took a cigar, leaned back in his chair, and began to sniff its aroma.

Ernst is right. The retail industry holds a very important position in the United States, and whoever controls the retail industry controls a certain amount of power.

Don't be fooled by the fact that the retail industry is fragmented, highly competitive, and has all sorts of supporters.

But if anyone dares to mess with the retail industry, the Retail Alliance will tell you just how united this team is.

This is why, despite the highly developed retail industry in the United States, it is difficult to produce nationwide chain giants.

Various local factions all want a piece of the pie, knowing the importance of the retail industry and the significant impact of local policies.

But now Ernst's answer has put him in a dilemma.

He wasn't confident about letting Ernst in, and he was also afraid of being tricked.

Bringing Ernst into the game means relinquishing control.

The Boston Consortium is a long-established power in New England. Their core interest lies in controlling local economic and political resources. How could they easily let an outsider get a share of the pie?

"I can't give you an answer right now," Massim finally spoke, his voice heavy. "It involves votes, which is not something I can decide. For the corporation, this is a core interest. Especially in New England, which is the Boston corporation's stronghold; they can't allow an unstable factor to get involved."

Ernst had anticipated that Massim would say that, so he wasn't in a hurry. He simply picked up the cigar on the table and lit it again.

"Then you'd better hurry, time waits for no one."

Ernst didn't have time to waste, and at the same time, he was telling the other party that if they didn't make a decision soon, he would find someone else to cooperate with.

>