America's No. 1 financial conglomerate

Chapter 531 Turning the Tables

On November 3rd, Amazon held a grand press conference to announce the launch of its Amazon Food Delivery platform.

This is interpreted by the industry as a strong offensive launched by Amazon into the local life services sector, with its spearhead aimed directly at the current super dominance of the US food delivery market – Flash Sale.

Ernst received a call from Affili immediately and learned some details about the Amazon food delivery platform.

"The 401k plan?" Ernst muttered to himself.

In my mind, the image of Bezos with his signature bald head and sharp eyes gradually blurred, replaced by another familiar figure, a man who was unaware of his wife's beauty.

Then, Daqiangzi's outline began to fade, and finally, the image of Milk Tea Sister appeared clearly in my mind.

He shook his head, clearing his mind of distractions.

Amazon, are you trying to emulate Jefferson and launch a surprise attack on Pearl Harbor?

But my flash sale isn't like Meituan; it has millions of employees who need insurance.

And this is America, not China.

One characteristic of the United States is its high labor costs. According to the latest data from the U.S. Bureau of Labor Statistics, the average annual wage in the U.S. this year is projected to reach approximately $28800, which translates to an average monthly wage of $2400.

But those who know, know the meaning of the word "average." The actual weekly wage for the average American employee is only around $350.

Even in big cities like New York and Los Angeles, most ordinary white-collar workers earn only between $400 and $500 a week, with a monthly income of around $2000.

Even on Ernst's farm in the Red River Valley, a cowboy's weekly wage is only $650.

It's important to know that American cowboys and fishermen are paid high wages; they are among the highest-paid ordinary workers.

And what about flash sales?

A delivery driver's average daily income has already exceeded $93, and this income will increase as more and more people use hourly delivery as restaurants reopen.

Although Ernst hadn't calculated it, it would definitely reach around $130, which is $47,000 a year—more than what white-collar workers on Wall Street earn.

However, this portion of the revenue must be reduced by the cost expenditure, namely fuel expenses.

Flash Sale delivery drivers are not provided with vehicles, but in the United States, where car ownership is extremely high, the vast majority of delivery drivers own their own cars, or at the very least, motorcycles.

To reduce the burden on delivery drivers, Flashbuy provides a special fuel subsidy for each delivery order. As a result, the daily fuel cost for delivery drivers will not exceed $10, which is not much higher than the fuel cost they usually need to drive.

Regardless of the circumstances, it's an undeniable fact that each delivery driver's salary is 30% to 50% higher than the average wage in the United States. For these delivery drivers, most of whom lack higher education, this compensation far exceeds their expectations.

As long as the platform exists and the market size remains, this is Ernst's greatest source of confidence.

Even if flash sales adjust their commission policies in the future and appropriately extract a portion of their profits, delivery personnel will not experience strong resistance.

Amazon's attempt to create trouble for Flash Sale by increasing labor costs is essentially impossible.

Flash sales can easily cover this extra expense through reasonable commission adjustments.

Moreover, 401k is not without its advantages. Although this part of the retirement savings is in an individual account, the investment is determined by the company and does not need to be disclosed.

It's like flash sales get a free fund to invest, and how much they earn is completely hidden.

As long as the employees have no objections, the company can continue to manage this money instead of hiring a professional management team.

Is it difficult for Ernst to keep his employees satisfied?

"Bezos is still too petty." Ernst sneered. Since you want to play, then I'll play along.

"Since he thinks that providing delivery drivers with 401k plans is being responsible to employees, then let's add fuel to the fire and show him what real competitiveness is."

Amazon is trying to steal market share and key employees from Flash Sale through its 401k plan? Ernst, however, is determined to turn the tables on Amazon, making them shoot themselves in the foot. "We're also immediately preparing a press conference to announce that Flash Sale's 401k allocation will be 100%."

"100%?" came Afei's incredulous exclamation from the phone receiver.

"Do you know what this means? This isn't just about adjusting the treatment of delivery workers; it will affect the entire compensation system within Flashbuy."

"If delivery drivers' 401k quotas reach 100%, what will the other lower-level employees think? It will definitely cause dissatisfaction and may even lead to internal turmoil. At that time, all lower-level employees' quotas will need to be increased to 100% simultaneously, which will bring huge cost pressures."

In the American corporate world, 401k quotas are not a uniform standard across the entire company, but rather are differentiated based on factors such as the employee's job level and years of service.

Looking at companies across the United States, the vast majority of companies provide their employees with a 50% 401k subsidy quota. If you contribute $1000, I'll give you an extra $500, for a total of $1500 put into your account.

However, large corporations have their own methods. Apart from newly hired employees, those who have worked for more than a year will generally be allocated 70% to 80% of the quota.

Flash Sale now sets a minimum quota of 80% for its employees, which can be achieved after three months of employment. This is a level of standard that is unique among American companies.

Aside from Ernst's other companies, among the remaining American companies, Affili knew no more than a handful that met this standard.

"Then add them all." Ernst's voice was filled with boundless pride and unwavering determination.

What does 100% quota mean?

In his view, this is merely a basic operation for attracting and retaining core talent. Which of America's major tech companies in later generations hasn't increased their 401k quotas to 200% or 300%? It has become a crucial means for large companies to compete for top talent.

"Now that Amazon is actively provoking competition, we have the perfect opportunity to thoroughly strengthen the cohesion of our team and demonstrate the strength of flash sales to the market."

"But..." Affil wanted to continue persuading, but Ernst interrupted him directly.

"I know what you're worried about, but right now our only goal is to stabilize the market; nothing else is on our agenda."

"Don't worry, the flash sale has an absolutely abundant cash flow, it's inexhaustible. There will be people constantly sending us money, we don't need to worry about money at all."

really?

Afei really wanted to ask a question.

However, the other party was Ernst, which made him choose to believe him.

"Moreover, this money might not necessarily be a losing proposition."

"What do you mean?" Affil pressed.

Ernst then shared his idea with the other party: to leverage the platform's market to increase the earnings of flash delivery drivers and supplement their 401k income through commission.

It's like he didn't spend a single penny on the flash sale, and even got extra interest-free funds. Afei remained silent on the phone for a long time, whether stunned or silently cursing Ernst, the heartless capitalist.

But this move did turn the tables on Amazon, and it also significantly increased the costs for subsequent players who wanted to enter this field.

As long as the market for flash sales exists, even if delivery drivers know that the money is ultimately coming from the customers, they are still willing to be the customers.

We talked about flash sales and Amazon, and finally the topic turned to iTech's food ordering machines.

"Wouldn't it be better if we blocked them? Even if we sold to them, we could use various excuses to delay delivery, giving us more time to consolidate our market position."

Affiliate is right, but in Ernst’s view, while it may cause trouble for Amazon in the short term, this strategy is ultimately meaningless.

He can't stop AiTech from making money just because of flash sales.

"By the way, what do you think of the plan we've been working on?" Seeing Ernst's resolute attitude, Affili stopped asking about the ordering machine and instead inquired about the plan Flashbuy had submitted to him to deal with new disruptors like Amazon.

"Not very good." Ernst refused without even thinking.

Flash Sale's counterattack plan is good. It involves waiting for Amazon to complete its setup before Flash Sale completely lifts the restrictions on merchant applications, allowing all stores in the United States to apply to join Flash Sale.

This would not only dismantle Bezos's newly formed offline store alliance, but also allow for direct integration with the stores Bezos has developed, even with readily available equipment. If this were in China, Ernst would definitely agree.

But this is America, and this approach simply won't work here.

China has a huge market size, a high population density, and a large number of shops of all kinds. There is a convenience store or restaurant almost every few steps.

They can endure the exploitation by capitalists; they have no choice but to do so in order to survive.

But America is different. Although the demand is also great, it can't support so many stores.

If applications are opened up, all merchants can join. Once flash sales start taking a cut and pocketing these merchants' money, the online business will collapse instantly.

These merchants will find that not only are they no longer making money, but their profits are also decreasing due to flash sales.

This would force the retail industry back to the era of traditional markets, where it's not that consumers don't want food delivery, but rather that these businesses will unite to resist it.

Only by showing them the benefits will they not resist the commission from the food delivery business.

But the market is only so big, so how can we increase profits?

That would only mean fewer people would share the benefits.

Therefore, flash sales cannot be applied for arbitrarily. A reasonable number must be maintained in each region, strictly controlled, and this will also kill off a number of traditional American retail stores. 15%—this is the figure Ernst hopes to achieve.

If retail stores in the United States were to decrease by 15%, flash sale stores could see a sales increase of at least 30%.

Even if they take a 10% commission, these stores will still be willing to support flash sales.