CHAPTER 344: CHAPTER 344: ON-DEMAND RETAIL

Chen Yiyang stayed in Hangzhou for a few weeks.

Just after buying the drone company recommended by Yang Chengru, Liu Xiaoyue came looking for him.

"Boss, I think we need to change our approach a bit."

"Go ahead." Chen Yiyang valued Liu Xiaoyue’s opinions greatly.

"To do takeaway delivery, we not only need to find customers but also vendors.

When our promoters approach larger restaurant chains, they are not willing to join our platform."

"Why is that?" Chen Yiyang asked curiously, "For vendors, joining more platforms would mean more orders, right?"

"But right now in the takeaway sector, Ugly Group has almost a monopoly, and even the second-largest, Bao Le, suffers losses year after year.

So when a new platform approaches these big offline stores, their first worry is whether you’ll suddenly run off or withhold payment for orders.

You know, the combined profit from taking a few more orders a day could be less than the profit from avoiding being charged by the platform for one order.

When it comes to money, these vendors naturally become very cautious."

"According to your view, how should we modify our approach now?"

"Do instant retail," Liu Xiaoyue suggested, "With the popularity of takeout, many people not only want food delivered but also snacks, various small items, cosmetics, etc. to be delivered straight to their door."

"Isn’t that the domain of e-commerce?" Chen Yiyang couldn’t immediately understand.

"Even Jindong can’t achieve same-day delivery for most areas; at best it’s next-day delivery.

But users want smaller items delivered within minutes after ordering, to be used immediately."

"Errands?" The word popped into Chen Yiyang’s mind.

"Yes, errands," Liu Xiaoyue said, "But errands require customers to specify what they need and orders are placed for the runner to buy, though sometimes customers don’t know which store has the needed items.

With instant retail, we first display what’s available on the platform, then let customers order and have it delivered.

Initially, we can sign up retail stores; mid-to-late stages, we can build our ’Lightning Warehouses,’ small warehouses stocked with popular items, to achieve instant sales."

After listening to Liu Xiaoyue, Chen Yiyang pondered for about ten minutes.

Then he made up his mind and directly said to Liu Xiaoyue, "Your idea of instant retail is great, but there’s one flaw."

"What’s wrong?" Liu Xiaoyue asked.

"We shouldn’t start building our ’Lightning Warehouses’ in the later stages, but should lay them out from the start."

"Why?" Liu Xiaoyue was a bit puzzled.

Establishing our own offline storage stores is very costly, and if the model fails, the initial storage rent investment is wasted.

"From what I understand about instant retail, there should be two benefits, one being lowering the shopping barrier.

Shopping involves two costs: the price of the goods and the effort needed to buy them.

But many young people today have low wages and little free time.

So they need a platform to help lower the barrier to shopping."

"But instant retail involves extra running fees, right? How could it lower the price of goods?" The accountant nearby couldn’t help but chime in.

She didn’t understand why Chen Yiyang said instant retail would lower the shopping price barrier.

"Because the prices of items in supermarkets can be much higher than wholesale prices. Among these costs, labor is quite low, the main cost being rent.

If we build warehouses for inventory, we’ll need to employ many workers, but the warehouses don’t have to consider street traffic and can be located in suburbs where rent is cheaper.

This way, even with delivery fees, our prices will have an advantage compared to offline stores."

"There’s another very significant benefit."

After answering the accountant’s question, Chen Yiyang continued, "For offline instant retail, there’d definitely be a minimum order amount for delivery.

This minimum order can be set very low, like 20 yuan.

This minimum is similar to the typical minimum for takeouts and far lower than that of big chain supermarkets.

But many customers might just want a small item worth a few or ten yuan. Facing a 20 yuan minimum order, they might add another item to make up the amount.

Thus, we increase our average order value."

After refining the idea of instant retail presented by Liu Xiaoyue, Chen Yiyang immediately felt that it was a very promising venture.

Of course, as soon as this business grows slightly, Ugly Group, who controls a large number of riders, will surely follow suit.

Therefore, Chen Yiyang needed to lay low in the initial stages, massively expand the warehouses, and then in the mid-to-late stages find strong allies.

The best choice for this ally would still be Jindong.

Chen Yiyang also had some thoughts on how to push Jindong to become opposed to Ugly Group.

But before that, Chen Yiyang first needed to solve the issue of the orders for the drone company he just acquired.

Initially, Chen Yiyang placed his hopes in Schaefer, hoping to supply drones to Europe through him.

But unexpectedly, after some research, Schaefer told him it was not going to work.

"My dear friend," said Schaefer, "how long has it been since you kept up with the war situation in Europe?

Now Ukraine is trying to produce and assemble drones themselves. The price of our drones is too high; Ukraine hopes to exchange military aid for artillery and other items, as they can manufacture drones themselves."

"Aren’t they at war over there? How could they develop their own drone production line?" Chen Yiyang was a bit surprised.

"Isn’t that your handiwork?" Schaefer replied helplessly, "There’s this amazing place called Huaqiangbei in your country; it sells all kinds of parts and software.

Ukraine bought a large number of drone parts and design drawings, directly setting up small workshops to assemble drones manually.

Anyway, these military drones are basically disposable, quality doesn’t need to be guaranteed, as long as they can fly."

"I remember the export of key drone components is controlled, right? Because these parts can turn civilian drones into military ones, how did Ukraine solve this issue?"

"They still bought your 3D printers. You provided them blueprints, they gathered some raw materials, directly 3D printed the export-controlled parts, then converted civilian drones into military ones and sent them to the battlefield."