"Do you think there's a possibility in the future, as your online e-commerce platforms develop, that through factory direct sales, bypassing middlemen to pocket the price difference, resulting in lower costs, combined with increasingly convenient express delivery services, the online shopping experience in terms of both price and service will eventually far surpass offline shopping? Will online shopping ultimately compress the survival space of our large hypermarkets, perhaps even defeating large supermarkets like Walmart, thus ushering in a new era of shopping?" Rob Walton suddenly asked.
"To be honest, I'm worried that if we cooperate with you, it will ultimately become a knife that cuts Walmart's throat, and ultimately destroy Walmart!" Rob Walton said with a frown.
"That's absolutely impossible!" Liu Xiangjiang couldn't help but say upon hearing Rob Walton's words.
"Oh! Mr. Liu, you are so pessimistic about the business you are currently operating? If that's the case, I would be even more hesitant to entrust Walmart's business to you!" Rob Walton said with a smile.
"No, you misunderstood me. I believe online shopping will definitely bring about tremendous changes in the future, even changing many people's consumption habits. But the target of this change will definitely not include supermarkets. Supermarkets and our online shopping platforms are absolutely not competitors, because online shopping platforms simply cannot compete with supermarkets."
"Not to mention anything else, let's talk about logistics costs. Online shopping has per-order logistics costs, while supermarkets have collective logistics costs. This creates a tenfold difference in logistics costs, so the prices for online shopping cannot be cheaper than supermarkets!"
"The simplest example is to look at the current online shopping platforms. Almost everything they sell is something that supermarkets don't sell, because their prices can never be cheaper than supermarkets, so there's no need to sell them online."
"Moreover, online shopping has an unavoidable cost, which is time cost. Even for same-city online shopping, it takes at least 1-2 days for delivery. I think most people are unwilling to tolerate such a wait and would choose to shop at supermarkets directly."
"In addition, supermarkets mainly sell various fresh foods, and these foods cannot be delivered through express delivery, because by the time the express delivery arrives, a large portion of the fresh products will be completely damaged."
"In summary, I believe the supermarket market can never be replaced by online shopping platforms. Online shopping platforms can only change those goods that are not sold in supermarkets, so there is no competitive relationship between us!"
"Of course, if we rely on Walmart for e-commerce distribution, that will naturally affect Walmart's market. But we are relying on Walmart itself, and Walmart can still gain more profits from us. And to put it bluntly, if Walmart feels that we will pose a threat in the future, they can directly cancel our cooperation!" Liu Xiangjiang said.
"What you said makes a lot of sense, but I still think you are a huge threat!" Rob Walton nodded while shaking his head, appearing very conflicted.
"Sir, please don't overlook the simplest fact, which is that we are not the only e-commerce platform in the world, besides Oriental Amazon. Wanxian Pavilion, which rose by shamelessly poaching our talent, and eBay, which is expanding globally, are all e-commerce platforms with immense potential."
"If you don't cooperate with us, we might perish, and then these two platforms will step on our corpses and become even stronger. When they can eventually invade Walmart's market in turn, you will be facing a terrifying enemy, not close collaborators like us!" Liu Xiangjiang said gravely, and Rob Walton fell silent again.
Liu Xiangjiang's words finally swayed Rob Walton. That's right, rejecting Oriental Amazon doesn't mean you can eliminate the entire e-commerce platform. The emergence of e-commerce platforms is an inevitable trend in social development, and it's not something he can stop single-handedly.
Instead of resisting with all his might, it's better to start cooperating with it now.
After realizing this, Rob Walton's entire demeanor changed slightly, but he still felt that the choices offered by these two young Chinese men were not exactly what he wanted, so he said, "Can you guarantee that you will only cooperate with Walmart in the future?"
"That's absolutely no problem! We can sign an exclusivity agreement. As long as Walmart is willing to cooperate with us, we will never cooperate with other similar companies!" Liu Qiangdong quickly stated.
"That's acceptable, but our Walmart warehouse data is our most valuable secret. I'm not comfortable handing it over to outsiders like you. Therefore, I hope your online stores will be completely operated by Walmart. You only need to be responsible for providing delivery services!" Rob Walton said unequivocally, a condition that left Liu Qiangdong and Liu Xiangjiang speechless for a moment.
"Shall we consult with the chairman?" Liu Xiangjiang had never prepared for this question, so he quietly said to Liu Qiangdong.
Unexpectedly, Liu Qiangdong shook his head helplessly, saying, "That might be very difficult to implement."
"Why? Don't you trust Walmart's capabilities?" Rob Walton couldn't help but laugh. He was just making a joke, but Liu Qiangdong nodded very seriously, saying, "Yes, sir, we deeply admire Walmart's capabilities in hypermarket operations."
"But there's one thing you might not fully understand: the operation of online stores is not the same as the operation of hypermarkets. It's not a consumer experience that can be completed by customers coming to the store to select products and then checking out at the counter!"
"It requires a complete set of front-end and back-end systems, as well as product marketing logic, and important customer service and after-sales service. All these operational logic are completely different from traditional hypermarkets. And Walmart probably lacks outstanding talent and training in this area. Please forgive my bluntness, but it would be better to have professionals like us execute such a system!"
"Hmph!" Rob Walton snorted coldly, "I didn't expect Mr. Liu to view Walmart's capabilities in this way. Is there still a need for us to cooperate?"
"Mr. Rob... Alright, I have a very simple question related to Walmart's online shopping. May I ask you to answer it?" Liu Qiangdong suddenly asked.
"Ask away!" Rob Walton nodded, not believing any question could stump him.
"Suppose Walmart is selling Duracell batteries, the kind packaged in packs of 10. The warehouse inventory is 1000 units. When setting the inventory on the website, how many units should we set it to?" Liu Qiangdong asked.
"Well!" Rob Walton's instinctive thought was to set it to 1000. But anyone normal could guess that since Liu Qiangdong asked this way, the answer could not possibly be 1000, but a number not equal to 1000.
Rob Walton instinctively began to recall his experience operating supermarkets.
He thought about how in Walmart's supermarkets, products with empty shelves sold better. Because in the eyes of customers, empty shelves meant that many people were buying them, and everyone recognized the quality of this product, which further stimulated the desire to grab it, and greatly increased sales.
After understanding this point, Rob Walton said without hesitation, "Only list 10 units, but we can constantly monitor the sales situation. Once too many items are sold, we increase the inventory, keeping the inventory level around 10 units. This way, we can sell our products to the maximum extent!"
"No, sir, we should list 10,000 units!" Liu Qiangdong shook his head after Rob Walton finished his answer.
"Ten thousand units? What's the point of that? Is your battery inventory too high because no one is buying? Also, although few people might buy 1000 batteries in a short period, what if someone actually needs them? If you can't fulfill the order according to the inventory, what then? Will you negotiate a return with the consumer?" Rob Walton snorted.
"No, of course not!" Liu Qiangdong explained, "When I say 10,000 units, it means there are 10,000 units, and there will be no situation where we cannot ship. Because the order is not for a whole box of 10 batteries, but for individual ones!"
"Each individual battery counts as one item, so there are 10,000 items!"
"..." Rob Walton was stunned for a moment, then became even more embarrassed and annoyed, "You're playing word games. What's the benefit of this trick?"
"The benefits are numerous!" Liu Qiangdong smiled. "First, a box of 10 batteries is sold for $5. This price looks very expensive, and many users will give up buying when they see this price. But if sold individually, one item is priced at $0.50. With a low price combined with a full box packaging, it will make users involuntarily click on the product link. This achieves the most important step in the entire sales process, making users actively want to learn about this product!"
"Of course, users will soon discover they've been tricked, but most users won't be angry. Because the price of batteries themselves hasn't changed at all, and buying 10 batteries still costs $5 as agreed!"
"Of course, $0.50 is the price for one battery, so users might still feel like they've been played. So we can set the price at $0.49. This way, users will find that buying individual batteries is cheaper than buying 10 at once, and they will have more desire to buy batteries!"
"Moreover, often people may only need batteries for toys or remote controls, and they don't need 10 batteries, only 1-2. Buying individual batteries at a low price is clearly a practice that can promote sales!"
"Finally, there's one more point. When a user buys a box of batteries, the sales volume is 1. But when a user buys 10 batteries, the sales volume is 10. All these will become automatically displayed data on the product page."
"This way, every time a user opens the product page, they will find that the sales volume of this battery can be hundreds or even thousands of items per day. Getting purchased by so many users clearly indicates that the product quality has been recognized by the vast majority of users, and buying along with the majority of users will definitely be correct. This way, it can further increase the sales of this product!"
After Liu Qiangdong finished speaking, Rob Walton, who was initially very confident, seemed unable to speak. Rob Walton understood that he truly did not understand e-commerce!