Costco's products can be said to be few and far between. We have probably all heard of the "28 rule". In fact, Costco is equivalent to selecting 20% of the Special Database products with the best quality and the most cost-effective products, so that customers can buy more worry-free and time-saving. The law of twenty-eight was discovered by Italian economist Pareto in the late 19th and early 20th centuries. He believes that in any group of things, the most important is only a small part, about 20%, and the Special Database remaining 80%, although the majority, are secondary. For example, 80% of the sales in a shopping mall come from 20% of the products.
Fewer and more refined SKUs bring the scale effect of purchases. Due to the huge sales volume of a single SKU, Costco can get the lowest price from the manufacturer, and then any Special Database commodity price will only increase the profit by 1%-14%, and the highest will not exceed 14% (Walmart, which has always been known for its high efficiency and low cost) , the gross profit margin is also 22%-23%). 3. Optimize logistics and gather industrial resources In the production stage, from Special Database raw materials to processing to packaging, products need to go through different factories, which brings a lot of transportation costs.
Pinduoduo took the lead in creating a "pin factory", which is to solve this pain Special Database point, gather factories on the production side and integrate industrial chain resources. Lee & Man Paper in Jiangxi is one of the most typical joint factories. In the traditional papermaking process, from raw pulp to finished product packaging, the transportation cost per ton of pulp is about RMB 300. Pinduoduo took the Special Database lead in merging the production lines, and the entire process was carried out in an industrial park, reducing the transportation cost of raw materials to 8 yuan per ton.