Passionate Entrepreneurship

(i) "Entrepreneurship keeps me in a state of excitement every day."

Moderator: No. 1th Shop is a network supermarket, how do you think of the establishment of the shop No. 1th?

Gege: I did a couple of different things after I sold the American company I created. It's like Amazon dug me up and worked as Vice president of global supply chains. Manage inventory, warehousing, storage and procurement. Later, Dell recruited me back to China as a foreign staff, managing global sourcing, and I am the Dell Global Sourcing VP. Manage about 18 billion dollars in the Asia Pacific region.

When I was working at Dell, my partner, Liu, and I had a regular lunch party. Every time you talk about the recent events and some ideas, Majestic is the president of Dell China, he is in charge of sales, I am in charge of procurement. I am the big buyer, he is the big seller. But, he is to beg, I am someone else to ask me. So he hoped that every time I went shopping, I helped him sell some of Dell's products. As a result, he asked me to be in a Hubei restaurant. When we were eating in that restaurant, he mentioned the idea of starting a business. He felt that China's economy was growing so fast that we should do one thing together and do something bigger.

In fact, after the idea, I think it is very interesting, the idea was actually quite simple. I think we work in Dell, although the position is very high, but we feel that we are a screw, is screwed on a large machine. We are Dale's screws, but none of us are engines. Many of the strategies, ideas, are basically the company set, we are more to put it into place.

We hope that in our own life, can do some direct changes in the world, change some patterns, can do some vigorous things. Can change the way people live. In fact, the idea was relatively simple, as long as we two people can wholeheartedly commitment, will do a bigger thing. Didn't think clearly what to do.

Moderator: Do you want to shop No. 1th?

Gege: Then we started to decide what to do and start talking. In the middle of the discussion, I mentioned doing e-commerce. Because I think E-commerce has a future, because I have done in the Amazon, and participated in the Amazon acquisition of China's outstanding project.

After we pulled out of Dell, we were in the building, we were under the building, and now the whole building was basically rented by shop number 1th. We used to live downstairs in a small room with only 10 square meters, and we face each other at a table. We went to do a lot of market research, direct market research. We first studied E-commerce inside the other companies, we found that there are some vertical category, there are books to do, have to do 3C digital, have to do clothing, have to do mother and child. I think they are also very good and grow well.

But we are thinking, also found that these vertical sites, finally to a certain stage, must be horizontal expansion. When they expand horizontally, they all encounter some obstacles. Like the mother and child, always be seen as mother and child, do books and so on, even if the horizontal development, always feel as if the same as before, in the middle of the customer, the mind has planted a deep impression.

Moderator: So you are making a comprehensive platform?

Gege: So we decided to do a comprehensive, a at least give us a chance, in the future can expand indefinitely. So even our name will take nearly three weeks to discuss the 两、三百个 name. Later we decided to take a more modest and show our ambitions. Also make it easy for customers to remember the "No. 1th Shop", and not a constraint, not others feel that you are a limited in a certain category, this shop can be a huge store, can be a comprehensive shop.

So we started thinking, starting with the synthesis. But the synthesis, how to let the customer understand, we are a comprehensive platform. We just thought, how about we just hit the supermarket concept. Because the concept of the supermarket can be a huge, can be said to be everywhere, but also can be a medium-sized, small, large can be. But its category must be very rich.

Another advantage of supermarkets is that customers are easy to remember and easy to relate to. Everybody thinks the supermarket daily necessities all things have. So our concept is to say, to do a comprehensive, so that customers can leave home, all things can meet the needs of a mall.

Moderator: Like the Internet supermarket, it is a very big idea, and then you start to consider all kinds of problems. For example, backstage technology, as well as suppliers, including warehouses, logistics. How did you first open the situation?

Gege: When we started thinking about doing a comprehensive online supermarket, it was really hard to say it was simple. In fact, no one looked at us at first, and everyone thought it was not feasible. Because the goods are big and heavy, and the gross margin is low, then many bottles and cans are fragile. Is that no one is watching us,

Let's go find a VC. The results prepared for one hours of conversation, talked about more than 10 minutes, 20 minutes, the other party began to teach us. Say that we are only professional managers, do not start a business. Say we will only from one to 10, do not know how to do one from zero. Even if I explained to him that I had ever done it from zero in America. He said it was the United States, this is China. Been taught for half a day. There was really not a lot of people watching you.

We think that the concept of online supermarket is really a concept because it has not been practiced. Although we have a lot of market research, we write our own business plan analysis, we are very confident. But there is no practice, and it cannot be said that this thing can be made absolutely. So there was really a big challenge, and when we did it, it was really challenging.

Because we do e-commerce, in China to do E-commerce, and do the integrated type of supermarket model, there is no precedent, no one has done, we can imitate some of the patterns of some practices. A lot of groping, we began to make a lot of mistakes, made a lot of mistakes.

For example, our first promotion, just on the line, printed a very beautiful catalogue. Because we see some directory-making enterprises do a good job, we also design the directory, more than 300 pages is exquisite, each more than 10 yuan, we printed 100,000. The result also personally to send, I also in the subway station to send, in the community hair, in the office building hair.

Moderator: Is it useful?

Gege: Useful, of course, is useful to our brand image is very good, because so exquisite things, more than 3,000 kinds of goods in the above show. Its return on investment is very low, because it is expensive, and the cost is very high. And the directory is static, it is not dynamic. Like the price of the site above now, you can modify at any time, found that the market changes, competitors price changes can be modified at any time to follow up. However, once the catalogue has been printed, it cannot be modified for a period of time, so many problems have been found, especially when the rate of return is particularly low.

As a result, we have not finished the hair, half of the time to give up. It's just one of the many mistakes we made earlier. Including the earliest packaging, I also personally made the packaging. Like many of our bottles and cans of goods, soy sauce, oil, vinegar, there are some shampoo, hair care, a lot of easy to leak things, fragile things. The beginning of the packaging method, we buy our own beer, the results of distribution to One-third are broken. So then we started making a lot of improvements and groping about how to improve the packaging.

Another big problem is shelf life because we run a lot of food. Food in the middle of a lot of short shelf-life products, such as room temperature milk, room temperature milk is 45 days of shelf life. How to guarantee the sale within the shelf life, there is enough validity period. We started to develop the system again, and began to develop new processes.

Moderator: The equivalent is in a constantly groping process, stones.

Gege: Stones.

Moderator: What did you just talk about, whether it was development systems, hiring, or printing those brochures, where did the initial funding come from?

Gege: The first investment was made by me and two people in majestic mountains, and we gave up our position as Dell's own executive, and we paid zero. and entrepreneurship. We didn't get paid for a two-year period.

Moderator: From professional managers to entrepreneurs, this transformation is very large, in the process of the most difficult for you to accept?

Gege: I think there is nothing that I can not accept, in fact, we were very good mentality. We have been prepared for this, we know to start from scratch, we really start from zero, before history. Our glory is history, do not mention, from the beginning, we have this mentality.

So at the time we started our business, I just talked about, in a small room for four months, sinking down to write business plans. We moved out of the mansion we rented from Dell and lived in an apartment, and then we did a market survey and we crowded the subway and crowded the bus to see the suppliers. We go to the warehouse ourselves, all the warehousing, inspection, shelves, packaging, and even I have sent goods.

A lot of the negotiations were done by ourselves, like saying that the negotiations of our distributor were made by myself. We talk about the negotiation of many suppliers ' partners.

One time I went to work with a supermarket and went to see the store chief in that supermarket. He is a supermarket chain store shop long, said the time I went. After going to tell me to wait for 10 minutes, 20 minutes, half an hour, one hours, and finally waited for him nearly two hours to meet. Don't say a word of apology, in the past you can imagine, I was in Dell as a global sourcing Vice president, signed a single is more than tens of millions of U.S. dollars. So there was really some frustration at that time.

Then remember once to the trade and Industry Bureau to talk about one thing, a very young staff. He told me to stand in that place, not to sit, to train me like his grandson. But I've been through all these things, and I've come to think of it as a story to tell.

Host: What is your dream

Gege: My dream has not changed with me at first, I think we are doing a great business, we are changing people's way of life. We can provide the public with a lot of benefits, convenience, let them stay at home, can let them enjoy the new era, another way of life. This in itself, let me feel very excited, very excited.

I think I'm not just a business to make money, but to do a career, the cause of change in the public life style. Bring value to the whole society and bring value to people. Bring value to our employees, shareholders, including ourselves. I believe that if I can create these values, I never worry that I have no value. Because I believe that if I can create value, I will get value in the end.

Moderator: Professional manager, entrepreneur This is the two completely different character, which do you think is more suitable for you? Which one do you like better? Why?

Gege: I think I prefer my current state as an entrepreneur. I think I take this thing as my own thing, I devote myself to it, I can say that all the efforts are spent on this. In the words of Majestic, we are in a state of excitement every day. So I sleep also want to eat also want to wake up the first thing to want to work in the company. Because I have so much to do, and so many challenges.

The key to my mentality is very good, every day I encountered many many challenges, including the media fabricated, and even is absolutely a lie information, Wal-Mart since the investment, the company does not have a director to leave. It is not appropriate to be said to be a collective resignation of six directors, which is misleading young people into thinking that capital is terrible, greedy, and that capital exploits our founders and breaks all the dreams of young people.

But every day I encounter something like this, and I also encounter more challenging, including our warehouse challenges. Like the customer experience, every day there are a variety of customer complaints, a variety of challenges. But I am very optimistic, I think it is because of these challenges, I need to do this thing, I think it can really show my ability and wisdom, finally solve the problem, I have a sense of achievement.

(ii) "self-built logistics to improve the customer experience"

Moderator: Peace is to 1th stores a large sum of money, this money is mainly used in what aspects?

Gege: All the money, whether it's peace or Wal-Mart's, we're using a couple of major areas. One aspect is all of our supply chain facilities, such as our warehouse, now shop 1th has only 24000 square meters at the beginning of the year, now has to 220,000 square meters of warehouse. We rented a lot of warehouses and developed a lot of systems. All of our systems are developed by ourselves and we have nearly 300 it teams. We have developed dozens of modules, such as supplier management, inventory management, warehouse management, distribution management, marketing management, CRM, etc. This is an investment. There is the investment in talent, we recruit many of the industry's elite, the main investment in these areas.

Moderator: You just talked about the investment used to build warehouses, distribution. The process of the network supermarket, logistics cost is very high, have you ever considered, self-built logistics?

Gege: Now we actually have a lot of expansion in the self distribution. Like we have now in 30 cities, there are more than 100 sites. Next year we will have more, this year is still preparing, in fact, next year I think that we have developed a faster year. Because a lot of logistics facilities in the first half of this year are not in place, for example, we have more than 20,000 square meters earlier. So for almost four months, we are subject to logistics and storage capacity. There were a lot of customer orders came in, we can not answer, by noon at one or two o ' clock, we stopped accepting customer orders, which is a bottleneck for us at that time.

We have now crossed the threshold and already have 220,000 square meters of warehouse. But also in Beijing, Guangzhou everywhere, continue to expand. In Chengdu, Wuhan also built warehouses. In the future, years will also build warehouses in about 15 cities in China. In this way, let us have no bottleneck in logistics.

Just speaking of distribution, I think it is also a feature of us. Because in e-commerce, we found early a big bottleneck in the distribution above. Like the customer's complaint, 60% complaints are all related to our third party distribution.

For example, when they deliver goods, there is damage, loss, overflow, and delivery staff attitude is not very good and so on. These items accounted for more than 60% of our customer complaints, then we really unbearable, decided to customer experience, we do the distribution.

Moderator: In fact, the construction of logistics is also a comparison of the process of burning money, you think comparison, the construction of their own logistics or with Third-party logistics, these advantages are what shortcomings?

Gege: First, the advantages are obvious, customer experience a lot better, we from the construction of the logistics line of the first one weeks. All operating indicators are better than the three-party logistics, and much better. Including delivery rate, distribution success rate, customer satisfaction, lost goods, wrong goods, breakage rate and so on, are better than our three-party logistics. So from the customer experience, is a big step forward, this is our pleasure to see.

We also analyzed, found that if a site to achieve a certain degree of saturation, the distribution staff reached a certain amount, and then the distribution of a certain amount of time, our cost is lower than the three-party distribution. Based on this analysis, we built our own distribution site, and then we found that it was. Now almost half of the site, has been lower than the cost of the three-party logistics.

Moderator: It can be said that logistics is equivalent to a part of the industry, electrical business is a virtual thing. What do you think is the special demand of the electric dealer for logistics?

Gege: The distribution of electronic commerce, the demand is very high. First of all, the timeliness requirements are particularly high, because we are given to individual customers, each customer is not only to ask at which point of time before the delivery, sometimes also require a certain period of time to receive, this requirement is relatively high.

Moderator: Have you considered, now some international logistics companies, its customer experience is not bad, have you considered using international logistics companies?

Gege: We actually now own distribution, to meet our own about 70% of the distribution volume. The remaining 30% is now working with nearly 30 distributors. Because we can't cover all the areas ourselves, or rely on a lot of tripartite distribution to cooperate with them. On the one hand with them, with our strict KPI to assess them, and even directly help them to do training. We have done a lot of training for the three-party company. We send people to do the training, and even write the distribution staff to see the customer, what speed, what to say, and then what action and so on. For example, there are some basic rules that you can't smoke at a customer's doorstep or go to a customer's home in your shoes. Ask the customer to check the goods, the end to sign a bill and so on, thank customers. These are the rules we have set, to the three-party distribution of the people, and then ask them to follow our rules to do.

Moderator: Like in the logistics, including the self-built logistics, this very large part of the customer experience can be improved, like now I know, like the east of Daiju East He is also in the self-built logistics. Now all want to give customers a good experience, shop number 1th has also said that in the customer experience this piece, at least if the industry leader. What are you going to do to get ahead in any way? In the customer experience this piece?

Gege: Well, we spent a lot of effort on the customer experience. In fact, I and Majestic, the past 1.5 or so of time spent in the effort to do customer experience. We have to take the largest piece of time from the company, we can say in the customer experience.

We do a lot of customer interviews, invite customers to different groups, different categories of customers, do interviews, let them give us a lot of advice, suggestions. And what they want to experience. Then, we invite a third party neutral company to give us a customer experience survey, we set up the customer experience indicators. It is a difficult process to hook up the customer experience metrics with the salary and bonuses of all employees in the company.

It is a very difficult process for everyone to understand that the customer experience is related to the function of every post and every post. We light up for this meeting to open more than 10 times is less said, and then we start each position to develop evaluation indicators, with the customer experience hanging check indicators. All departments have indicators related to the customer experience, whether it be the product department or the marketing department, the operations department, etc.

(c) "The choice of safe Wal-Mart is the right decision"

Moderator: Recently some media reports that Ping an of 80 million U.S. dollars in real capital contribution, accounted for 1th stores 80% of the equity. He then 65 million dollars and transferred 20% of the shares to Wal-Mart. Is the news true?

Gege: First I do not know how the media these numbers come from, we signed a confidentiality agreement, I can not violate the confidentiality agreement. I still have to abide by our moral bottom line. Peace does make money, and in our early years, it helps us a lot and gives us a great deal of value. So this data is totally untrustworthy and I can tell you that it is not believable. Our value is much higher than this value this is a bit, and none of us sell the stock to anyone. Wal-Mart is to invest in Shop No. 1th, is optimistic about the 1th store, not either side is not optimistic about the number 1th store to transfer their own equity, this is absolutely fabricated. Wal-Mart to invest in his investment in the number 1th store, he is optimistic about shop 1th, particularly optimistic about our team. I hope to enter China's E-commerce through store No. 1th.

We choose to be safe and choose Wal-Mart, and now looking back, we have made the right decision. First of all, Ping An and Wal-Mart are among the best companies. Wal-Mart, the world's largest company, made the world's largest company and millions of employees in 60 years, and he's not going to do it by luck. There's a lot of value we can get from Wal-Mart.

Moderator: Now what is the mode of cooperation with Wal-Mart?

Gege: Our cooperation model is starting to unfold, and our team is also starting docking. Slowly start these cooperation, cooperation includes the sharing of supplier resources, supply chain resources, logistics resources sharing, brand resources sharing and so on.

Peace is also, we chose peace at that time, feel also made a very correct decision. Peace is a financial empire, can build a financial empire, I feel very not simple. And Ping An company very enterprising, we also from peace that got a lot of strategic value.

Moderator: Yes, in the process of enterprise financing, on the one hand, can bring a large number of current development needs of funds. Another part may also indeed exist a problem of dilution of equity. I see you on the blog, Ma Yun He is now Alibaba's leader level figure, including China's entire electric business leaders. You said that he was also only 5% of the controlling power.

Gege: Yes, first of all, you want to do a big business, how fast. We think that the time window of E-commerce in China, which means the whole competition, will be over in a few years. Can go to the front and go to the front, not to the front are eliminated.

Therefore, we believe that in such a short period of time, we must have a great deal of resources, including funds, including talents, to be able to develop rapidly. How do you get the resources to have these resources? You are definitely going to give up and we choose to give up some of our holdings. We think this thing is not important, make a career is the most important, first of all you do not make, you have 100% of the shares is not worth, so this is a little.

2nd, we think we choose investors at that time, looking for our investors like PE, VC and so on, less said there is 二、三十家. But what do I think we value? Is that in addition to money, can not get a lot of strategic value. I think we choose to be safe, choose Wal-Mart, I now look back, the first decision is correct. If I were to make a decision again, I would make that choice. Because they bring us a lot of strategic value. Help me enterprises in a short span of three years, to enter the first echelon of China's e-commerce. We are very satisfied that we can have a very healthy trend of development.

Moderator: Now shop 1th, it is the equivalent of ping an shares with Wal-Mart cooperation, and many aspects of cooperation. In peace this piece, because of peace it is a network of electrical dealers qualified, and then a lot of electric dealers are now in the competition drug network this piece. Will no. 1th store enter the electronic commerce of the medicine?

Gege: That's what we were doing, doing something now. Including geographical expansion, product expansion, we have done a lot of preparation for the future. Mobile Internet, mobile shopping, this is our investment, we are still investing in medicine and drugs, opened 1th Medical Network, 1th drug network, can be online diagnosis and treatment, electronic prescriptions, online sales of medicine, and we gradually will slowly introduce more services.

Ping An investment, we bought a chain of pharmacies, applied to this qualification, in China at that time, there are more than 10 companies, have the quality of this medicine. I think this is a barrier, medicine in China's online sales, but also a start. The scale is still small, but we think that these are good future directions, including mobile shopping.

Moderator: Now this one found some big electric dealer, also slowly try to intervene?

Gege: It must be like this, people find good things, will enter. So we never expect that we do things that no one else does, this is impossible.

Moderator: How about this profit?

Gege: I think the profits of the medicine is good, medicine in the future to have a great development, but also to see China's health reform. Including online to allow Medicare. Now the internet is not allowed to use health care, which is a big obstacle, health reform will give a lot of drug sales, will have a great impact in the future.

So on the one hand we see now, on the one hand we do a lot of the future. Including we have opened a No. 1th auto parts City, selling part of the auto accessories. We also have a lot of business, will gradually one by one of the launch.

Moderator: Like No. 1th Shop involved in so many areas, including fast sales goods, department stores, electronics, medicine, the higher the profit is which plate? Lower?

Gege: It's a combination, and we thought about it when we started designing this business model. A lot of category words, is a popular commodity, it is to bring flow, bring customer stickiness, attract customers over. Because what is our concept? is to achieve a one-stop purchase, really let the customer one-stop purchase, to enjoy one-stop shopping, one-stop service, let him stay at home, this is our complete concept.

But how to achieve this? Like to say one-stop purchase, you must have necessities YOUYANJIANGCU tea. Customers should need these things, if you don't have rice, you say how you call the supermarket. No oil is called the supermarket, these things have to have. But you say these things are not high profit? Certainly not high. For example, beverages, Coca-Cola, its profit is very low. But you say no cola, this is called the supermarket? So our category, in general, are such planning, some categories it is to bring popularity, some categories are to bring profits. Some goods with low profit, as I have just given the example drink, and some 3C digital, the profit is very low. But some profits are very high, such as household goods, health products and so on, clothing is a higher profit.

(iv) Store 1th to enter the virtual supermarket in the next three years to look forward to the development of the electric business

Compere: I see now 1th shop in the subway station also has the advertisement, a big banner above all is the commodity. A very cool idea, how did you first think of it?

Gege: This is called the virtual supermarket, because now the whole mobile phone shopping, China is still just beginning, still very small. But we think it will have great potential in the future, so we are willing to invest in this, so we developed the Handheld No. 1th store. Handheld 1th is the mobile client, in the iphone system, WINDOW7 system, Android system, we all have. And there are tens of thousands of downloads every day, I think this is very gratifying.

As we have seen on Weibo, the concept of a South Korean Tesco is doing this kind of virtual supermarket, which I think is very good. Our business is a culture that sees new things, encourages innovation, and encourages to try something that everyone thinks is good. This thing, at that time on the Internet, see the next day, the team organized, everyone meeting said, this thing good, we have to try anyway. Even if the future is wrong, even if the failure, we also know that this thing is not. So we immediately make the decision to do, and in a short span of three weeks, to do it all down, really launched, this is the performance of the company's executive power.

Moderator: Now customers are already able to download the client, the bar code can be taken to shopping?

Gege: Yes. Now it's really cool, in fact you can come to our, we have a sample, in our main conference room there is a large commercial wall. And in Beijing we have just launched a very shocking virtual wall, 27 meters long, all of this form of advertising. It looks like a real shelf, and we think it's really cool. Because it gives us the value, not only the customers to see after the purchase, I think it has a good market effect. First it looks like a real supermarket, and it turns out to be a virtual one. And then connected with E-commerce, and mobile phone.

So this effect has three aspects, the first is the brand effect, the second mobile phone shopping promotion, the third direct conversion to buy, increased sales. I think from three aspects, we think that we have reached the original idea.

Moderator: Now there are some people preach the electric business of the winter, that is, the upstream of the capital has been frozen, and then have to reserve the winter, what do you think of this matter?

Gege: This is not without reason, it is true that there are many investors are watching, the capital market is not optimistic. I think it's more of a chance for us.

Moderator: How do you think of the electric business industry, the next three years of development?

Gege: Very optimistic. You can see the development of E-commerce itself, or very fast, it's growing, you can hardly see an industry, you could double the growth, this is very rare. I think we are all very fortunate to be involved in this rapid development of the torrent, we have chosen a right industry, the right business model to do.

I think this is, I always feel very lucky. From China's e-commerce demand there, customers are more and more, Internet users are growing faster. Because of the advent of e-commerce, consumers have stimulated the desire to buy. Because the integrity of the industry as a whole, is due to the emergence of E-commerce, customer trust increased. And because of the scale effect, cost reduction, to bring more benefits to customers.

So the development of the whole industry is very fast, very healthy, I also very optimistic about the demand in this place. I can only say that we are very lucky.