Chapter 655 – Selling cards for money Part 3 of 4
Shopping cards as gifts?
After Feng Yu said this, everyone was confused. These shopping cards were just like shopping vouchers. How can these cards be given out as gifts? What’s the use of giving out these cards as gifts? It will be more direct to give cash.
Fu Guangzheng had stayed in China for quite some time. He knew that although the Chinese did not have the culture of exchanging gifts, many officials like to accept gifts. The gift they preferred most were cash.
Fu Guangzheng’s eyes brighten up. Shopping Cards = Cash!
That’s right. Shopping cards can be used to purchase many things, including refrigerators, TVs, VCD players, etc. It’s almost the same as cash.
Feng Yu saw Fu Guangzheng’s expression, and he smiled. “You understand now?”
“Yes. This gift is mainly to target the leaders?”
Feng Yu nodded. “That’s right. But it is not only limited to leaders. It includes parents, in-laws, future in-laws, elders, or someone who had helped you before. During festivals, choosing gifts is always a big headache. If you bought the wrong gift, you will waste your money and not get any favors in return. But if you give our shopping cards as a gift, the other party can use it to buy whatever he needs.”
“Also, we can set an expiry date on the shopping cards. For instance, 3 months. If this card is not utilized in 3 months, the credit in it will be gone. This way, people who received this card will be in a hurry to spend it. Don’t think that this will lower their purchasing power. People will not use these shopping cards to buy their groceries. They will use it to buy big ticket items. Those big tickets items are not your daily necessities like toilet rolls or toothbrushes. If they want to buy these things, they will come back again to buy.”
“Most importantly, when people buy things with the cards, they will try to fully utilize the credits in it. They know that if they do not use all the credits in it, the credits cannot be used after the expiry date. So, they will either buy more products or choose something that matches the amount of the card. Most of the time, the total of their purchase will be more than the value of the cards. That means these people will not only use the shopping cards, they will also need to spend some cash.”
Tai Hua Supermarket’s higher management staffs were in awe of Feng Yu. None of them had thought about this before. The Fu Family’s staffs were embarrassed. They had been in the supermarket business for so many years, and yet they were not aware of this strategy. Even Feng Yu, a novice in this industry, could come up with this idea. They had wasted all their years in this industry!
“Manager Feng, what dominations of shopping cards should we introduce?”
“500, 1,000, 3,000, 5,000 and 10,000 RMB. There will be 5 different values of shopping cards. 500 RMB type are the ones you all are talking about. Companies will buy them to give to their employees as benefits or rewards. Of course, people can also buy them for their parents or elders. When people made some money and want to give to their parents, their parents will usually not spend the money on themselves. But if it is a shopping card, the value in it be gone in 3 months, the parents will be forced to spend. The 1,000 value cards are also the same. People will need to give some gifts to their superiors in their company or return some favors. The 3,000, 5,000, and 10,000 RMB cards are mainly used as gifts to leaders or officials. The good thing about shopping cards is there are no records of the person who bought them, and there is no pin or name on the card. With this card in hand, you can just use it.”
“This is the benefit of the card? What if the card is lost?” Fu Guangwei asked.
“It’s their loss if they misplace their cards. It has nothing to do with us. In China, there is a department Commission for Discipline Inspection. It is the same as Hong Kong’s Independent Commission Against Corruption. They will conduct random checks on government officials’ banks and finances. The value of this shopping card cannot be deposit into the banks. Even if they were caught with this card, they could just say they had won in lucky draws or picked it up on the streets. The officials will feel safer to accept them.”
Corruption had always been a problem. Even before Feng Yu came back to this life, corruption still exists in China. This was an issue in every country. Feng Yu only wanted to change the practice of giving cash into giving shopping cards.
“Brother Feng, how much shopping cards do you think we will sell?” Li Zekai asked.
“It will definitely be much higher than the membership cards!”
In Feng Yu’s previous life, he had a friend that works in Carrefour. During festive seasons, Carrefour would introduce these shopping cards, and every outlet sells at least a few hundred million worths of cards! During the mid-autumn and Lunar New Year, some branches even sold more than 1 billion RMB of shopping cards. Later, the government issued a restriction on these shopping cards to limit the value of the cards. But every month, hundreds of millions worth of shopping cards were still sold.
The economy now was not as good as 10 or 20 years later. But Feng Yu knew that if they market the cards right, every branch should be able to sell at least 20 million RMB. The 5,000 and 10,000 RMB cards will also be selling well.
20 branches should be able to raise 500 million RMB from these shopping cards. It will be teachers’ day soon, and after that, it will be the Mid-autumn festival and the national day holidays. These were the peak season for shopping cards.
With the next 6 months, there is the New Year day, and the Lunar New Year. The amount raised from selling these shopping cards will be an enormous figure.
Although this shopping card must still be used at the supermarkets, it will stimulate the sales of the supermarkets and they will able to raise cash fast.
Most importantly, it will create a false perception of good business, and they could use this to loan more money from the banks.
With the loans and profits, it will not be a problem in raising over a billion RMB in the next 6 months. That means they could open up another 20 branches.
This way, they will be able to set up branches in almost all provinces. Aside from those undeveloped cities, the rest of the cities will have 2 to 3 branches.
Tai Hua Supermarket Corporation will be able to build their branches at the best locations in every city. They do not need to worry about Carrefour or Walmart getting the good places before them. They also do not need to worry about those smaller supermarkets who tried to imitate them. Tai Hua Supermarket Corporation will be China’s number one supermarket corporation. They might even be one of the world’s top 5 supermarket brands in the future.
However, Tai Hua Supermarket Corporation still needs to be wary of those trend followers. Everyone knew that Walmart held the number one spot Fortune 500 company ranking for several years. But in the future, some Fortune 500 companies were in the retail industry, and their operation model was like Walmart.
Even for a strong company like Walmart, they also got to face competitors. Some of those competitors did even better than Walmart in terms of their returns, and their annual profits were even higher than Walmart.
Being the first to develop in the industry does not mean that you will own all the market share. In Feng Yu’s previous life, there were also many supermarket chains in China. They were all competitors.
Tai Hua Supermarket’s strategy now was to take up all the prime locations to prevent those trend followers from making profits. This will stop their growth!