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Our real business model is MUJI in the technology industry, we are a retail brand.
I, Black Horse News, July 9th, at the external expert seminar held by Xiaomi Technology, the founder and CEO Lei Jun spent three hours talking about why he founded Xiaomi, how to make Xiaomi, Xiaomi
The status quo, and where Xiaomi will go.
Lei Jun bluntly said that Xiaomi was in a trough recently. This year, Xiaomi has a three-month supply chain that is “extremely out of stockâ€, but he expects the rebound to begin immediately. In the next year, Xiaomi’s product sales will improve and the business model will be improved. Become a "Muji of the technology industry."
Lei Jun said that in the past five years, Xiaomi Technology has been doing e-commerce Xiaomi.com, but it will be the home of Xiaomi in the next five years. Like MUJI, there are only 50 to 100 items in the store, and 50 to 100 items to conquer consumers.
The goal of Xiaomi Home is 250 square meters per store and monthly sales of 50 million yuan. Now the highest store can do 1.43 million yuan a day.
The following is a 3-hour shared record of Lei Jun at the closed-door exchange meeting of Xiaomi:
"My dream is a bit exaggerated, I want to change the image of Chinese products in the eyes of ordinary people."
First of all, let me talk to you about why I should dry Xiaomi.
After the listing of Jinshan in 2007, I will withdraw from the rivers and lakes. Every day I sleep and sleep until I wake up naturally. I never want to do anything about the third day. Everything is only about today and tomorrow, because I am too tired. I stayed in this for three or four years, until I was 40 years old, and suddenly I felt that people could not live like this for a lifetime. I still have a little pursuit and dreams. What if I realized it?
My dream is a bit exaggerated. I want to change the image of Chinese products in the eyes of ordinary people and let the people use high-quality products. In my eyes, domestic products generally have poor appearance, poor quality and high prices. But Americans are six times more expensive than ours. All things are only half the price we have, and the quality is good and safe.
In 2010, just as I was financially free, many ideas could be done. I am doing Xiaomi in this big background. After I have done the Internet, I look back. I think that the Internet + application in the traditional industry, the core is two points: one is the user experience, and the other is to use information technology to improve efficiency.
Efficiency is a big problem. Many people may say that this has something to do with efficiency. We can do high-end. In fact, behind this is efficiency.
In the case of shirts, does any department store shirt seem to be below 400? I still know about the shirt industry. The best shirt manufacturing cost is 125 pieces. The difference is 15 yuan. The difference is that the sleeves are shorter and the bottom is shorter. One pull will definitely fall out.
Why do you have 125 to do to 15? Because he bought 400 yuan in the store, 125 shirts only earned three times, and the channel and cost of sales are not enough. However, the shirt's fixed rate is calculated at 10 times, and it can only force him to do a shirt for 40 yuan.
If we have such a problem, we say it is business ethics. I think it is useless to blame morally. We must first analyze what is the most essential thing behind its business. I found that it was actually a question of efficiency. I have been doing the Internet for so many years and I am thinking about how to improve this situation.
Efficient evolution from Wal-Mart to Costco
So I really spent some time doing a little research, just thinking about how American business evolved.
The gross profit of store retail in the United States 65 years ago was 45%, which is similar to ours. A bottle of water in the store basically has to double to earn money, plus a certain loss. When the information technology did not start, the United States was also like this. The property was expensive and the labor was expensive. It was impossible to maintain the store without doubling it, so it was not expensive.
Later, there was Wal-Mart, which we are familiar with, and put forward a slogan called "everyday low price." That is to say, criticizing Xiaomi on the Internet today, I feel very Low. Wal-Mart's low price is a reverse mechanism. It does not earn 45%, earns 22.5%, and earns half of the gross profit. How to do it, it has three major innovations:
Innovation one, the store is not open in the city center. The iron law of the retail industry is called the first place, but as long as it is good and cheap, it will go to the suburbs.
Innovation 2, it is directly rebuilt by warehouse.
Innovation 3, the introduction of a large number of IT technology. This set down, in the early 1980s, Wal-Mart ranked first in the world. In fact, there is no flaw behind it. If it is summarized, it is efficiency.
But 25 years ago, another group of "crazy" appeared, saying that Wal-Mart's efficiency is still not high enough. They said that there were 1 million things going to the suburb of Wal-Mart. They went in and turned around and didn't know what to buy. It was not efficient. Can you face the middle class and let half of the middle class spend on us? He thinks that it is only for the middle class. Too rich and too poor are not their customers. This is the same as our Internet theory. It is the precise customer positioning, and the service will improve the efficiency of this group.
This company is Costco. When it was founded, the company said that we can only earn 1% of anything in this supermarket, up to 14%, if 14% requires the approval of the CEO and the board of directors. In the past 25 years, it has never been approved.
This is exactly the opposite of what is said in the business school. Business schools believe that the higher the gross profit margin, the better. In fact, the higher the gross profit is the enemy of the user, and the average gross profit margin of Costco is only 6.5%. This is a true Internet spirit company, the Internet we talked about today. In fact, Costco has already done it.
Costco, earning half of the money in the middle class of the US
How crazy are consumers about Costco?
I went to the United States as a senior executive in Jinshan, and when I drove a plane, Dr. Zhang Hongjiang rented a car and went straight to Costco. When I came back, I blew it for a long time. After he was awkward, except for all my nine executives.
As a result, everyone came back at night and said that things are so good, I will ask how good. In fact, one thing is cheap. Everything is cheaper than domestic ones, only one tenth, a bunch of things in Beijing won more than 9,000, Costco only 900 yuan.
So I went to Costco early the next morning, and stood for 15 minutes. I said I understood it, just like what I thought!
I think it is essentially the same as the model I used to do in the past. In fact, there are so few:
First, select items and only sell 4,000 SKUs. You need to know at least hundreds of thousands of Wal-Marts. How much is Costco selected? His partner said that all the things I sold were chosen by me. I used them at home, and I thought I would sell them. For example, there are two kinds of TV, but the quality and experience are very good. Because the variety sold is small, it is desperately pressing the unit price with the upstream manufacturers, adding 6% directly to the final store, and I can't wait for the wholesale price to be much cheaper.
Second, there must be surprises. It’s just that you have one thing for every 10 things: you have such a good thing! So everyone becomes a Costco Fans.
I was investigating the return of our company on the spot. Some people said that I only bought things at Costco in my life, and Costco didn't go to other stores. Its 6.5% gross profit originally did not make money, but the United States has a very good tipping culture. He said that everyone gives tips, that is, member income. Now its annual membership income is 2 billion US dollars, so the gross profit margin is 11%.
Third, Internet finance. Calling its users to use Costco's credit card, it can be divided into one or two points, the profit actually comes mainly from membership fees and credit cards.
Fourth, there are very few waiters. Save labor costs, retail prices are cheaper than wholesale.
Where is the Costco model difficult? Because it does not make money, it does not melt money. In the case of a financial crisis, it was almost closed. The company sold it to a VC. Today, the founder has no equity in the company.
But the founder is still managing the company. His dream is to be a great company. He doesn't care if the company is his own. It took him 15 years to convince the American people of Costco, because everyone feels that there is no business, you must be blind. Into Costco, you don't have to pick, don't look at the price, just close your eyes and buy it. This is a kind of "belief."
What Xiaomi wants to do is actually the same. First, do something well. Second, improve efficiency and very low gross margin.
This is the biggest motivation for me to do Xiaomi, to do things well.
The three companies that won the bid when they founded Xiaomi
Found Xiaomi, we have three benchmark companies. The first one, just mentioned Costco; the second one, Tong Ren Tang (31.150, -0.43, -1.36%), selected real materials, built a century-old shop, in essence, is the craftsman spirit; the third, sea fishing Learn word of mouth and kill all marketing.
I am a bit like this person. Today, I will forget it. I don’t see everyone. The fact that I have to use steel in 15 years is hard, indicating that we have really done something different. I said that my contribution to Chinese society may be able to imprint my epitaph when I am dead. I changed China and at least changed China's manufacturing industry. This is my ideal of life. I don't want to see anyone today. I just take things seriously and I believe that time can prove everything.
I don't think China can talk about theory. You have to be like a squid. When you go in and stir it, they will live. We went in and stirred up an industry to bring an industry. Of course, we were criticized by countless people, saying that we are Hulai, no, we are going to activate the entire industry in this way.
First of all, we made a mobile phone because the mobile Internet era began. Xiaomi entered the mobile phone market four and a half years ago and became China's number one in a year and a half. At present, Xiaomi's biggest contribution is to promote the progress of the entire mobile phone industry. The better the mobile phone is, the lower the overall price is, which has rapidly increased the penetration rate of Chinese smartphones.
Another example is the power strip, the market sells the best, and it is the stacking line. It is the craft of 30 years ago. Even the packaging is made of plastic bags, and I don’t know where the ingenuity is. You look at the patch panel made by Xiaomi. Have you seen a patch panel packaged like this? I gave it to someone else. At first, everyone said that this is not an Apple watch, because the packaging is too beautiful. Open it, bring three high-speed USB ports, 49 bucks, and do this for a year and a half.
We are very serious, really when the artworks are doing, and by making achievements to promote the progress of the industry. We have entered a lot of industries and have also screamed. For this, I told my internal colleagues that the beggars said that our products are not good enough. If they can’t beat others, they will not move. I am I hope to make the product to the extreme.
“Let every Chinese enjoy the fun of technologyâ€
Sometimes we don't know how to express Xiaomi. Sometimes we don't know what Xiaomi is doing. We made mobile phones, mobile power supplies, air purifiers, rice cookers, electric fans, and felt very unfocused. In fact, after looking at Xiaomi from a different angle, you will feel that this company is extremely focused.
Our vision is to enable every Chinese to enjoy the fun of technology, enjoy the latest technology and ideas with very cheap money, and even let everyone in the world enjoy the fun of technology. This is just the first meaning we want to express.
The second layer we want to represent the progress made in China. How to do it? It is to enter 100 industries. What you see is the product. In fact, Xiaomi is not a product, but a work of art.
We have been doing e-commerce Xiaomi.com for the past 5 years. We will be working for Xiaomi's home in the next 5 years. Like MUJI, there are only 50 to 100 items in the store, and 50 to 100 items to conquer consumers.
We are actually extremely focused. The air purifier has only two models for two years. The first model is no longer sold. The water purifier is only one, and the electric fan is also, so we only need 50 to 100 products. , 250 square meters.
The average single store in China's home appliance stores is 5,000 square meters, and the average single store sales should be more than 40 million yuan. The goal of Xiaomi Home is 250 square meters, the average single store is 50 million, and the highest day is now 1.43 million. Xiaomi’s home is a sea of ​​people during non-working hours.
I am currently opening 5 to 10 stores a month, and opening 1,000 stores in 3 to 4 years. It may be a retail price of 400 to 50 billion. I don’t want to join or list. I ask 100% to manage it myself, because only like I can do this thing with such a hard and pure heart.
Everyone must understand that our real business model is MUJI in the technology industry, we are a retail brand. Everyone thinks about how many things there are in MUJI. It also does refrigerators, washing machines, suitcases or something. Business model We are branded products and then retail, which is a vertically integrated model.
Therefore, on this retail platform, we need 50 to 100 kinds of goods to pull passenger traffic. If only the mobile phone traffic is insufficient, the insufficient traffic will cause us to sell three thousand or five thousand dollars for the same thing as the traditional manufacturers. Very high, this is not the future of China. This is what I said before. China's future is an efficient revolution.
"Millet wants to avoid becoming a big company"
Finally, the third layer of meaning, Xiaomi is not a charity, even if Lei Jun does not want to make money, but these colleagues, what do these families do.
Thanks to the great Internet for inventing the long tail theory, so our core benefits will come from the customer's tip and the income of the Internet. We have published a few figures for the income of the Internet. Now we have 9 million meters of self-owned apps. There are 43 of the monthly actives of over 10 million. This is definitely not a small income. Next year, I have the opportunity to see a net profit of 10 billion.
I would like to talk about the model of Xiaomi. Now it is 8,500 people. Then we have a total of 220 companies that hold shares and participate in shares. This is a huge ecology.
Behind us is the two-wheel drive of industry plus finance. We use investment to avoid Xiaomi becoming a big company. How do our eco-chain products do it? For example, if I want to make a patch panel, I will find the most cattle people in the world, convince you to start a business, I will invest in small shares, you will make a big share, your product will meet the millet requirements, then I will help you enter My millet channel.
I said that this may not be enough to convince everyone how much we have done. We have invested in 55 companies in this way. In fact, it is 55 departments in large companies. Only 55 of these 55 companies are managed, almost from idea. The whole process of structure, software and hardware is a huge incubator. If I have to work in fifty or sixty departments, I will be exhausted. I have to turn them all into bosses, so Xiaomi is a fleet.
Like now, the millet bracelet is very large, the world's second smart wearable device manufacturer, the balance car Nanning Bo world first, purple rice to do the charging treasure is also the world's largest scale It has become a huge scale in two or three years.
This model is adopted because I don't want to become a big company, big companies are inefficient, let them all become bosses, directly participate in market competition, we pay for ideas, we help. First of all, you succeed, followed by the success of our millet. And enter 100 industries and activate 100 industries.
These 55 companies are called intelligent hardware ecosystems, and many are a variety of services. For example, we use a little bit of information we share, for example, the top three video of the video class, Youqiyi, we are all shareholders, including the use of Thunder, we are also shareholders.
So in the field of IOT, we are actually quite strong, we solve it end-to-end. The entire Xiaomi mobile phone MIUI itself is an Internet platform. To carry a lot of content, we will pursue cooperation and win-win.
This time period is one of our bottoms. This year we have a three-month supply chain that is extremely out of stock, and there are many negative reports, but I think the rebound will start soon.
Whether it is product sales, business scale, or business model improvement, including the various technologies accumulated by Xiaomi in the past two years, in the next six months to one year, a brand new millet will be displayed.
Because in the past we have done a lot of innovation, but they have been concealed under our disruptive business model, or our innovation is not enough to impress everyone, but in the next year, I may show a lot of completely different things. I have enough confidence.
I saw Feng Xiaogang last time. He said that you don't need to introduce Xiaomi. Almost everything in our family is Xiaomi. When all the things in the house are millet, everyone's understanding of Xiaomi may be different from the present.
My overall goal is to make the product the ultimate in Xiaomi. When the user can be armed with Xiaomi, I know how strong we are. This is also an exciting new beginning for Xiaomi.
Lei Jun admits that Xiaomi is in a trough: but changed China to avoid becoming a big company
Lei Jun acknowledged that Xiaomi has recently been in the trough and wants to be "the MUJI of the technology industry"