Chapter 36: Chapter 36 Price War

By mid-July, Capital City was still sweltering.

Following Tengsheng Fruit’s 11 million investment concentrated in Shijingshan, the news naturally spread within the fruit circles.

Actually, the fruit business is quite grueling.

The industry generally attracts several types of people.

Like Chen Pingsheng and others who have been selling fruit on the streets for many years.

Also, there are mostly husband-and-wife stores hustling from dawn till dusk to make a living.

Another type is like Nongguo Garden which has become sizable, beginning to evolve in all aspects toward a formal business.

That is, moving towards a real chain model.

Chen Pingsheng himself was also racing down this path.

Eight shops opened simultaneously on the 5th.

Apart from causing a huge sensation in the fruit circles, it still had not attracted significant attention from the likes of Nongguo Garden, the original fruit leader in Shijingshan.

The turning point of the event occurred three days later, when Tengsheng Fruit officially opened.

Not to mention others, the hottest-selling fruit in summer is undoubtedly the watermelon.

Watermelons come in many varieties, with the two most typical being seedless and seeded watermelons.

Before Chen Pingsheng entered, the average price of seedless melons in Shijingshan was about 3.50 yuan per catty.

Everyone sold at this price, and the cheapest wouldn’t go below three yuan.

After he entered, he directly dropped the price of seedless watermelons to 1.68 yuan per catty.

The cost price is 1.50 yuan.

The market price for seeded watermelons in Shijingshan was about 2 yuan.

Chen Pingsheng slashed it to 0.90 yuan in one go.

The purchase price was 0.80 yuan.

All other fruits were also sold right at the buying price, and his store was originally large, opening five more at the same time.

Suddenly pulling the selling price of fruits to the cost line was indeed a violation of the whole Shijingshan fruit taboo.

It’s just that now it’s a legal society; a few years ago, such actions would surely get his store smashed.

Nowadays, internet companies subsidize billions just to seize the traditional markets.

He was merely emulating them.

The low-price effect was quite significant; Tengsheng Fruit saw a surge in foot traffic just three days after opening.

This caused neighboring Nongguo Garden and a series of mom-and-pop shops much grievance.

Logically speaking, with his store being so large, the rent would not be less than fifty or sixty thousand a month.

With such prices, it was clear he was using losses to capture the market.

Some stores located next to him couldn’t last even a few days.

A fruit as conspicuous as the watermelon, surely had to lower its price.

Otherwise, not a single one would sell.

Later came the durians and a series of everyday fruits, only to find that lowering prices still didn’t bring in customers.

After a week of silence, Nongguo Garden also decisively began to lower prices.

They had stores not just in Shijingshan but throughout Capital City.

Ranked among the top ten fruit magnates of Capital City.

A direct price war between the number one and number two would only result in the demise of those following them, like the third and fourth places.

Stores that couldn’t hold on either had to be sold off or switch to other businesses.

The fruit business isn’t like the internet; it serves customers within a 500 meters to 1,000 meters range.

In this range, if there is a large fruit supermarket with low prices, good quality, and comprehensive inventory.

It is absolutely a devastating blow to those small shops.

Swallowing them like a whale.

Especially since within this range, Tengsheng and Nongguo Garden went head-to-head.

Customers always compare; if his price is lower today, at most, they’ll buy from you a couple of times then switch to him.

If you lower your price tomorrow, they may come back in a few days.

This process, it’s all about who can hold out longer.

That is, who has more capital.

Chen Pingsheng naturally didn’t care, as he had already formed a stable and mature strategy.

Just waiting for customers to get accustomed, then directly launching a recharge promotion.

With the scale of these five stores currently, if he starts recharging simultaneously, he estimates he could bring in at least twenty to thirty million in a month.

By then, he could simply double this money at random and open thirty to fifty more community stores directly.

Even if it didn’t completely eliminate Nongguo Garden, it could still pull it down from its top position in Shijingshan.

By then, he would also count as a prominent fruit merchant in Capital City.

The current price war between the two companies is greatly beneficial to the customers.

It’s just like the taxi market with Didi and Kuaidi.

One backed by Penguin, the other supported by Alibaba.

The two companies fiercely finance their operations to outbid each other, one day subsidizing drivers and users with a hundred million.

Tomorrow I could raise two hundred million for subsidies, though the process is a bit brutal, it is greatly beneficial for both customers and drivers.

First, customers can get a ride for minimal cost, and second, drivers don’t have to give up too much to the platform.

Instead, they have various kinds of subsidies which high up their income.

The least favorable scenario is actually ending up with just one company.

One company could set the game rules then, at that point, customers and drivers can just be easily manipulated.

Many people should have a deep understanding of this.

Chen Pingsheng himself is no different, he couldn’t possibly continue to sell at cost.

In the end, it’s all about making money.

It’s just a process after all.

Five stores in Shijingshan started up smoothly, and the price war was raging.

He wasn’t worried about anything, after all, Old Guo and his team would provide ample funding.

Put simply, payments are reconciled every three months.

Fighting the price war with the wholesalers’ money, earning bank interest with his own money.

How good is that.

After all, Old Guo had already seen through this scheme, just waiting for a payback in three months, not to mention earning a year’s worth of money.

Now just work hard and it’s done.

By August, with the customer base of the five stores stabilized above five hundred, Chen Pingsheng was still fiercely engaging in the price war.

In another two months, it would be the National Day.

With five million in his account, he couldn’t just keep it there; he needed to put it to use.

Towards drama investments, Yang Jiancheng went to shoot “Legend of Lu Zhen” and for now, there’s no news.

The high-end beauty project he wanted to do hadn’t found the right person to lead it either.

This money, it’s still more reliable to invest it in the fruit stores.

This time, he would not go too big, just focusing on opening community stores of one to two hundred square meters.

An investment of about five hundred thousand per store was the most appropriate.

Once the top-up activities of these five stores were done, this area could immediately catch up.

To ensure that he would have significant income in the coming months.

Five million was only enough for ten stores, so he would start by opening these stores.

This batch of stores would open in August, engage in customer acquisition in September and October, just in time to fill the top-up gap in November.

The plan was good, so he acted on it right away.

As Tengsheng Fruit continued to expand, more and more people were being hired at the headquarters.

Not only did they have a marketing department, a finance department, but now also a logistics department which included drivers and miscellaneous tasks.

At this step, the headquarter really started to take shape on a true scale.

Chen Pingsheng, the boss, was also increasingly looking like a boss.

Overall, he was still building his steps steadily.

In July, he battled Nongguo Garden, and in August, he worked on community stores.

By September, he would focus solely on building headquarters.

That is, to devise a set of headquarters operating standards.

From then on, everyone must follow established rules to operate, and he would still check Mr. Ma’s speeches daily.

In his eyes, Mr. Ma was definitely a strategic genius in the truest sense.

As for the god of Huaxia commerce, he felt that only Li Ka-shing from Xiangjiang deserved that title.

This individual was undeniably the most underestimated richest man in Asia.

His business insights were enough for him to learn for a lifetime.

For now, he was taking these two as his learning exemplars.