Since when is $580M a useless number?
It proves one thing. The new business model is working (see below).
Remember when we were enthused about a $107M run rate?
The current run rate of gross sales generated within by the chain is over 800 RMB, or $107 million USD.
Now it's $580M USD.
True, we don't know the exact company-revenue percentage. Is it a low-margin U.S. supermarket model of 2-3%? Or is it edging into the higher-tech land of a distributor's 10% (or higher)? Hopefully they're reaching the point where they're becoming an adult company and feel confident in giving us an audit.
Good Life China (GLCC) to Convert to New Business Model by Year's End
Oct. 20, 2008
BEIJING, Oct 20, 2008 /PRNewswire-FirstCall via COMTEX/ -- Chairman Dongmei Jia of Good Life Corporation www.goodlifechina.com (GLCC.PK) announced that conversion to the new business model should be completed by end of the 4th quarter.
As the Company has continued to experience geometric growth, management has realized that the point is approaching at which the Company will have to revamp and enlarge its head office management group, and the organization will gradually suffer from typically, large company 'bloat'.
Chaiman Jia notes, "We have run lean, and focused. We were starting to see some of the potential downside of our incredible growth pattern. No matter how you slice it, more people means more meetings, more coordination between different departments, and more fat around the 'corporate middle'.
We have grown this quickly based on our software development capabilities, that have allowed to bring new suppliers and franchisees on line and get them fully productive in a very short time. As our retail channel management platform has grown in sophistication, we realize there if we remove ourselves from the middle of the wholesale distribution channel, we can connect suppliers to retailers directly, and act as a pipeline for which we charge fees for the goods flowing through the pipe.
Along the same lines of thinking, providing turnkey franchise systems is time and resource intensive. We are stripping down the model to a membership approach. Retailers will purchase membership, typically for 3 years, and ongoing monthly platform access fees. We see greater revenue potential and lower expenses with this new model. Our pilot project has returned exceptional results so far.
Suppliers will be charged to purchase our supply side software package, and pay for logistics and warehousing. We expect that the supply side will account for a majority of our revenues under this new approach, and most particularly, logistics services.
Taking this logic further, it makes good sense to split-out the logistics services division into a separate company, as this will be a high-value, high growth and high profitability source of revenue, and we want to recognize fair market value for it in the investment marketplace."
The Company will be releasing additional updates about this business model conversion in the very near future. We will also be releasing new and updated pictures of our operations on our corporate web site shortly, which is something that our shareholders have been asking for.
