Turn into a small lane next to the exit from Taipei metro’s Wanlong Station and, in the distance, there is an eye-catching white-and-green sign for the iVegan Supermarket. Located in the basement of a row of old houses, the store is filled with verdant veggies and rainbow-colored fruits.
“I opened the supermarket because I feel that vegetarians are like second-class citizens. When we shop, we often can’t be sure what kinds of ingredients are in the foods and whether they are really vegetarian. So I decided to open a supermarket where we don’t have to constantly study the labels on the food we buy.” Lai said, adding that it is very tiring to read labels when one grows old.
“With two or three founders, plus our inner and outer circles of friends, we held a launch meeting,” said Lai, who is a member of the ruling Kuomintang. “These people have different faiths and political affiliations, but all share the common goal of loving and protecting the earth, as well as loving and protecting animals.
Enjoying the fruits of his labor
Tseng Chun-lin, one of the supermarket’s shareholders, said “iVegan is the first of its kind, and there is no store operating a similar model anywhere in Taiwan. As for how we are going to manage it, we turned it over to Lai, because we knew that with his experience he could get the job done.”
It turns out that the reason the stockholders chose Lai as manager was his credentials as a vegetarian and 20 years of experience in the produce business. He was the pioneer of the fruit specialty store operating model that can now be seen everywhere on streets of Taiwan.
At his peak, Lai, aka The Fruit King of Taiwan, owned eight stores and 13 fruit stands, with annual revenues up to NT$500 million (US$16.1 million).
According to Lai, at the end of 1981 if one wanted to buy low-cost fruit, one had to get into a wholesale market. But to gain entry, one needed certification as a wholesale or retail business, and also had to be able to buy at least 600 kilograms of fruit per day. “My mother ran a fruit and vegetable stand in a traditional market, and such a little stand could never absorb so much stock in one go,” Lai said.
Not wanting to end up a small trader like his mother, Lai set his mind to working out how to sell 600 kilograms of product. “I rented a 15-ton truck and in the middle of the night drove it filled with watermelons to the park next to the market,” he said. “While I was unloading the fruit, I slipped and smashed a case, so the only thing I could do was give the contents away for free to the elderly people who came to the park in the early morning to exercise.”
Unexpectedly, the watermelon proved hugely popular and the seniors asked him where they could buy some. At that time Lai’s cost was NT$24 dollars for a watermelon weighing 2.4 kilograms. “The retail cost for my mother was NT$64, so to make a profit she had to sell at NT$90, whereas I could sell at NT$50.” He moved half a truckload of his NT$50 watermelons in a flash. “I earned back almost all my costs in that one day.”
With one eye firmly set on big business, Lai had to establish sales channels capable of handling large volumes of fruit. As a result, Lai went from a roadside truck into fruit specialty shops, creating a new retailing format in Taiwan.
Lai’s first shop Making One Dollar opened in Dongmen Market in Taipei City. He did everything himself, traveling one every two days to fruit-growing areas to bring back product. “I would go out in the middle of the night and come back to open the shop first thing in the morning. I only slept every other day, and even then only for four or five hours.” But he did not feel the least bit tired, and in fact looks back proudly on those days. “I would return after buying my fruit and see everyone else heading out for the day to earn their money, whereas I had already earned mine and was on the way home.” By continuing in this way Lai eventually had eight stores and 13 stands.
Compared with his competitors, the key reason why Lai’s chain could keep growing outlet after outlet, with each one turning a profit, is that he understood how consumers think.
“Say for example I had several boxes of wax apples at a cost of NT$30 per 600 grams. When I opened the first box, I sold them at NT$35, and the second box at NT$45. Customers who came early saw that I charged other people more, so they invariably became my core customers, and even spread the news by word-of-mouth.”
As another example, during peak production season for oranges, if the produce company set the price at NT$25 per 600 grams, Lai would sell at NT$15, quickly attracting a crowd. When the market price eventually fell to NT$8, Lai still sold at NT$15. “No matter what, I always stayed at the same price, because my customers were used to buying at that price.”
Developing a unique point-of-sale system
Having accumulated extensive experience in the produce business, Lai decided to take on the challenge of high-volume stores. “At that time, the fresh produce departments of supermarkets and high-volume stores always operated at a loss, but because my prices for acquiring produce were lower, I could create a profit margin for the big stores,” he said. For a time, Lai was even the produce supplier for Makro, Taiwan’s earliest hypermart.
Lai also noticed that supermarkets, to make things easier at the checkout counter, would prepackage the fruit and put a price tag on it. But after a few hours, produce wrapped in plastic starts to look less appealing. “If they wanted to sell unpackaged fruit, they would have to have a clerk next to the fruit area who would weigh the fruit and attach a price label before the consumer could take it to the checkout.” This means that unpackaged fruit required the supermarket to pay an extra employee.
“I started a POS system, so that a customer could take their unpackaged fruit right to the checkout like any other product, eliminating the need for that extra employee.” The system Lai developed is currently the only one in Taiwan that allows unpackaged produce to be checked out in a single step.
Lai has poured all of this experience into iVegan. So far, it is the only supermarket in Taiwan selling unpackaged agricultural products without requiring a two-step method to pay.
Business for iVegan was dismal in the beginning, Lai said. “Because we only have one store, the price for small-volume purchasing was less than ideal.” But following last year’s scandals over tainted foods, the number of customers coming into iVegan increased markedly. “If you don’t count the investment we have made in the Internet, the supermarket itself started turning a profit in November of last year,” he added.
But it is not the money that spurs the company. “If we weren’t doing this to promote the vegetarian ideal, there really would be no need to open iVegan,” Lai said. “These days all supermarkets sell fruit, so there is not much room for another competitor. The insistence on the vegetarian ideal creates a clear differentiation in the market, which has allowed iVegan to stay alive.”
Lai said that every month the company reassesses inventory to see whether they can find substitute products that are ever less harmful to the earth. For example, they previously switched over to woodless toilet paper, and in mid-January of 2015 the company decided that the supermarket would not sell products created using genetically modified crops.
Wu Ting-yen, a good friend of Lai’s who was formerly director of the packaging plant for a produce company, said Lai has plenty of foresight and vision, so he is always a step ahead of the game. From founding fruit specialty shops to being elected borough chief to opening a vegetarian supermarket, it is this knack for foresight and innovation that has made Lai’s life action-packed and rewarding.
[by Hsu Chiung-wen / tr. by Phil Newell]