GG10, a membership wholesaler founded by a group of 10 retailers, stands for “Golden Goose,” or the goose that lays golden eggs. Retailers and wholesalers have various opinions about GG10, which is an organized entity based on the association’s group buying system. We met GG10’s CEO, Bohyun Yoon, to learn more about the company’s goals, direction, and challenges.

Why the membership wholesale?

Mr. Yoon explains that retailers came together to build rules and systems so that they wouldn’t be swayed when purchasing goods. As a store owner, you may find yourself in a vicious cycle where you buy a large amount at the sale price offered by the wholesaler, the products don’t sell and stay in inventory, and you can’t get new products on your shelves. There are also products that small shops can’t order because they can’t meet the minimum quantity, so they have to just look at them selling like hotcakes in other stores. GG10 was founded to overcome these fundamental weaknesses. “The advantages are competitive pricing, less inventory burden, and no minimum quantity issues,” summarizes Yoon.

Membership and operational strategy

1. Membership management
   GG10 is a membership organization that comes with a membership fee. While membership fees can be a barrier for some businesses, they decided the elimination of fees shouldn’t be the focus or distract the operation, so they kept minimum membership fees. They believe in setting direction with strong supporters of the organization, even if it means slow growth.
   
2. Sourcing and collaboration
   One of GG10’s key strategies is sourcing through the collaboration of its members. “We identify demand for hot items and source them for all over the U.S.,” says Yoon, and members share the opportunity to access new items while benefiting financially. Members who directly participated in the sourcing would get extra benefits such as getting the product at cost.
3. Prioritizing quality products
   While focusing on price, it’s rigorous on quality assurance. Prioritizing quality, reliable products can keep members happy. They’re also expanding their private label offerings. It started out with beauty items, but after listening to member feedback, it now offers a wide range of products, including miscellaneous goods, chemicals, and food.
4. Maintaining fast turnover
   GG10 operates with a small staff and aims for quick product turnover. To sustain low margins, they built an autonomous system and have three people on site in rotation.
5. Thorough board management:
   They laid out a detailed roadmap and institutionalized a number of measures for effective board management. For example, over the 12 meetings a year, a member who missed four meetings would be automatically expelled. There are no formal meal sessions before and after meetings to avoid meetings overrun by a few members.

Challenges ahead

1. There are different stances on reselling, and different companies set forth different terms. If there are points of disagreement and no guidelines in place, the organization can be cut off by wholesalers. For popular products, there’s more tension in price negotiations than for individual retailers.
2. It’s still hard to run a store relying 100% on sourcing through GG10. For now, the goal is for GG10 to be able to supply about 35% of the total sales.
3. GG10’s profits are ultimately derived from the investments made by the investors and the margin comes from sourcing. Until getting to a certain point in the trajectory, raising investors will be key.
4. Members who wish to purchase items must come and pick them up in person. Members who are located outside of New Jersey are using a system where they can designate a common place to ship items or have them on hold for a while to reach a certain amount for a grouped shipment, but they need an innovation that can eliminate the physical limitations.

The vision

After more than five years of trial and error, GG10 has developed fundamentals that allow for transparent operations and a clear understanding of management metrics. The ultimate goal of GG10 is to create synergies through collaboration and share profits through an initial public offering in the near future. Until then, the best goal is to keep each member’s business strong. Yoon said he hopes GG10 will become “a company that grows based on ownership value and cooperation.”