---
title: "10 Management Lessons from Conversations with Over 100 Outstanding Distributors"
description: "Over the past two to three years, we have visited over a hundred outstanding distributors across the country, discussing their business strategies and how they manage to resist risks, achieve growth, and expand despite rapid market changes. This article distills 10 practical management lessons from these visits, focusing on internal trade company operations and management, offering insights for distributors to break through in a changing environment."
author: "袁来"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-08-20"
language: "en"
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# 10 Management Lessons from Conversations with Over 100 Outstanding Distributors

> Over the past two to three years, we have visited over a hundred outstanding distributors across the country, discussing their business strategies and how they manage to resist risks, achieve growth, and expand despite rapid market changes. This article distills 10 practical management lessons from these visits, focusing on internal trade company operations and management, offering insights for distributors to break through in a changing environment.

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Over the past two to three years, we have visited over a hundred outstanding distributors across the country, discussing their business strategies and how they manage to resist risks, achieve growth, and expand despite rapid market changes.
The market continues to evolve, and distributors face increasing challenges. How to continuously break through amid change? This article, from the perspective of internal trade company operations and management, may offer some inspiration and food for thought.
**The following 10 management lessons are distilled from our visits to over a hundred distributors, and they are real and effective.**
**01 Compensation for frontline sales staff**
If the compensation for frontline sales staff is simply a basic salary plus commission, the market will not be well developed. A large part of all distributor market problems stems from people, and behind people is performance assessment.
Distributors who perform well structure frontline compensation in three parts: basic salary + sales/gross profit/net profit commission + market development/special rewards.
**Part 1: Basic salary.** There's nothing special here; whether it's high or low isn't key, and some distributors don't even offer a basic salary.
**Part 2: Commission on sales, gross profit, or net profit.** Sales commission is most common but can lead to selling only bestsellers; gross profit commission effectively addresses new product promotion but may neglect market development and lead to irrational inventory pressure; net profit commission is a higher level, considering both sales and cost investment, but requires high digital capabilities from the distributor.
**Part 3: Market development or special rewards.** This is a phased process assessment, allowing distributors to adjust operational focus at different times and stages. It also ensures frontline staff pay attention to both goal achievement and process/market development.
In summary, basic salary addresses survival, sales/gross profit/net profit commission addresses goal achievement, and market development or special rewards address execution of key market actions.
**02 Compensation for warehouse, picking, and delivery staff**
Warehouse, picking, and delivery are headaches for many distributors. Salaries can only be so high, yet they expect efficiency and no slacking. The common practice among excellent distributors is: **more work, more pay, piece-rate or contract system.**
Warehouse sorting and checking staff are paid by piece, with basic salary reduced or eliminated, and 60% of income from piecework. Delivery drivers contract to deliver in specific areas.
In this process, some distributors even sell vehicles to drivers at below-market prices, making drivers small delivery bosses, reducing company management burden and costs.
**03 Standardized and normalized management systems**
Standardized and normalized management here isn't just about work hours or daily/weekly meetings, but standardizing and normalizing overall business management operations.
For example, warehouse goods management, from receiving to storage to store delivery, and potential returns to warehouse and then to store, clearly defining key tasks and responsible persons at each step.
Take goods arrival at warehouse: key tasks are transportation, unloading, and storage, involving drivers, loaders, and warehouse keepers. **For each key task, what is the standard for doing it right? Is there a quantifiable assessment system? What are the rewards and penalties for not doing it right?**
Similarly, in-store execution follows the same principle. With standards and norms, there's a yardstick to measure execution.
**04 Mid-level business partner model**
Once a distributor grows, especially with cross-category operations, they face the need to split business organizations. To boost the motivation of business heads, many distributors consider a partner model.
But it's important to emphasize: business partners solve not enterprise management issues but business operation issues. **Let partners focus on specific brands or categories, responding flexibly around distribution, sell-through, and competitive strategies.**
If the distributor operates consistent categories or brands with similar distribution, sell-through, and competitive strategies, it's not recommended to set up partners. Instead, the distributor owner should set terminal operation strategies, mid-level managers coordinate and check, and frontline staff execute.
**05 Adding promotion and procurement departments**
When a distributor's annual sales reach 50-60 million yuan and they want to expand brands or categories, besides the front-end sales department, they should accelerate building the seemingly less important promotion and procurement departments.
The promotion department should design phased activities based on upstream brand policies and market execution suggestions, combined with downstream terminals and consumer characteristics. For example, displays, tastings, shopping guides, and various promotional materials.
**Which stores to choose, what policies to invest, what incentives to design, what frequency to execute, and what final standards to achieve.**
Once the trade company has stable brand agency, the procurement department needs to continuously introduce more brands, especially evident in the snack food sector. The procurement department's assessment must be directly linked to front-end sales gross profit and inventory loss.
**06 Owner's personal learning and exchange**
The owner's personal cognition determines the company's ceiling. You can't avoid going to the front line to see the market, nor can you stay there all day. Distributors should also become social activists.
Here, social activist doesn't mean dining and drinking with manufacturers or maintaining customer relationships with downstream clients, but going out to **learn from other outstanding distributors' experiences and have tea with business owners outside the industry.** Attend industry conferences and downstream retail meetings.
Retail formats are changing rapidly. Chat with local retail chain owners, exchange ideas with e-commerce live-streaming executives. This process will broaden not only personal horizons but also potentially open business opportunities.
**07 Team PK competition system**
For frontline teams, besides direct monetary rewards, there should be a culture of PK between individuals and teams. **The core purpose of PK is to mobilize team enthusiasm and atmosphere, stimulating business potential.**
Of course, during PK, managers or owners should participate, paying attention and coaching participants. As a distributor owner, you must understand that the goal of PK is not to eliminate a team but to enable both participating teams to surpass themselves.
**08 Office in a separate building from the warehouse**
An office in a separate building from the warehouse serves the same purpose as the owner's personal learning and exchange. Distributors should step away from heavy basic work to think and communicate more. Focus on guiding rather than moving goods and selling.
Additionally, moving into an office building is to attract more young people. Especially for distributors with 100 million in sales, when considering business diversification, the inclusion of young people is essential. And young people's requirements for the work environment are something distributors must consider.
**09 Data-based management rather than people-based management**
Data-based management rather than people-based management—I think distributors all agree. But how to achieve data management?
It's not just about finance using data software or the owner seeing data; **it's about enabling frontline staff to see and use data.**
We often talk about products online, customers online, people online, etc. How to achieve this? From warehousing and delivery to sales, complete the business loop in software data, not just entering orders and amounts into the system.
**10 Scale awareness: big pond raises big fish**
A distributor's business isn't high-tech, intelligent, or artistic. **To continuously attract and retain talent, the only way is continuous growth.** Growth brings scale, and scale attracts and retains higher-level talent.
With larger scale, there are more positions for others. With talent, you can expand new businesses. For example, when the company has only five or six people, if community group buying comes, the owner can only supply goods.
But when the company has 50-60 people, if community group buying comes, you can pull three or four people to research and connect with it, capturing the dividend and incremental opportunity.
**Summary:**
Share these 10 management lessons with fellow distributors, hoping they inspire you. If you have additions, feel free to comment and interact with the author.
**【Guo Zhihai, Head of Sales for Greater China at Mondelez】Pay tribute to channel partners, meet in Chengdu, August 31 - September 2, 2022 (7th) China FMCG Channel Innovation Conference.**
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