---
title: "18 Tips for Getting Along with Secondary Distributors"
description: "This article, written by Pan Wenfu from Senpan Consulting, discusses how distributors can effectively manage their secondary distributors. It covers understanding secondary distributors, shifting from rigid management to cooperative partnerships, and gradually implementing control measures to secure market dominance."
author: "潘文富"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2016-04-16"
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# 18 Tips for Getting Along with Secondary Distributors

> This article, written by Pan Wenfu from Senpan Consulting, discusses how distributors can effectively manage their secondary distributors. It covers understanding secondary distributors, shifting from rigid management to cooperative partnerships, and gradually implementing control measures to secure market dominance.

> Author: Pan Wenfu | Source: Senpan Consulting
Note: The management of secondary distributors discussed here refers to the management of downstream secondary distributors from the perspective of a distributor.

**1. The Overall Development of Secondary Distributors**

A distributor secures the distribution rights for a large market area from a manufacturer, directly operating in the central market while allocating surrounding districts and counties to several secondary distributors. This model was once mainstream, especially when operating products with strong brand power. However, continuing this model has become increasingly difficult, as the market environment no longer permits it.

Overall, the number of secondary distributors is continuously shrinking. Either upstream distributors are going direct to end-users, or manufacturers are flattening their operations by refining market divisions, reducing existing distributor territories, and promoting former secondary distributors to primary distributors. Some secondary distributors are still tolerating cooperation with distributors, essentially waiting for this day to come.

Distributors who still have secondary distributors, especially those where secondary distributors account for more than half of sales, must not take this lightly. They cannot simply continue the early management model for secondary distributors and must prepare for changes.

**2. Basic Understanding**

Management begins with understanding. Even if you have cooperated with secondary distributors for years, in-depth understanding is still necessary and also serves as material for effective management later. As a distributor, you need to understand:

1. How do these current distributors view cooperation with you?
2. Can secondary distributors purchase the products they buy from you directly elsewhere? Or will distributors from other markets approach them?
3. Are any secondary distributors planning to cooperate directly with upstream manufacturers? Have any previously tried to contact manufacturers directly or actively inquired about channel flattening plans?
4. In each secondary distributor's overall business, what proportion involves direct dealings with manufacturers (as primary distributors) versus purchasing from other distributors (as secondary distributors)?
5. What proportion of each secondary distributor's total product mix do the products they purchase from you represent? This reflects the importance of your products in their current business.
6. What is the current overall operational and management status of each secondary distributor? What are their characteristics and obvious problems?
7. What are the attitudes of each secondary distributor towards business development? Do they want to grow, maintain a small but comfortable status, or are they conservative and shrinking?
8. How strong is each secondary distributor's control over downstream retailers?

**3. Traditional Management Thinking for Secondary Distributors**

In traditional management thinking, secondary distributors are often positioned as subordinate units to the distributor, subject to the distributor's control. Specific behaviors include:

1. Assigning sales tasks to secondary distributors
2. Attempting to transfer tasks and inventory pressure from the manufacturer directly to secondary distributors
3. Requiring secondary distributors to invest in personnel and vehicles
4. Using sales rebates to control secondary distributors
5. Prohibiting secondary distributors from purchasing from other distributors
6. Directly cutting off secondary distributors with poor cooperation
7. Treating secondary distributor owners as employees, unilaterally imposing rigid management rules in document issuance, rewards and penalties, and daily communication, requiring compliance.

These management methods cannot be simply judged as right or wrong, but the premise is whether the distributor simultaneously possesses these three advantages:

1. The products supplied to secondary distributors are very popular, with substantial sales volume and profits
2. Products purchased by secondary distributors from the distributor account for more than 50% of their total business volume
3. Secondary distributors cannot source products elsewhere

To make secondary distributors obedient, these three conditions are indispensable. For the sake of profit, secondary distributors will tolerate it. If the distributor cannot ensure all three, rigid management cannot be used. If rigid management is insisted upon, it will naturally lead to:

1. Secondary distributors deliberately controlling the proportion of business in that product, not making it too large to avoid becoming more passive
2. Actively developing similar substitute products (which are competitors to the distributor)
3. Secondary distributors uniting to jointly deal with the distributor
4. Actively dumping goods into other markets, especially when there is a price advantage
5. Regarding the purchase volume required by the distributor, they will sell as much as they can, and they won't take the year-end rebate seriously; if the distributor gives it, fine, if not, they'll let it go.

**4. Changes in the Distributor's Own Thinking**

As a distributor, if you cannot ensure the above three advantages, you should not insist on traditional rigid management but make corresponding adjustments:

1. Bear the sales tasks and inventory pressure from the manufacturer yourself first, rather than directly transferring them to secondary distributors
2. Change the top-down management orientation to an equal cooperation orientation
3. Eliminate the flavor of rigid management, replace it with gentle negotiation and communication, and proactively apologize for previous inappropriate rigid management methods
4. Shift from assigning sales tasks to mutual negotiation, estimating achievable sales targets within a certain period
5. Downplay year-end sales rebates and other control measures, replacing them with current support measures for secondary distributors' sales work
6. Based on the overall current state of secondary distributors' businesses, introduce corresponding value-added services, not just helping them sell the distributor's products, but helping them improve all their products to achieve overall company development and enhancement
7. For secondary distributor groups that have already formed alliances, avoid directly eliminating one or two, as this will strengthen their unity. After all, it's hard to punish everyone. Unless you can eliminate all secondary distributors, it's better to use interest-based tactics to divide them. For example, periodically offer special-priced goods with limited quantities and time, notify secondary distributors in batches, and give more to some and less to others based on cooperation quality, avoiding equal distribution. Although secondary distributors are united, when they see others getting more special-priced goods, they'll suspect those are closer to the distributor and might have sold them out, so why stay united? After a few such operations, the so-called alliance will collapse.

**5. The Feelings Brought to Secondary Distributors**

These proactive changes by the distributor aim to create significant motivation for secondary distributors, influencing subsequent cooperation behavior and guiding them to do their own calculations:

1. First, emotionally, the distributor has clearly changed their work style, no longer being forceful but consulting on everything, and even apologizing for past rigid behavior. If they show respect, I should reciprocate.
2. The value-added services proactively introduced by the distributor indeed cater to some needs in my own company's management and development, solving practical problems and bringing additional profits. Although purchasing from the distributor means they clearly make a profit from me, these value-added services can somewhat balance that.
3. Changing from distant year-end rebates to current direct support is more realistic and visible
4. Although I can source goods from elsewhere, there's no price advantage in purchasing from this distributor. But considering all factors comprehensively, such as the change in the distributor owner's attitude, current direct support activities, and value-added services for me, these all count as money. Overall, it's similar to sourcing elsewhere, and at least it's a formal channel with quality and after-sales guarantees. So I might as well focus on purchasing from this distributor.

**6. Gradually Introducing Control Measures**

Effective management requires a high degree of control. As a distributor, deep down you still want to effectively control secondary distributors. To achieve this, you need strategy. Advance gradually, don't make a fuss, endure when necessary, and invest when needed:

1. Establish a company market service team that goes directly to the markets where secondary distributors operate, helping them develop new outlets (borrowing goods from their warehouses to sell), making basic displays, and connecting new outlet supply relationships to secondary distributors, while maintaining displays at current operating outlets. In short, the distributor sends people and vehicles to help secondary distributors open outlets and do terminal maintenance, working in rotation across markets.
2. While the market service team serves the secondary distributors' markets, improve terminal outlet data and establish initial customer relationships.
3. Establish a dedicated customer service department to directly connect with all retailers in the market, including maintaining files, proactive phone greetings, collecting sales feedback, congratulating customers on birthdays, sending sales tips via WeChat or SMS, and transferring some orders. This effectively establishes a direct relationship between the distributor company and all retailers, gradually gaining control over the terminals.
4. The market service team serves dual purposes: helping secondary distributors develop new outlets and maintain current ones, while also gradually strengthening sales capabilities, so they can directly serve as a sales force to replace secondary distributors' sales capabilities if needed.
5. Through the market service team and company phone customer service, fully introduce value-added services to retailers. This can be communicated to secondary distributors, but execution is done directly by the company's market service team, not through secondary distributors, to further strengthen the relationship between the distributor company and retailers and create differentiated features.
6. Reserve new secondary distributors simultaneously, directly managed by the distributor owner, kept confidential for now.
7. Provide certain basic salary support for new sales personnel hired by secondary distributors. Of course, this is part of supporting secondary distributors' sales work. Since the distributor pays basic salaries, these personnel need to be interviewed by the distributor, and the basic salary is paid directly to the corresponding sales personnel. Additionally, the training of new sales personnel hired by secondary distributors is also the distributor's responsibility. Paying basic salaries and providing training also aims to influence and control these new sales personnel, potentially considering them for direct recruitment later.

Once these measures are fully implemented, the distributor directly controls retailers, establishes direct communication and customer relationships, builds a mature business team, forms a unique value-added service system among retailers, and can even win over sales personnel from secondary distributors' teams. Reserved secondary distributors are also basically in place. At this point, the distributor effectively controls the market and has somewhat bypassed secondary distributors. Only then is it the right time to introduce more rigid management.

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