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Distributing products of well-known brands, or taking on lesser-known products and turning them into local market leaders, has made many distributors wealthy. This demonstration effect encourages more distributors to try their hand at product agency. How can distributors find products that match their agency style and sales channel network characteristics? How can they do product agency well?
(1) Act According to Your Capabilities, Tailor to Your Situation
If you are a distributor just entering the food industry, there are two principles for product agency selection: first, choose side products or new products from major brands; second, choose the core or main products of small enterprises.
Because you are new to the industry, your experience, capital, and sales channel network resources may not meet the requirements of major brand manufacturers for "rapid volume growth of mature products." However, if you choose side products or new products launched by major brands, the manufacturer does not have rapid volume requirements, and the brand has high visibility, strong marketing capabilities, and advanced marketing thinking. By choosing such products, distributors not only face lower agency risks but can also accumulate experience and channel network resources, learn good market promotion methods and techniques, and build strength for introducing better products in the future.
Choosing to distribute the core or main products of small enterprises allows you to leverage the focused marketing resources of small companies to break through in a core area, thereby winning market and channel network resources and quickly accumulating wealth. One of my colleagues left the company to start his own business, and his first agency product was a small liquor product launched by a small enterprise. The manufacturer had high hopes for this product and it was their core product. Within three years, with the manufacturer's support, this colleague made the product the number one brand in his market, achieving his first pot of gold in product agency.
Of course, if you are a veteran in the distribution industry with your own core brands and products and a rich market channel network, your product selection should mainly consider your own development: products and brands that can increase volume should be the first choice, such as securing the core products of well-known brands; small enterprise products can also be chosen, mainly from a profit perspective, to avoid wasting your market channel network.
(2) Have a Long-term Vision, Be Both Lenient and Strict
A distributor's vision determines their ultimate development. Among distributors, some go from agency products to owning products, eventually becoming manufacturers; others remain obscure in the distribution field all their lives, just making a living.
One of my classmates was in the agency of semi-finished dishes for hotels. At the start, he rented a storefront in a wholesale market, specializing in semi-finished dish products from a Chengdu company for hotels. After two years of accumulation, he began developing his own semi-finished dishes to sell to hotels. Two years ago, he registered a trademark, owned his brand, and commissioned the former agency manufacturer for processing. Last year, he rented a factory for production and sales. His annual sales have now reached nearly 30 million yuan, and he has completed the transformation from distributor to manufacturer and professional sales company.
Observe carefully: distributors who truly grow and strengthen basically own their brands, or at least have their own customized products. Whether you have your own brand products, "whether the knife handle is in your own hands," is a basic criterion for evaluating whether a distributor is strong.
Another distributor I know has been in the food distribution industry for over 10 years, starting with instant noodle agency. He has changed countless products and manufacturers and is still selecting products. Although he earns enough to support his family and lives better than ordinary people, he has never been able to take the path of improvement and development. Many distributors who started at the same time are already operating as companies or are leaders in their industries.
Whether you have a long-term vision tests your patience and boldness. As the market changes, transforming yourself into a higher-level distributor is a key issue all distributors need to consider.
(3) Dedicate Yourself with Heart, Persevere
Ordinary distributors prefer quick success, wishing their agency products would sell well in 3 months and make big money in a year. Ten years ago, such opportunities might have existed, but today's market is no longer an era of overnight riches.
One of our distributors also distributes Baixiang instant noodles alongside our products. Initially, our products were his main source of profit, and he admitted that cooperating with our company brought him his first pot of gold. Eight years have passed, and he still only distributes our products and Baixiang instant noodles, without taking on other brands or products. But in his small county, Baixiang instant noodle sales will exceed 8 million yuan this year. Although our product sales have not declined, their growth rate is far behind that of Baixiang instant noodles. If he had given up Baixiang because it brought little profit initially, he would not have achieved today's sales of over 8 million yuan.
This distributor truly dedicates himself to his products, nurturing them like his own children, and perseveres consistently. During our communication, I deeply felt his affection for the brand. He said he would not easily take on products, but once he chooses, he will do his best to cooperate with the manufacturer to make the market successful. He believes the manufacturer will not harm him, and the longer the cooperation, the more he cooperates from the heart. This distributor does not have his own marketing ideas; he follows the manufacturer completely, willing to use his maximum cooperation and sincerity to win manufacturer support, and ultimately win the market.
(4) Carefully Weave Your Network, Specialize and Refine
Distributors should find their positioning and specialize in their channel network. For example, some distributors have good social relationships and broad personal connections, so their agency products should focus on mid-to-high-end products to convert these connections into sales results. But if you push low-end products to these high-end resources, customers will disdain them, and even if they buy, you won't make much money. Similarly, some distributors have built super-strong channel networks in mass circulation products, so they should focus more on popular product agency.
One of our distributors, who handled mass circulation bottled products, introduced C'estbon water and Huiquan beer after achieving a certain scale and influence. These products sold well through the existing channel network. When he had surplus funds, he kept pestering the company to give him a high-end product to distribute, vowing to do well. The company tried to persuade him but failed, so they gave him a product on a trial basis for three months, with the condition that if results were poor, the distribution rights would be withdrawn.
After receiving the product, he set up a dedicated marketing team and personally ran the market, working very hard. But for this product, he had a completely new high-end channel network that did not overlap with his previous channels, and he had few available resources. Three months passed quickly; of the 100 cases sent to him, 70 were still in the warehouse, and the remaining 30 were stuck in his partial channel network, with very limited actual sales. After persisting for a few more months, he proactively approached the company to terminate the cooperation. Since then, he has focused on his familiar mid-to-low-end product operations and no longer aims too high.
Distributors must choose products that match their channel network and carefully nurture and accumulate their channel network. As long as products matching the channel network sell smoothly, the channel network is successful.
(5) Focus on Product Categories, Unify the Market
Another good way for distributors to handle product agency is category focus. For example, if you distribute MSG and other seasonings, and you can capture all the well-known MSG brands in the market, you can rest easy. Some brands may not allow this, such as if you distribute Master Kong products, you cannot distribute Uni-President products; if you distribute Coca-Cola, you cannot distribute Pepsi. But nothing is absolute. If you have enough strength and channel network locally, or if the other party cannot find a more suitable distributor in your market, distributing competitive brands in the same category is natural.
I know a milk powder brand distributor who is a typical example. He has obtained distribution rights for seven or eight out of ten well-known or well-selling milk powder brands in the market, except for one local brand. He achieved this not only through his complete channel network and strong financial strength but also, most importantly, by having numerous milk powder specialty stores locally. Any brand's milk powder sales need a platform, and building this platform is the key factor in obtaining product distribution rights.
When distributors achieve category focus, they can control resources well, enhance their bargaining power with hypermarkets and channel partners, and reduce marketing management costs. Of course, brand building is not the distributor's concern; distributors just set up the stage for manufacturers. Who performs best and most brilliantly depends on the manufacturer's brand-building skills.
(6) Carefully Investigate, Prevent Risks
The biggest fear for distributors in product agency is being trapped by manufacturers. How to prevent this has been detailed earlier. Some distributors may ask, "How to judge if a new product has no trial market or model market?"
This depends on brand awareness and product origin—whether it is launched by a major manufacturer or brand. If it is a new product from a new manufacturer, distributors with weak financial strength should never take it on. The chance of winning by gambling is too small; leave such opportunities to distributors with strong capital and channel network strength. For them, even failure will not be fatal, and success means just another profitable product.
If distributors can effectively prevent risks in product agency, it is like adding an insurance policy. The result of hard work each year, if preserved, is the best profit. Food industry products have shelf lives; once products become unsalable, they have no chance to depreciate—they directly become garbage and losses. So risk control is an important part of product agency.
How distributors handle product agency ultimately depends on matching their own resources. New entrants, those with rich channel networks, those with capital resources... Different distributors have different perspectives and angles in product selection. "To forge iron, one must be strong." Only by honing your skills and consolidating your channel network will good agency products come to you continuously, and wealth will follow.
Source: Excerpted from Mr. Tang Jianghua's book: "The First Book for Baijiu Distributors"
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