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Representing well-known brand products, or representing lesser-known products and turning them into well-known brands in the local market, has made many distributors wealthy. This demonstration effect encourages more distributors to try their hand at product agency. How do 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 Capability; Tailor to Your Situation
If you are a distributor just entering the food industry, there are two principles for product agency selection: first, choose by-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 by-products or new products launched by major brands, the manufacturer does not require rapid volume growth, and the brand is well-known with strong marketing capabilities and advanced marketing ideas. Choosing such products not only reduces agency risk but also allows you to accumulate experience and channel network resources, learn good market promotion methods, and build strength for introducing better products in the future.
Choosing to represent the core or main products of small enterprises allows you to leverage the focused marketing resources of small enterprises to break through in a core area, thereby winning market and channel network resources and quickly accumulating wealth. A colleague of mine 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 generate volume should be the first choice, such as securing the core products of well-known brands; products from small enterprises can also be chosen, mainly from a profit perspective, to avoid wasting your market channel network.
(2) Long-Term Vision; Be Both Strict and Lenient
The distributor's vision determines their ultimate development. Among distributors, some go from agency products to owning products, becoming product manufacturers; others remain obscure in the distribution field all their lives, just making a living.
A classmate of mine was engaged in agency for 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 own brand, and commissioned the former agency manufacturer to process. Last year, he rented a factory to produce and sell himself. Now his annual sales scale has reached nearly 30 million yuan, and he has completed the transformation from distributor to manufacturer and professional sales company.
Observe carefully: distributors who truly become large and strong basically own their own brands, or at least have their own customized products. Whether they have their own branded products, or "whether the knife handle is in their 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 during this period 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 improve and develop. Many distributors who started at the same time as him are now operating as companies or are leaders in their industries.
Whether one has a long-term vision tests the distributor's patience and courage. Transforming into a higher-level distributor as the market changes is a key issue all distributors need to consider.
(3) Dedicate Effort; Be Persistent
General distributors prefer quick success, hoping their agency products will sell well within 3 months and make big money within a year. If this was 10 years ago, such opportunities might exist, but today's market is no longer an era of overnight wealth.
One of our distributors, while representing our products, also represents Baixiang instant noodles. 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 later, he still only represents our products and Baixiang instant noodles, without representing other brands or products. But in his small county, Baixiang instant noodles sales will exceed 8 million yuan this year, while our product sales have not declined but their growth rate is far behind that of Baixiang. If he had given up Baixiang because it initially brought little profit, he would not have achieved sales of over 8 million yuan today.
This distributor truly dedicates himself to his products, nurturing them like his own children, and persists consistently. During communication, I deeply felt his affection for the brand. He said he does not easily take on agency products, but once he chooses, he will do his utmost to cooperate with the manufacturer to do the market well. He believes the manufacturer will not harm him, and the longer the cooperation, the more heartfelt his cooperation. This distributor has no marketing ideas of his own; he follows the manufacturer completely, willing to use his maximum cooperation and sincerity to win manufacturer support, thereby ultimately winning the market.
(4) Carefully Build Your Network; Specialize and Excel
Distributors should find their own positioning and specialize in the channel networks they are good at. For example, some distributors have good social relations and broad personal connections, so their agency products should mainly be mid-to-high-end, converting personal connections into sales results. But if you push low-end products through these high-end resources, customers will disdain them, and even if they buy, you won't make much profit. Similarly, some distributors have built super-strong channel networks in mass circulation products, so they should focus more on agency of popular products.
One of our distributors deals in mass circulation bare-bottle products. After achieving a certain scale and influence, he introduced C'estbon water and Huiquan beer, which sold well through the existing channel network. When he had surplus funds, he pestered the company to give him a high-end product to represent, vowing to do it well. Despite our earnest persuasion, we finally gave him a product on a trial basis, with the condition that if it didn't sell well within three months, we would take back the agency rights.
After receiving the product, he formed a dedicated marketing team and personally ran the market, working very hard. But this product required a completely new high-end channel network, which did not overlap with his previous channels, and there were few resources he could use. Three months passed quickly; of the 100 pieces sent to him, 70 were still in the warehouse, and the remaining 30 were stuck in some of his channels, with very limited actual sales. After persisting for a few more months, he voluntarily asked to terminate the cooperation. From then on, 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 at the same time, carefully maintain and accumulate their channel network. As long as products matching the channel network sell smoothly, the channel network is successful.
(5) Category Focus; Unify the Market
Another good way for distributors to handle agency products is category focus. For example, if you represent MSG and other seasoning products, and you can get all the well-known MSG brands in the market, you can rest easy. Some brands may not allow this, such as representing Master Kong products and not being able to represent Uni-President products; or representing Coca-Cola products and not being able to represent Pepsi products. But nothing is absolute. If you have enough strength and channel network locally, or if the other party cannot find a more suitable distributor than you in your market, representing competitive brands in the same category is a natural step.
I know a milk powder brand distributor who is a typical example. He has obtained agency rights for seven or eight out of ten milk powder brands that are well-known or sell well in the market, except for one local milk powder brand. He achieved this not only because of his complete channel network and strong financial strength, but also because he has 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 agency rights.
When distributors achieve category focus, they can control resources well, enhance their bargaining power with large supermarkets and channel merchants, and reduce marketing management costs. Of course, brand building by manufacturers is not within the distributor's consideration; the distributor just sets up the stage for the manufacturer, and 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 agency products 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 the product's origin—whether it is launched by a major manufacturer or major brand. If it is a new product from a new manufacturer, distributors with weak financial strength should not represent it. The chance of winning by gambling is too small; we should leave such opportunities to distributors with strong capital and channel network resources. For them, even failure won't be a major setback, and success means just another profitable product.
If distributors can effectively prevent risks at the product agency stage, it is like having an insurance policy. The results of hard work each year, if preserved, are the best profit. Food industry products have shelf life; once products become unsalable, they don't even have a chance to depreciate—they directly become garbage and losses. Therefore, risk control is an important part of product agency.
How distributors handle agency products ultimately comes down to matching with 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 oneself." Only by honing their skills and consolidating their channel networks will good agency products come to them continuously, and wealth will follow.
Source: Excerpted from "The First Book for Baijiu Distributors"
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