---
title: "8 Proven Methods for Managing Secondary Distributors"
description: "Secondary distributors in the sales field exist in two forms: one is storefront operations in traditional wholesale markets (mainly wholesale), and the other is wholesale-retail combined operations on city streets. For liquor manufacturers, developing and managing secondary distributors becomes a strategic choice for entering different markets. This article outlines eight methods to control secondary distributors."
author: "New Distribution"
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published: "2015-11-11"
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# 8 Proven Methods for Managing Secondary Distributors

> Secondary distributors in the sales field exist in two forms: one is storefront operations in traditional wholesale markets (mainly wholesale), and the other is wholesale-retail combined operations on city streets. For liquor manufacturers, developing and managing secondary distributors becomes a strategic choice for entering different markets. This article outlines eight methods to control secondary distributors.

**Introduction**
**Currently, secondary distributors in the sales field exist in two forms: one is storefront operations in traditional wholesale markets (mainly wholesale), and the other is wholesale-retail combined operations on city streets. For liquor manufacturers, developing and managing secondary distributors becomes a strategic choice for entering different markets.**

**Eight Methods to Control Secondary Distributors**

**1. Plan the Development of Secondary Distributor Customers and Set Up a Reasonable Wholesale Distribution Structure**

The channel distribution system shown below is a fully covered channel structure for a general distributor (or direct-operated branch) in a medium-sized prefecture-level market. The red parts are wholesalers or distributors, representing three wholesale forms:

**1. County-level distribution**
That is, setting up a sole distributor in the county-level market under the jurisdiction. This distributor has strong terminal coverage in the local county, able to directly place products in A-class supermarkets and ordinary county retail stores. Such wholesalers actually have quasi-distributor characteristics; once established, a good cooperative relationship must be formed.

**2. County-level wholesale-retail stores**
That is, widely setting up county wholesalers, using multiple distributors to achieve terminal coverage, while directly targeting A-class supermarkets in the county to establish image terminals.

**3. Wholesale market secondary distributors**
This is the most traditional large circulation form. Since goods in wholesale markets mostly flow to county and town wholesalers, their main means of attracting customers is complete assortment and relatively low prices. Therefore, when the first two distribution forms have achieved ideal terminal coverage, wholesale market secondary distributors often become centers for channel stuffing and price cutting.

**Summary**
The above three secondary distributor setups are usually a combination. As product terminal coverage increases, the structure of the three combinations will show different proportions. Generally, during the growth period, the sales volume of the three channels may be roughly equal. By the maturity stage, it is best to control the sales volume of wholesale market secondary distributors to no more than 20%, and their shipping rhythm must be controlled.

**2. Pay Attention to Shipping Price, Quantity, and Rhythm**

The second key to controlling secondary distributors is to control their shipping price, quantity, and rhythm. When multiple secondary distributors exist, their competition inevitably becomes price undercutting, known as "peeling the plate" or "skinning." At this point, if the manufacturer does not regulate and continues to push trade promotions, market symptoms such as shrinking sales, reduced customers (wholesalers), and insufficient terminal coverage will quickly appear. The result is: gradually discovering "no promotion, no sales; with promotion, sales," then becoming "big promotion sells, small promotion doesn't," until "even promotion doesn't sell"!

Therefore, in the absence of product upgrades or changes, to maintain the product life cycle, it is necessary to constantly monitor the shipping situation of secondary distributors. When low-price sales, abnormal sales fluctuations, or increased purchase frequency are found, investigate the secondary distributor's shipping to clarify the real reason for the abnormal sales or purchase frequency. If there are signs of channel stuffing, adjust sales policies and control their purchase quantity or rhythm.

The best management method for secondary distributors is not rigid, unchanging fixed prices, but flexible control of shipping quantity, i.e., adjusting their single purchase quantity and purchase frequency. This is a more advanced circulation operation skill.

**3. Master the Downstream Sales Data of Secondary Distributors**

Regardless of the type of secondary distributor, their sales targets are either wholesale-retail operators or terminal retailers. To effectively manage secondary distributors, it is necessary to have a clear understanding of 80% of their goods flow. This can be achieved through terminal visualization co-marketing or promotional activity audit and expense reimbursement, gradually mastering the sales data of their downstream customers, and having sales personnel regularly visit key customers to establish a terminal customer sales database.

**4. Assist Secondary Distributors in Managing Their Core Terminal Customers**

Good secondary distributors are cultivated. Distributor sales personnel or manufacturer sales representatives should assist secondary distributors in managing their core terminal customers. Through store entry negotiations, promotional planning, promotional execution training, and joint customer visits, improve the relationship between secondary distributors and terminal retail stores. This also guides them to transform into terminal distributors, making them willing to actively cooperate with the manufacturer's terminal coverage requirements, reducing the probability of channel stuffing and price chaos.

**5. Revoke Distribution Rights or Control Shipping for Non-Compliant Secondary Distributor Customers**

The difficulty in secondary distributor management lies in the decisiveness when facing trade-offs, i.e., how to deal with large non-compliant secondary distributors. Our view is: after planning the first four items, the problem of such large customers can be easily solved: either obey the game rules or get out; there is no hesitation. But if it is a traditional distribution pattern, especially the platform distribution pattern above, where the distributor relies too heavily on secondary distributors, it will inevitably be impossible to cooperate with the manufacturer in taking decisive action against troublesome large secondary distributors.

An Anhui liquor company had a large liquor customer in the Woyang area of Fuyang City, selling over 30,000 cases annually, making it the largest distributor for the company. However, due to long-standing habitual thinking of demanding policies and subsidies, it never paid attention to the management of the office. The newly established marketing department required a new marketing plan, requiring the distributor to cooperate with price control, logistics order, channel data reporting, etc. The large customer also ignored this. After multiple communications including an ultimatum, the company decisively stopped shipping to it and revoked its distribution rights, developing three new distributors instead. As a result, within less than a month, the market quickly recovered, sales increased by 20% compared to the same period, and customers coordinated price control, earning more profit.

**6. Far Attack, Near Friendship: Control Core Terminals Outside Your Doorstep**

The most important leverage for managing secondary distributors is the number of directly controlled core terminals. Distributors usually like "far friendship, near attack," i.e., keeping nearby terminals in their own hands while leaving distant county-level terminals to secondary distributors. This is actually a huge operational mistake, as much market volatility and instability stem from this. The distributor's "far friendship, near attack" is a product of natural thinking, lacking deep understanding of the market, thinking they can eat meat while others gnaw bones—this is undoubtedly wishful thinking! If distributors lose control of core terminals, they lose the ability to regulate the market.

The correct method is "far attack, near friendship," i.e., handing over the delivery of nearby core terminals to urban secondary distributors (while maintaining transaction relationships with core supermarkets), allocating some vehicles for direct operation of A-class terminals in the county, while developing distributors to cover other channel terminals.

Distributors need not fear that after operating core terminals themselves, no secondary distributors will cooperate. When distributors operate county A-class terminals well, secondary distributors will come knocking.

**7. Conduct Irregular Market Coverage of Terminal Networks**

Channels actually need constant stimulation to activate their energy. For secondary distributors, their operational software and hardware resources (personnel, vehicles, etc.) are shared by various brands. If you do not strive for their tilted investment, other brands will occupy it, and your sales will inevitably decline.

How to constantly stimulate secondary distributors? Not through wave after wave of trade promotions, but through periodic surprise terminal coverage, especially for small and medium terminals below A-class stores. What methods are used for coverage? Generally, there are three situations:

**1**
**For old products, 30 days before the peak sales season and 30 days after the end, organize manpower for surprise coverage of small and medium terminals;**

**2**
**Coverage when new products are launched;**

**3**
**Coverage centered on visualization for large consumer terminal promotions.**

**Summary** Coverage is the best way to stimulate secondary distributors and squeeze out competitors. Regardless of your brand, among secondary distributors, the brand that can mobilize their resources to the greatest extent will become the brand with the largest sales volume for that secondary distributor!

**8. Strategically Stabilize Secondary Distributor Customers During Crises or Competitive Impact**

When competitors launch strong trade promotions, this will have a significant impact on the brand's secondary distributor system, and a rapid response is needed. Effective practices are:

**1. Classify secondary distributors into A, B, C categories based on sales volume**
First, stabilize B-class, i.e., medium-sized secondary distributors. Such secondary distributors usually account for 20% of total customers and over 40% of sales. Compare the competitor's "promotional benefits" (note: not intensity but benefits!) and convert them into the sales ratio of this product, design tiered reward policies, first sign reward agreements with medium-sized customers and absorb funds (occupy funds and warehouse). This action must be quick to be effective.

**2. Break down A-class, i.e., large customers**
Such customers account for 10% of total customers and over 30% of sales, but they are not easy to cooperate with the manufacturer. Therefore, while quickly stabilizing medium-sized customers, start negotiating with large customers to break them down. For individual large customers, as long as they promise not to participate in competitor activities, give non-direct discount-style super rewards, such as travel, durable goods, etc.

**3. Immediately start surprise terminal distribution**
Block at downstream terminals.

**-END-**

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