---
title: "A County-Level Distributor's Strategy to Dominate the Market"
description: "After defeating the local retail leader and becoming the top player, he seemingly aimed at wholesale giants, but in reality, he was setting a trap to reorganize all retail shops in the county. Song Leshan, who started as a clothing salesperson, used his savings of over 300,000 yuan to establish Leshan Supermarket in this small county, and within a few years, through classic 'commercial battles,' he swept through local retail and wholesale, becoming the largest retail chain in the county and initiating the expansion of stores to rural areas."
author: "欧海青"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2015-04-03"
language: "en"
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---

# A County-Level Distributor's Strategy to Dominate the Market

> After defeating the local retail leader and becoming the top player, he seemingly aimed at wholesale giants, but in reality, he was setting a trap to reorganize all retail shops in the county. Song Leshan, who started as a clothing salesperson, used his savings of over 300,000 yuan to establish Leshan Supermarket in this small county, and within a few years, through classic 'commercial battles,' he swept through local retail and wholesale, becoming the largest retail chain in the county and initiating the expansion of stores to rural areas.

After defeating the local retail leader and becoming the top player, he seemingly aimed at wholesale giants, but in reality, he was setting a trap to reorganize all retail shops in the county.
A few years ago, Song Leshan, who started as a clothing salesperson, used his savings of over 300,000 yuan to establish Leshan Supermarket as his foundation in this small county.
Little did he know that within just a few years, relying on several classic 'commercial battles,' he would sweep through local retail and wholesale, becoming the largest retail chain in the county and initiating the expansion of stores to rural areas.
Starting with Unorthodox Moves
When he opened his first store, he didn't know how to purchase inventory, take stock, or set prices. He arbitrarily decided that prices should be low, so he went directly to various wholesale markets in Kunming and set a uniform pricing strategy for all items: a 10% markup.
People in small cities had never seen such a cheap and well-stocked store, so Leshan Supermarket experienced unexpected 'popularity' upon opening.
Seeing Leshan Supermarket's 'low-level' operations, competitors mostly predicted: 'Leshan Supermarket won't survive more than six months!'
Indeed, six months after opening, Song Leshan, who had gained some experience, conducted the first inventory check and found a net profit of just over 2,000 yuan.
But Song Leshan saw great potential.
At that time, in Kunming, over 100 kilometers away, supermarket retail was already common; but in this small county, all 'supermarkets' were mostly mom-and-pop stores with a counter at the front and a large shelf in the middle, offering limited variety, high prices, and many counterfeit goods. If he could bring the convenient and affordable supermarket model to small cities, with bright storefronts, abundant products, and lower prices, it would surely have a market.
In the second year, Song Leshan opened his second Leshan Supermarket in a relatively prosperous area, with a sales floor of over 500 square meters and a newly decorated storefront, becoming a beautiful sight in the small county.
But it also disrupted the traditional pattern of small retail shops. Many small retailers spontaneously united, planning to teach Leshan a lesson.
During the initial period after the second Leshan Supermarket opened, some small retail owners would mix into the shopping crowd, with a simple and clear goal: to head straight for the special offers, buy them, and resell them, so customers wouldn't perceive Leshan's low prices.
Normally, one would first remove these 'troublemakers' from the store. However, Song Leshan remained calm and put up a prominent sign at the entrance: 'Welcome fellow retailers from the county to purchase goods at our store.'
Since the county was small, with this sign, many customers quickly identified the retail owners buying special offers. Soon, word spread around the county: 'Leshan Supermarket is so cheap that even shopkeepers queue up there, buying goods to resell...'
By this time, Song Leshan had developed some supermarket operational capabilities. For example, in pricing strategy, for well-known products like Shuanghui, Master Kong, and P&G, Leshan adopted a strategy of selling at cost or even at a loss. On the other hand, Leshan Supermarket introduced some lesser-known products with higher profit margins.
Consumers here usually had only a superficial impression of brands. With the low prices of big brands like Shuanghui, Master Kong, Wahaha, and P&G as a backdrop, many customers were easily convinced of Leshan Supermarket's low-price image, and those profitable products were sold along with them.
The second Leshan Supermarket quickly created a miracle, with daily sales exceeding 40,000 yuan, and after six months, net profit exceeded 600,000 yuan!
Then Leshan's third and fourth supermarkets opened one after another, with equally booming business.
Category War: Clash with the Local Retail Leader
Leshan Supermarket's 'arrogance' eventually angered Junguo Supermarket, the local dominant player, and a decisive battle was inevitable.
As soon as the war broke out, the first thing was a price war, with both sides going back and forth for several rounds, evenly matched.
The decisive battle was the 'shampoo war.'
A shampoo with a purchase price of 6.8 yuan per bottle was fought down to 5.3 yuan per bottle, with neither side willing to cease fire. When the battle was in full swing, Junguo Supermarket, to reduce losses, quietly switched to a lower-grade product with similar packaging but a purchase price of 5.7 yuan per bottle.
Upon learning this, Song Leshan made a very 'unexpected' decision: he ordered shampoo at 7.5 yuan per bottle with packaging similar to higher-priced brands, and continued to sell it at 5.3 yuan per bottle!
Song Leshan believed that running a supermarket was about building popularity and reputation. So, he would rather lose more himself to protect Leshan Supermarket's reputation and image.
The contrast was obvious; within just two weeks, the news that 'Leshan Supermarket has good products and low prices' spread again.
The battle situation also changed fundamentally. A year later, Leshan Supermarket became the darling of the county's retail market, with 13 stores. Junguo Supermarket's performance continued to decline.
Turning to Wholesale: Attacking the Opponent's Upstream
At this point, Song Leshan made another puzzling decision: Leshan Supermarket made a full adjustment: no new supermarket stores for a year, and resolutely develop wholesale business for cold drinks, dairy products, and convenience foods.
The wholesale business started after a conversation between Song Leshan and Li Yuemin, which ended in disagreement.
Li Yuemin, a local food wholesaler for many years, was cautious and low-key. His business covered cold drinks, beverages, packaged foods, and alcohol. Many street shops and residential retail stores in the county sourced from him. Although business had been tough in recent years, he still earned a net income of 300,000 to 500,000 yuan a year, and he was content with his modest wealth.
The rise of Leshan Supermarket chain had an impact on Li Yuemin's business, but the former focused on retail, directly facing consumers, while he focused on wholesale to retail stores, so they didn't interfere with each other.
What brought Song Leshan and Li Yuemin into direct conflict was the issue of bagged fresh milk in the county: prices were too low and chaotic, with no standard.
The milk company gave both Song Leshan and Li Yuemin an ex-factory price of 1.6 yuan per bag, with a wholesale price limit of 1.8 yuan and a retail price of 2.3 yuan. Li Yuemin strictly implemented the wholesale price, but his downstream retail milk points mostly sold at around 2 yuan.
Song Leshan had no wholesale business, so he couldn't regulate retail prices. He approached Li Yuemin to discuss how to standardize the market.
After listening to Song Leshan's purpose, Li Yuemin pondered for a moment and said, 'I can only guarantee that I won't step out of line, but I can't force retail milk points. Besides, business is tough now; as long as everyone makes a profit, it's fine.'
Song Leshan then took his leave. That night, Song Leshan decided to launch a wholesale business, and the direct conflict between the two began.
Within a few days, Li Yuemin's situation took a sharp turn for the worse. Retailers' orders for cold drinks and dairy products dropped significantly, and some new retailers refused Li Yuemin's supply.
Especially on May 12, Li Yuemin, as planned, purchased 50,000 bags of fresh milk from the milk company. When the delivery vehicles returned and he checked the inventory, he found that more than half had not been wholesaled out.
A store owner explained the reason to Li Yuemin: Song Leshan has already made a move against you. 'The salespeople from Leshan Chain promised us that if we source from them, cold drinks and dairy products will be at least 2 percentage points lower than your prices, and other products like beverages and alcohol at least 1 point lower, with prices absolutely the lowest in the county. However, they require that retail prices remain the same as now and not be lowered, for example, bagged fresh milk must be raised to 2.3 yuan per bag...'
Li Yuemin's hand holding the cigarette trembled slightly: 'What price does Song Leshan give you for bagged fresh milk?'
'1.75 yuan per bag, and if you order more than 800 bags at a time, it's 1.7 yuan per bag.'
A few days later, Song Leshan also lowered the wholesale price of another best-selling product from the milk company.
Digging a Deeper Trap
Li Yuemin couldn't remain indifferent.
He knew well that manufacturers wouldn't easily lower ex-factory prices for a new wholesale distributor, so Song Leshan's purchase price couldn't be cheaper than his.
Li Yuemin decided to fight fire with fire, lowering the price of bagged fresh milk to 1.75 yuan per bag and other products by 1 percentage point. After adjusting sales prices, Li Yuemin began persuading retailers to continue ordering from him, and many retailers switched back to Li Yuemin's side.
In the following three months of June, July, and August, Li Yuemin and Song Leshan seemed tired, with minor skirmishes but no major conflicts.
Li Yuemin wanted to maintain the status quo and deal with Song Leshan early next year.
However, entering September, cold drinks entered the off-season, which was increasingly favorable for cold drink and dairy inventory. Large wholesalers usually made their last stock-up of the year at this time, preparing goods for the next few months and buying new stock next year.
Because of the competition this year, as early as August, Li Yuemin conducted a thorough survey of all retailers, clarifying the specific quantities and varieties each retail point needed before stocking up.
After stocking up in early September, Li Yuemin arranged for staff to deliver goods to retailers, but was repeatedly told that they had already stocked up for the year.
Li Yuemin was stunned: 'If I can't push this batch this year, no one will want old goods next year. That's over 2 million yuan worth!'
Li Yuemin quickly found out: Leshan Chain had held a department manager meeting in June, requiring the distribution center to transfer inventory to various supermarket stores before August 20, and the stores would launch a 'Summer Appreciation' activity, bundling products to increase sales. All cold drinks, dairy, beverages, and alcohol in the stores would be sold at 5% discount before August 10.
After the hot sales in June and July, Leshan Chain had mostly digested its inventory, and the financial books showed cash holdings of over 8 million yuan. At this time, Song Leshan ordered the purchasing department to buy large quantities of best-selling products from suppliers with cash on delivery, but suppliers had to offer a discount of at least 8 percentage points off the original ex-factory price.
Previously, these products were mostly on consignment with payment terms of one to two months. Now, with cash payment, why not? At the same time, manufacturers, after receiving the promise that these goods wouldn't need to be exchanged or returned, all agreed to supply at the prices proposed by 'Leshan.'
In fact, Song Leshan had already privately signed written order agreements with most retailers: if retailers purchased all goods for September, October, November, and December at once in cash, they could enjoy a 8% discount off the original wholesale price. Moreover, the goods purchased by retailers could be stored for free in 'Leshan's' cold storage and warehouses, and retailers could pick them up as needed.
Small business owners are meticulous; enjoying such a low purchase price was an unexpected bonus. Retailers naturally wouldn't miss this good opportunity.
Within just three weeks, over 5 million yuan of the 7 million yuan in payments had returned to his account, and the remaining goods could be digested by the chain stores within two months.
At this time, Li Yuemin hadn't yet started. Song Leshan's trap was getting deeper, and Li Yuemin seemed unable to escape.
Surrendering on Both Fronts: A Brilliant Net Closing
Song Leshan had a business creed: price competition is the most primitive and also the most effective means of competition.
Before the war, Song Leshan had seen through Li Yuemin: Li Yuemin only had wholesale business, and in wholesale, without 'volume,' there is no life.
To this end, Song Leshan formulated a step-by-step encirclement strategy:
First, enter the wholesale business with a low-price strategy regardless of cost, competing with Li Yuemin for customer resources, with losses offset by Leshan's retail profits;
Second, strike first during autumn stocking, making Li Yuemin's goods 'dead stock,' completely seizing all of Li Yuemin's customers, and striving for both fame and fortune at this stage;
Third, to take, one must first give. By controlling the supply channels of scattered retail stores, they could force them to raise retail prices, then lower Leshan Chain's retail prices, use extraordinary means to attack retail stores within the radiation range, and expand their own scale. This is the best strategy to undercut from behind.
Li Yuemin, in depression and distress, forced a smile and spent New Year's Day with his family. Just after the holiday, Li Yuemin, like before the holiday, ran around looking for a market for that batch of goods worth over 2 million yuan. After hitting walls everywhere, Li Yuemin felt a desolate sense of being at the end of the road.
Before the Spring Festival, a stranger found Li Yuemin and was willing to buy his goods. Li Yuemin felt 'a light at the end of the tunnel,' but also felt the offer was too 'black': the stranger required Li Yuemin to sell at 65% of the purchase price. After bargaining, they settled at 79% of the purchase price.
According to the contract, the payment was to be transferred to Li Yuemin's account on February 6. On February 7, Li Yuemin stood early at the warehouse door. When the stranger arrived with over a dozen trucks to pick up the goods, Li Yuemin understood everything. Two of the trucks had 'Leshan' chain logos, and the loading workers wore Leshan Chain uniforms.
Song Leshan distributed Li Yuemin's goods directly to his own chain stores and added a 10-point profit on top of the normal purchase price, selling them as special offers.
At this point, other retailers were unhappy: How come Leshan Chain's prices were suddenly much lower than theirs! If this continued, who would buy from them?
Some larger retailers found Song Leshan and accused him of 'going too far.'
Song Leshan, with a bitter expression, said he had too much old stock, and if he couldn't sell it before the Spring Festival, it would be stuck in the warehouse as waste after the holiday, so he had to resort to this. He patted these people on the shoulders and vowed: 'After the Spring Festival, I will immediately cancel the special offers. Let's be understanding!'
Just after the Spring Festival, Song Leshan indeed kept his promise.
The retailers were left with no choice but to swallow their bitterness; they vaguely felt that the good days were over!
After the Spring Festival, Song Leshan required that all new wholesale business for the year cancel discounts, uniformly adding 8 points to the purchase price for wholesale, and requiring cash transactions.
After changing the wholesale policy, Song Leshan required all Leshan chain stores to lower prices on price-sensitive products by 3 points and strengthen in-store poster displays and color flyer distribution.
As a result, Leshan Chain's prices remained significantly lower than retail stores, gradually establishing a friendly image of good quality and low prices in consumers' minds.
Cash settlement with retailers greatly shortened 'Leshan's' cash turnover period. With the new wholesale policy, Song Leshan had more working capital.
At this time, he started a new round of chain brand expansion.
Song Leshan attracted retailers with larger storefronts and prime locations to join Leshan Chain through 'franchising,' with the following cooperation terms:
1. The investment costs for store decoration and hardware facilities would be shared equally between the two parties;
2. All goods for franchise stores would be uniformly supplied by Leshan Chain's distribution center, and franchise stores had no independent purchasing rights;
3. Franchise stores must implement Leshan Chain's retail prices and could not set prices arbitrarily;
4. Franchise stores had independent financial accounting and were responsible for their own profits and losses; the chain headquarters did not charge franchise fees;
5. Franchise stores enjoyed a 7% discount off the normal wholesale price, but still required cash on delivery.
Such favorable franchise conditions were much better than going it alone, and larger retail owners flocked to 'Leshan's' banner.
Within 3 months, Leshan Chain developed 16 franchise stores with minimal investment, and the number of chain stores jumped to 29, scattered throughout the county, becoming the largest chain convenience supermarket in the county.
Now, Song Leshan is building chain supermarkets in the townships on the outskirts of the county. This time, he is focusing his greatest effort on building an information system different from the county chain stores. Whether it will go smoothly remains to be seen.
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