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Since its founding in 1992, Huiyuan has grown from nothing, and its successes are numerous. However, today's Huiyuan faces many problems, which are just growing pains. I see no need to sing its praises; instead, let's discuss some issues and suggestions. I welcome discussion and hope to spark further thought.
Huiyuan has developed for 20 years. The first decade was satisfactory. In the last century, during China's transition from a planned to a market economy, goods were scarce, and sales pressure was nothing like today. Entrepreneurs then needed more "courage." But in the new century, with further opening, more foreign brands entered, and the market shifted from scarcity to oversupply. Professionalism became more important than courage for business operators.
Compared to Wahaha's Mr. Zong, who is not well-educated, the juice boss is a cultured man. He is a product of a country known for etiquette, a guest professor at China Agricultural University, and an MBA mentor. Impressive, right? He's on par with the singing Major General Song, both guest professors at the agricultural university. You ask about his education? Well, he graduated from a party school, which the Ministry of Education doesn't recognize, but he's a professor. Unlike Mr. Zong, who was an "unemployed youth" until 42, the juice boss was a civil servant with an iron rice bowl before 40, holding a section-level position. If he hadn't been unfairly passed over for promotion to deputy county head, he might have had a political career as bright as the official in Anhui. Given these backgrounds, their management styles differ. Mr. Zong, who has known poverty, does everything himself to save on salaries, even with a 60 billion yuan business, he has no vice presidents. The juice boss, with only 3 billion in scale, has a vice president team like a reinforced platoon. Mr. Zong, having suffered from joblessness, still works tirelessly, spending 250 days a year visiting markets. The juice boss, however, rarely visits street-level shops; he hires that platoon of VPs to listen to reports. If he went to a wholesale market with his team, it might intimidate the middlemen. But it's not that he never goes to markets; he visits European markets, attending forums and saying, "I just toured Germany, England, Italy..." He's not on vacation; he's studying markets at a high level, something a poor man like Zong can't understand. That's why one is 60 billion and the other 3 billion. Innovation needs inspiration, which you can't get from street shops. You need to go to Europe. For example, to get new proposals from the planning department, you shouldn't keep them in the office; instead, rent a luxury cruise on the Huangpu River, let them enjoy the night view, sip French wine, and listen to Mendelssohn's E minor concerto. That's how inspiration comes. In 2009, the juice boss went to Europe. On the Rhine, in pleasant weather, a light rain caught him without an umbrella. Back at the hotel, watching the rain, he had an inspiration: God is the greatest designer, and the raindrop's streamlined shape would make a beautiful bottle. He decided to make a bottle shaped like a raindrop, filling it with cola and juice, naming it "Juice Joy." You see, foreign rain is different from Chinese rain.
Let's get back to the point. The difference between Mr. Zong and the juice boss in market approach explains the gap between 60 billion and 3 billion. A boss of a 60 billion company still goes to the market daily, solving problems immediately. That dedication ensures growth. However, modern enterprises should let professionals do their jobs; the chairman should focus on planning and strategy. If Mr. Zong continues to micromanage, Wahaha's future may not be bright. If the juice boss doesn't get down to see the real market and make correct judgments, relying only on reports and his platoon, his situation won't change fundamentally.
The juice boss often says, "Anyone can do sales," which hurts the feelings of real salespeople. Sales is indeed something anyone can do, but results vary. With increasing competition, professional skills are more important. "Thinking determines the way out." A leader's understanding and emphasis on marketing determine the company's height. So, if the juice boss wants better market performance, he needs to change himself first.
After the failed Coca-Cola acquisition in 2009, Huiyuan made many detours in sales models and organizational structures. The biggest problem was ignoring the input-output ratio of sales organizations. They used aggressive sales systems to cover the market, but market development has objective laws. You can't become fat in one bite. Uni-President's failure with sales offices was the same mistake. The bigger issue was constant change. The problems are obvious, so I won't list them all.
Let's return to marketing and discuss Huiyuan's sales models in recent years.
Huiyuan's sales model and structure changes can only be described as chaotic. Small changes monthly, big changes every few months, and within half a year, it's unrecognizable. Two major events drove these changes:
- Listing on the Hong Kong Stock Exchange in 2007.
- The Coca-Cola acquisition attempt.
Before the 2007 listing, Huiyuan's development was stable, with better finances than now. Although sales were not on par with industry giants and growth was modest, Huiyuan was a big fish in the medium-high concentration juice pond. After listing, with more money, the juice boss expanded factories nationwide. But sales couldn't keep up with capacity. Listed, he had to answer to shareholders. The pressure was felt quickly. The juice boss was clear-headed; he was playing a big game. He had talent in capital operations and realized that operations weren't his strength. So, he decided to sell the company "like a pig" while he could, leading to the Coca-Cola deal. Initially, things went as planned. The Americans offered a high price, but they were interested in Huiyuan's factories and brand, not its marketing team or network. They made it clear that the juice boss would handle the aftermath. The juice boss was happy, lounging in his villa, waiting to count money. He didn't care about the business team; he transferred them around, and if they didn't report within three days, they were considered resigned. Dealers were easier to handle. But fate intervened: the financial crisis hit. The Americans felt the chill and wanted to keep cash. They also learned through espionage that the factories' management and capacity weren't as reported. They wanted to back out but had signed an agreement. So, they used their connections with Chinese leaders, leading to public outcry to save the national brand, and the government blocked the deal on antitrust grounds.
Why compare Wahaha with Huiyuan? I think Huiyuan can use Wahaha as a hypothetical enemy; the market enemy is the best teacher. Huiyuan's sales haven't grown mainly due to its weak beverage segment. Wahaha could be a teacher. If Huiyuan's beverage goal were to be present wherever Wahaha is, that would be formidable, given Wahaha's 60 billion. But to learn from Wahaha, the key is product. Without suitable products, even a dragon team can't succeed. Niu Gensheng said, "Win at the terminal, but also win at the start." Forcing sales leads to expired products everywhere. Huiyuan has many factories, so production should be an advantage, but it seems to be a weakness. The juice boss needs to reflect, but that's outside marketing. Innovation is hard in the short term, and new product development takes time and risk. So, following Wahaha's lead is a good strategy. The standard is better price with similar packaging and quality. For example, sports drinks like Mizone, Scream, and Activate sell well. Why doesn't Huiyuan follow? Maybe with a catchier name. There's also a good trend: medium-high concentration juices are gaining consumer acceptance due to rising living standards. The advantage is Huiyuan has a head start; the disadvantage is more competitors will enter. Can Huiyuan meet the challenge and grow? I think medium-concentration juices and fruit-vegetable juices will replace low-concentration ones like Orange Fresh and Daily C as table drinks. This market is huge and still open. Can Huiyuan create advantages in packaging, taste, price, and promotion? Sales models and structures should also learn from Wahaha, maximizing dealer and distribution enthusiasm. We mentioned Wahaha's joint distribution system is simple: exclusive distribution plus controlled wholesale. Its strength is profit distribution, backed by cost leadership, which leads to customer relationship leadership. Can Huiyuan build its own joint distribution system? Can it manage profit distribution? Can it achieve cost leadership? These are the questions Huiyuan should ask itself. The key is whether people can make money working with you. That's for the platoon and the juice boss to answer. Let's focus on the joint distribution model. In principle, it's exclusive distribution plus controlled wholesale. Let's analyze with a minimal business unit:
First question: How many dealers are appropriate in a county?
This can't be answered arbitrarily. It depends on sales volume and product mix. If a county does 50 million a year, one dealer might struggle with capital and delivery. If it's only 3 million, one dealer is barely surviving, so more would be foolish. If the company has multiple product categories with different channel focuses and sales bases, splitting among dealers is normal. For example, Want Want divides its products into divisions, each with separate recruitment and teams, though in many areas, they share dealers with bestsellers. Huiyuan's food service division recruiting separately makes sense due to channel specificity. But if products are the same category and channels overlap, separate recruitment is pointless.
Let's think backwards: A dealer with 3-5 delivery vehicles and 8-10 employees needs at least 20 million in annual sales to survive well. If Huiyuan only does 1 million with him, he won't take it seriously. Such dealers usually handle 4-5 brands, so Huiyuan is just 5% of his business. He won't invest much. If you find a dealer doing only 1.5 million, he might focus, but can he meet network, capital, and delivery needs? The point is, with Huiyuan's current sales scale, a county should have one dealer, not many, to ensure profit and attention. Otherwise, you can't guarantee dealer profits, and you'll need more staff, increasing costs. Of course, specific situations vary, but generally, one dealer is better. Even Wahaha, with its scale, typically has one dealer per county doing 30-50 million annually. The dealer must be cooperative and aligned with the company's vision. Speaking of vision seems vague, so let's be practical: Would a dealer with 50 million in sales fight with a secondary wholesaler over a terminal selling 2-3 cases a month? Probably not. That's the controlled wholesale system we'll discuss later.
Second question: What is an exclusive distribution system and how to implement it?
Exclusive means selling only Huiyuan's products in the same category, ensuring dealer focus. If he also sells Wahaha, you'd have to compete for attention, increasing difficulty. So, choosing the right dealer is crucial. Does he have good distribution networks? A good reputation? Clear business philosophy? Can his capital, storage, delivery, and staff meet Huiyuan's requirements? Huiyuan's biggest mistake has been blind recruitment and arbitrary marketing, hurting old dealers who grew with the company, leading to higher costs, lower sales, and price chaos. Remember, dealers have grown into large companies with their own teams; don't control their growth. Only unfair profit distribution drives them away. Now, Huiyuan's policies change daily, dealers change monthly, and sales managers are busy meeting targets, deceiving themselves. Internal strife is rampant. Boss Zhu is playing a big game, enriching himself at shareholders' expense.
It seems everyone has felt the pain of recruitment. Product recruitment is like a girl finding a husband. You can't love everyone or expect everyone to chase you. Be rational: know your own conditions, decide what you want, and then act. Huiyuan already has dealers nationwide, so it's not a young girl but a middle-aged woman, not particularly attractive, but restless. She didn't choose well when young, married hastily, and now flirts with every handsome man, thinking she's irresistible. But she only attracts old widowers, not real catches.
Back to exclusive distribution. Exclusive means the dealer is faithful to you, not a mistress. Distribution means helping the dealer move products from the warehouse. Products don't fly out by themselves. This has evolved from "sitting merchants" to "traveling merchants." In the last century, wholesalers just hung a sign and waited for customers. In the new century, with competition, manufacturers pushed "win at the terminal," and terminal owners now get deliveries at their door. This shift requires staff, which costs money. That's where sales organization and systems come in. Huiyuan has made many mistakes here, costing a lot, as everyone knows. Yet it keeps falling into the same trap.
How many salespeople should a market have? The key metric is sales volume, current volume. You can be slightly aggressive but not ignore reality. If you're doing 200,000 a month and plan for 2 million, staffing for 2 million is foolish. For a county doing 1 million a year, don't assign any salesperson. It's not even an exclusive distribution system; just controlled wholesale. Also, consider if the dealer is suitable. Ask him, "I've given you this great product and market; what have you done?" If he can't reflect, replace him. If a county is at 1 million, pressure the dealer to reach 1.5 million. Once at 1.5 million, you can assign one salesperson, but then the target should be at least 2 million. The dealer and salesperson must share the pressure. With staff, management issues arise. What KPIs do you assess monthly? As a marketing guru said, "You get what you measure." What has Huiyuan been measuring? That brings us to the MVS system, another foolish move.
The MVS system has many issues. It's not that the system is bad, but the platoon doesn't know how to use it—a classic case of amateurs leading professionals. MVS stands for Mobile Visit System, introduced by the two American giants. It was designed to improve visit efficiency in the US, where stores are sparse and far apart. Salespeople would spend all day driving, missing lunch, and still not meeting visit quotas. So, they created a mobile data terminal to connect with store databases, check inventory, and place orders instantly, improving efficiency.
In China, the predecessor was a customer card, where salespeople manually recorded customer info, inventory, orders, and routes, with customer signatures. The Americans replaced it with the mobile terminal, adding GPS, which was like putting a spy on salespeople. Initially, employees protested, but the boss insisted. The second boss tried it in Shenzhen but gave up. The first boss explained it was to reduce paperwork, and they removed GPS but added barcode scanning at stores. Coca-Cola used it as a route tool, replacing paper cards.
Huiyuan's MVS is more advanced, with GPS, photo upload, and visit time management, but it lacks inventory management and SKU trend analysis. So, it's more of a management tool than a sales tool. One helps salespeople do their jobs; the other watches them. The difference is huge. Of course, people find workarounds, as everyone knows.
So, MVS is like having eyes in the back of salespeople's heads, but it loses historical data that could help sales. In this atmosphere of distrust, management relies on it more, and salespeople resent it more. It's a waste of money and adds trouble. The only benefit is revenue for mobile operators, as Coca-Cola's terminal is independent.
In essence, MVS is just an electronic customer card. No matter how advanced, it shouldn't lose its basic function. That's why Huiyuan's MVS is putting the cart before the horse. The platoon uses it to show the boss how they control and supervise the team, leading to absurd features like timing visits. Remember, you get what you measure. Since MVS is essentially a customer card, let's summarize the card's functions and compare.
A customer card has four parts: cover, route map, index, and individual pages. The cover is simple. The route map shows the day's area, with roads, outlets, and visit routes, numbered to match the index and pages. It can also show competitor placements. The index lists customers by number, with addresses, contacts, and visit frequency. The individual pages are files for each customer, with basic info and dynamic sales data like visit times, inventory, and SKU trends. The card is a vital tool for route salespeople to plan visits, prepare info, and make suggested orders. It's also a management tool for supervisors to assess customer quality, product promotion, and inventory. When replacing staff, a complete card helps with handover.
You might say this is obvious, but I'm covering basics for those who need it. For route salespeople, the card's key function is inventory management and suggested orders. For example, at a store, after greeting, you do merchandising, record inventory, and see last visit's stock, orders, and current stock. The suggested order is: (last stock + last order - current stock) * 1.5-2 - current stock. The bracket is the sales during the visit cycle; 1.5-2 is a safety factor. With this, you can say, "Boss, last time you had 1 case and 4 bottles of 1.5L pulp drink, you ordered 3 cases, now you have 5 bottles. You sold about 4 cases last week. With Mid-Autumn Festival coming, you should order at least 7 cases." The boss will agree. Without this, you'd just say, "Boss, you're low on 1.5L, I'll send 10 cases tomorrow," and he'd refuse. So, the card is essential.
Does MVS have these functions? Does it need changes? Back to staffing: match staff to sales volume. Under 1 million in a county, no staff, just fix the dealer. At 1.5 million, one person, but target 2 million. For every additional 1 million, add one salesperson. This 1 million is arbitrary; Huiyuan should calculate its cost per case. At 8-10 million, add a supervisor; at 80-100 million, set up a regional office reporting directly to HQ, but strategy should be made at the regional level. Now, what do salespeople do? How to manage? How to assess?
First, what do salespeople do?
Mainly two things: 1) Visit and maintain existing customers; 2) Develop new customers.
Simple, but not easy. For existing customers, increase displays and items. For new customers, what type and how? These questions could fill a book. Keep it simple: use the 80/20 rule to focus on the best customers, not just meet numbers. With one salesperson in a county, focus on key outlets (KA, schools) and key secondary wholesalers, then add others. With two, one for urban, one for rural. Always prioritize high-volume, high-influence customers. Don't expect the same customer count from a key account rep and a small store rep.
Second, how to manage? Third, how to assess?
These can be discussed together, but remember: manage the process, assess the results. Some metrics are for management only, not assessment, like distribution rate and merchandising. Sampling is too random, so results aren't fair. You can't visit all outlets. So, these are for management, not assessment. Using distribution rate as a monthly KPI is foolish. Process management is important because good processes lead to good results. Front-line supervisors mainly manage processes. Also, assessment metrics must be consistent across levels. If monthly KPIs are active customer count and average SKU per order, then everyone from VP to route salesperson must be assessed on these. Salesperson data comes from their cards and orders; MVS can export this. Supervisors' data is the average of their team; regional managers' is the average of supervisors; the GM's is the average of regional managers. Only then will everyone focus on these metrics. If you only assess salespeople and not managers, managers won't care. Again, you get what you measure.
We've discussed how manufacturers use appropriate sales structures to support regional systems. The key metric for staffing is sales volume, but there are exceptions. In key cities like Shanghai, Hangzhou, or Shenzhen, sales might be low, and finding suitable dealers is hard, but we must be there due to influence and competition. So, our earlier advice may not apply. How to handle such areas? Also, factory cities should be model markets. How to do that? We've focused on traditional channels with dealers, but modern retail is growing. How to handle modern retail and special channels? Let's discuss these.
In essence, different markets need different sales models. Theory alone isn't enough, so I'll use Jiangsu as an example. Jiangsu is representative: economically developed, populous, with prosperous southern areas and less developed northern areas. Huiyuan has two factories there, marking the north-south performance divide.
Here's a map of Jiangsu. It has 13 prefecture-level cities, 106 counties/districts, 54 of which are urban districts, with a population of about 75 million. It's known as a paradise for FMCG. Suppose Huiyuan has one dealer in each of the 106 counties, each doing 1.5 million annually. That's 1.59 billion. Each dealer sells about 100,000 per month, with peaks in summer and Spring Festival. Does Huiyuan have this scale in Jiangsu? What if it were 2 million? Some might say this is naive planning. I agree it's not how you plan, but I'm just illustrating a potential. If a product can't reach 1.5 million in a county in Jiangsu, it's doing poorly. I know some areas in southern Jiangsu might not even have dealers, but this is a hypothetical average. Using per capita consumption to predict sales is common.
Let's look at a sample county. Suppose it did 2.3 million in 2011 and plans 3 million in 2012. According to our staffing standard, that's 2-3 salespeople.
In the diagram, red arrows show product flow: factory to exclusive distributor, then to KA, urban secondary wholesalers, rural secondary wholesalers, and some terminals. Secondary wholesalers distribute to their terminals. Green arrows show sales structure matching: one salesperson for urban KA and secondary wholesalers, 1-2 for rural secondary wholesalers. With 3 million, no dedicated supervisor; share one with other similar areas. The exclusive distributor covers KA using a "we sell, they deliver" system, which I'll discuss later. Here, I focus on traditional channels. I emphasize the wholesale channel. I want dealers and salespeople to mainly serve wholesale. But in practice, dealers prefer direct delivery to terminals, and salespeople prefer terminals. Why? Because the per-case margin for direct delivery to secondary wholesalers is higher than for wholesale. Dealers think: 1) Why let secondary wholesalers earn the margin? 2) What if they use low prices to steal my customers? 3) Control more terminals. Dealers might say they avoid secondary wholesalers because they undercut prices. There's some truth, but it's also about price system design and market control. When the company doesn't provide enough staff, dealers doing less secondary wholesale and more wholesale hurts the company's performance because one person selling can't open the market like many. Salespeople prefer terminals because: 1) Small customers are easier to serve and close; 2) The company requires customer count but not quality; 3) Dealer pressure.
You can see some of Huiyuan's problems: the sales model is upside down, overemphasizing terminals and ignoring wholesale. Simply covering all terminals with people won't maximize sales. This isn't unique to Huiyuan; the two American rivals made the same mistake. They thought controlling terminals would maximize sales but found that overly aggressive sales systems are costly and can't replace wholesale's role in distribution. So, they agreed: if terminal service rate exceeds 60%, reduce staff. That is, the company's terminal coverage in an area shouldn't exceed 60%; aim for the best 60%, and let wholesalers cover the rest. This is rational and economical. Wholesalers have their own customer bases and resources. Maximizing their enthusiasm is the most economical and efficient sales system. That's the controlled wholesale system. Now you see the brilliance of Wahaha's joint distribution system.
From the diagram, when sales reach 6 million a year, consider splitting the dealer. Not mandatory, but be aware of risks. If the current dealer is cooperative, loyal, and has adequate resources, don't disturb. But if problems arise, prepare for a split. If splitting, I prefer by area (urban vs. rural) rather than by product. A key point is that the sales team can't match a product-based split. If you have four products in a county and split among four dealers, how do you allocate sales? If a salesperson gets an order for one case of each product, do you split it into four deliveries? Delivery times and service quality will differ. Customers won't accept that. Such a model only works if: 1) You use traditional wholesale with no salespeople, relying on dealers; 2) Each product's sales are large enough to support a sales system. Neither applies to Huiyuan now, so the current product-based recruitment is nonsense. At 6 million in a county, the market is open. With our staffing standard, you'd have 6 or more salespeople, so it's worth managing well. Consider a dedicated supervisor.
Modern retail channels, besides national chain customers using the "we sell, they deliver" system, include many local supermarkets that need attention. So, consider assigning one salesperson to this channel. But price management is crucial: don't sell to these supermarkets at wholesale prices, or you'll have conflicts with national chains. Try to follow the company's unified price for this channel and use fees or rebates to gain competitive advantage. I'll discuss KA management later.
As sales grow and staff increase, the market needs deeper cultivation. In urban areas with dense population and outlets, assign 2-3 salespeople using a wholesale collaboration system to serve BC-class retail terminals. Divide by area, meet customer count requirements, and optimize routes to serve active customers. The diagram shows a dedicated person for urban wholesale, but with a dashed line, meaning: 1) If there are only 20-30 beverage wholesalers in a small county, no need for a dedicated person; the supervisor or KA salesperson can handle it. If there are many and sales are large, assign one. 2) Some might ask why not let route salespeople serve wholesalers. I say absolutely not. Why? The 80/20 rule: 80% of sales come from 20% of key customers. Where would you focus? If a wholesaler orders 100 cases at once and a small store orders 2, would you spend time on small stores? Then why invest in serving them? If a route salesperson has a daily target of 2,000 yuan and visits 30 customers, he could meet it with one wholesaler. Would he then diligently visit the other 29 small stores? Some might, but not all. People are self-interested; it's a design flaw.
This might require some insight to understand, but I suggest reading it twice. You'll see why I say this. Rural markets are vast; even strong dealers can't cover village-level customers. So, rural wholesale is especially important. At this sales scale, allocate salespeople based on the number of townships. Generally, a salesperson shouldn't serve more than 3 townships a day; 2 is better, 1 is luxurious. More than 3 means you're just contributing to oil companies, not implementing visit processes or merchandising. Remember the American boss's early days in China: he'd shout, "Want goods? Unload. No? Leave." Later, the second boss forced a 101 system. You don't have that no-competition environment now, and even if you did, competitors would kill you. Two more points about rural markets:
- Should salespeople do pre-sales or ride along with delivery?
For new distribution, ride along is better. For regular sales, pre-sales is better. If a salesperson spends 8 minutes per customer doing the eight-step visit, will the dealer's vehicle wait? Dealers have costs for vehicles and drivers. Unless your product has high margins, dealers won't cooperate. Pre-sales allows merchandising and problem-solving. Don't be absolute; it shows you don't understand sales. How does Huiyuan do it?
- Which customers to serve in townships?
I've been talking about wholesale customers in townships. What about others? How do you define who is wholesale? Townships have various customers: supermarkets, schools, internet cafes, wholesalers, retailers, restaurants. We can't serve all like in urban areas due to cost. Key supermarkets and schools should be served by township salespeople, similar to urban. Village-level customers should be left to township wholesalers. Salespeople should identify wholesalers with village delivery capabilities and focus on them. Many customers are both retail and wholesale, like small supermarkets that also wholesale. For these, base it on order size: if it meets a threshold, treat as wholesale; otherwise, retail price. So, when I say township, I mainly mean wholesale.
That's about county-level markets. As sales grow, it's about deepening and refining. "Cities go deep, villages go wide." Cover terminals economically, but remember the 60% coverage limit for salespeople. Leave room for wholesale and control costs. For markets under 1 million or without customers, there's no point discussing. Find suitable dealers quickly, even if it's just controlled wholesale. If recruitment is a problem, either the people or the company has issues.
In the previous two lessons, we discussed county-level models, sales systems, and organizational structures. I highlighted the wholesale channel. A brother asked how to expand wholesale without a sales base. Today, I'll focus on the wholesale channel.
First, there are no secret tricks or miracles in marketing. A healthy company with sustained growth makes fewer mistakes and progresses steadily. So, I'm not offering magic solutions but discussing principles that are still correct.
The wholesale channel I refer to is secondary wholesalers, not primary. This is key. If you treat primary as secondary, you'll go astray. Who are the secondary wholesalers for beverages? First, they're not competitors' dealers. Competitors also require exclusive distribution. They might carry your product only if their customers specifically ask, so they'll just do it as a favor. They won't promote your product or maintain your price. So, don't expect competitors' primary dealers to be your secondary. Salespeople should resist unhealthy sales. Second, secondary wholesalers usually have storefronts and do both wholesale and retail. They have no brand loyalty and care about margins. They cover smaller areas but have their own distribution channels. These are typical characteristics. If your product isn't selling well, secondary wholesalers won't be interested. New products without higher margins won't be pushed. They might take a few cases as a favor, but you'll handle any unsold or expired stock. So, without a sales base, don't force the wholesale channel. Instead, cultivate quality terminals, and once you have a base, consider expanding.
Now, let's discuss special areas like southern Jiangsu cities or factory surroundings, where Huiyuan has direct operations and factory marketing zones.
Again, let's use a diagram:
[Diagram description: External business, route sales, wholesale sales, KA sales, special channel sales; external supervisor, city supervisor, direct supervisor; company manager]
First, factory sales offices and direct companies can share a model. These areas should be model markets. If you can't do well, how can you ask dealers to? So, these areas should be regional operation centers, covering at least a prefecture-level city. Without 20 million in sales, you shouldn't call yourself a general manager. I know Huiyuan's direct companies exist because suitable dealers aren't available, and modern retail is developed, so they had to do it themselves. But since you're doing it, do it well and set an example. Factory marketing zones have the same issue. With a factory as an advantage, not performing is inexcusable. Let professionals do their jobs. Forcing a production manager to handle sales is amateurish. Huiyuan factories also have a fatal problem: not treating employees well. If you manage well, employees feel a sense of belonging, and they become your advocates. But if the company is half-dead, wages are below industry, machines run half the time, and quality control is poor, employees are ashamed to say they work for Huiyuan. They become negative promoters, telling people not to buy Huiyuan products. So, production and sales must be separated. Factory sales offices can use factory resources but shouldn't be under factory management.
Now, let's discuss the ideal operation. Surrounding counties should follow the exclusive distributor model, but leverage the factory and direct company's logistics. If nearby areas can't order full truckloads, the sales office or direct company should provide small-batch delivery. Don't leave blank areas; start small and grow. In the city where the sales office or direct company is located, don't use a large exclusive distributor for traditional channels. Instead, divide into areas and develop small wholesale collaboration dealers. These dealers need only delivery capability, storage, capital, and self-selling ability in their area. You manage your route salespeople's shipments and market performance. Similarly, wholesale needs dedicated staff, not route salespeople. For wholesale customers, if they order a certain amount (e.g., at least 100 cases), the sales office or direct company should deliver directly. This gives better price control and reduces dependence on dealers, as you have your own delivery. But set a minimum order to cover delivery costs; delivering 2-3 cases is a loss. National chain KAs and local supermarkets should be direct, but some key schools, internet cafes, and restaurants might also be direct. But keep it minimal; give dealers what they can handle, as these channels have high service costs. However, you need competitive advantages. For external areas, I recommend assigning a supervisor, one per 6-8 million in sales. In the diagram, I used dashed lines for the city traditional channel supervisor and direct supervisor, meaning it depends on sales volume. If sales support it, assign; otherwise, the manager can oversee. That covers the various minimal business units. I've emphasized the wholesale channel in traditional channels. Finally, I must stress that price system management is crucial in wholesale. Without proper profit distribution, you can't resolve conflicts between dealers and secondary wholesalers. (To be continued)
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