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“Without money, you can't crack the retail market. Retailers only care about money, nothing else. No money means death for your business in retail, and the budget the company gives is never enough...” We hear too many complaints like these from manufacturers about retail fees. A few days ago, I had a small gathering with colleagues and friends from retail, and the conversation naturally turned to the issue of fees in the supplier-retailer relationship. I personally feel that there are many differences between how retail buyers view fees and how manufacturers think about them. Because these differences are not well understood, they affect the effectiveness of manufacturers' fee investments in retail. Let's first look at a few psychological phenomena of retail buyers regarding fees:
They go where the money is. Whether you're a big or small manufacturer, if you're easy to get money from, they'll ask for more. Logically, manufacturers with high performance should be charged less, but if there's a wealthy manufacturer who performs well and is willing to invest more, the buyer will still take the money without hesitation. As long as there's money, regardless of the manufacturer or product, they'll collect it first. Once a buyer gets the impression that “this company has money,” it's hard to escape later. If you don't pay, they won't do anything for you, even if they could, because they know you'll eventually come up with the money. When have you ever seen kidnappers target the poor? It's the same principle.
They ask more from those who pay easily. For manufacturers who are stingy with money, buyers are reluctant to approach them too often—it's exhausting and yields little. If their performance is decent, they'll just make do. Buyers are human too; they want to achieve more with less effort. So they'll go for the easy targets. Those who pay easily will be approached more often, with more tricks and tactics, because it's more rewarding than dealing with tightwads. It's like picking the plumpest, softest persimmon.
No matter where the money goes, if they're willing to pay, why not take it? Buyers may charge for even the smallest things, but not everything in the retail store requires money. (I can only say so much; if I go deeper, my buyer colleagues might beat me up. Ladies, don't cut off our income, haha.) As I said, it's not that buyers can't do things for free; it's whether they're willing. If you give them a good reason, they can do it without spending or with less spending. Operational skill is power. Moreover, buyers need to control the overall budget, not individual projects or suppliers. If a manufacturer lacks skill and just throws money around, whether it's necessary or not, whether it's too much or too little, they'll take it first. If they get a watermelon's price for a sesame seed, the buyer will be overjoyed. Everyone has a bit of a “get something for nothing” mentality.
Whoever contributes the most this year will be asked again next year. Buyers have annual fee targets. Whether it's ten manufacturers or just one that meets the target doesn't matter. What matters is who has the strongest paying ability. If you pay a lot this year and account for a large share, they'll come back to you next year. Otherwise, with such a big share and such a big hole, which other manufacturer can fill it? If you paid this year, you'll have to pay next year too; otherwise, the buyer's target won't be met, and they might lose their job. If they're going to lose their job anyway, why be polite? You must pay, or else they'll make you lose your job first! So, when a manufacturer decides on a large expenditure, they must be extremely cautious—not just about the fee itself, but because such a large fee will raise the buyer's fee level this year, and next year's budget will skyrocket. That's not good news. Are we only doing business this year and not next?
The purpose of the above analysis is to remind manufacturers to think about their retail maintenance strategy. When it comes to spending money, you must be clear: Is this money really necessary? Is it being spent in the right places? Should you focus on using skill to control expenses? Of course, the answers are in your own hands!
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