Distributors often say that entering KA (Key Account) stores requires caution due to various fees such as entry fees, barcode fees, and display fees. "High fees, low profits, long payment cycles" has become a common refrain among many store distributors. This is also why many distributors are reluctant to work with KA stores, as it is typically thankless. However, it is undeniable that over the past decade or so, the rise of the KA channel has also driven the growth of a number of distributors. Even today, there are still many distributors, and Suzhou Leye is one of them. Founded in 2012, in just 8 years, it has grown from a startup to an agent for well-known brands such as Guanshengyuan, Alpenliebe, and White Rabbit, with annual sales of nearly 400 million yuan. Recently, New Distribution interviewed Ms. Zheng Juan, founder of Suzhou Leye Trading, and Mr. Zheng Yue, CEO. As a traditional trading company, how to stand firm and continue to grow in the competitive KA market, and extend more online opportunities from this, we hope their thoughts and practices on business can bring some inspiration and insights to everyone. The Growth Path of Suzhou Leye In 2003, Zheng Juan entered the retail industry. She worked at two companies, first leading terminal teams, KA teams, and KA headquarters negotiations at the first company. At the second company, she served as Marketing Director, responsible for overall operations. It was these two experiences that gave Zheng Juan a strong understanding of retail, especially KA. In 2012, Zheng Juan, along with a few passionate post-80s partners, officially started their business and founded Suzhou Leye Trading, focusing on the KA channel in East China. At the beginning of the venture, Leye's first agency brand was instant enoki mushroom - Jin Dazhou. At that time, Zheng Juan experienced a psychological gap, as in the past she had big brand resources at large companies. But when starting her own business, she dealt with small category brands with no volume and no budget, making negotiations with stores very difficult. Often, she had to rely on past connections and accumulated experience to do business. It was also this that established Suzhou Leye's strong team cohesion. Zheng Juan told New Distribution, Leye has always had a tradition: every year, 10 days before the Spring Festival, after goods are shipped, everyone in the company, including herself, goes to the front line to work with the promoters to sell goods. By 2014, Leye reached a turning point. At that time, Guanshengyuan was looking to change distributors, and both RT-Mart and Auchan teams recommended Suzhou Leye. By chance, they became the agent for Guanshengyuan. As Leye Trading's first first-tier brand, they strived to do their best in both terminal execution and promotional activity design. From then on, Leye gradually got on track, successively becoming an agent for well-known brands such as White Rabbit, Alpenliebe, and Fujiya, and the scale grew larger and larger. While growing, Leye continuously adjusted its organization. Every year, they made regional adjustments and team changes. For example, a regional manager might be responsible for Jiangsu this year, Anhui next year, and Zhejiang the year after. Through these adjustments, regional managers can clearly understand their own strengths and weaknesses. At the same time, when other regional managers take over, they can also discover the strengths and weaknesses of the previous manager, discuss problems collectively, make the region better, and the team can learn more. This is why, in just 8 years, Suzhou Leye Trading completed the leap from zero to hundreds of millions. The team's cohesion and learning ability allow Suzhou Leye to find good development directions and methods even in a bad environment. "Increase Sales, Reduce Expense Ratio" is Key to Doing Well in KA Zheng Juan told New Distribution, the core of doing KA is management. The larger the KA system, such as RT-Mart and Auchan, the more transparent the rules. In this case, the requirements for distributors are very high. The team's execution and management must be better than the manufacturer's, so that the manufacturer is willing to give you the brand agency. What does it mean to do well? The key lies in two aspects: one is sales increase, the other is expense ratio control. Sales increase: only if you can achieve higher sales than the manufacturer's direct operation or others, and can develop steadily, will the manufacturer be willing to entrust KA to you. Controlling expense ratio is a test of the distributor's refined operations. If the expense ratio is not well controlled, it is difficult to make money. Taking RT-Mart as an example, there are two key points: First, high personnel efficiency. Whether it is salespeople or promoters, they must be specific to sales and gross profit targets. If they do not meet standards and requirements, make changes in a timely manner. Second, low return rate. Use KA's professional data chain for comparison, same period, month-on-month, and forecast. For example, how much to sell next month, what is the safety stock, what is the turnover days, etc., all need accurate forecasts. If the store really has abnormalities and inventory turnover days are not high, promptly cooperate with internal store resources to do inter-store transfers. These actions require deep communication and exchange. Many KA distributors do not do well in this link, with low communication efficiency, leading to losses in the process. Suzhou Leye actually strings these processes together to make overall operations more efficient, with an annual return rate of only 0.3% for the snack food category. As Zheng Juan said, KA profits are saved from team management and channel professionalism, not by cheating the upstream for some fees, taking some fees from the downstream, or making money through information asymmetry. A long-term business must be built on value and earn the profits that should be earned. Not All Products Are Suitable for Selling in Stores For distributors, not all products are suitable for listing in stores. Distributors in the KA channel are somewhat restricted in product selection. New brands entering traditional small stores are relatively easy because the shelves are small, and even if there is only one product, consumers can see it. But in a store, the barcode fee for one SKU may be hundreds of thousands. If a new brand wants to enter a store, without 6-10 SKUs, don't touch it. Otherwise, you won't even have the most basic display space, and once listed, it may be drowned on the shelf. Therefore, in product selection, first choose manufacturers with strength; second, based on the group behind the channel, choose products suitable for the consumer group. At present, consumers in stores are starting to age, so products should not be too novel. Third, all promotion and operation models are additional. The core competitiveness of a product is the product itself; taste and quality must be good. For example, why do Yuanqi Forest and sugar-free cola still add sugar substitutes? Essentially, it is for better taste. Only with good taste can there be repurchase. Why have meal replacement foods never become popular? The reason is also this: they don't taste good. Fourth, predict repurchase rate. Before listing a product, it is best to conduct multi-channel tastings, collect feedback, see consumer acceptance, and finally consider whether to enter the store for promotion. This is the product selection strategy. After product selection, marketing and promotion are also an indispensable part of KA operations. Different KA systems have completely different promotion strategies. Take Hema and RT-Mart as examples: RT-Mart's core is to promote purchase, while Hema's core is to reach experience. In RT-Mart, promotional promotion is to tell consumers the characteristics of the product. Do a good job of vivid display, promoters know how to sell, master sales skills, can chat with grandparents, and promote the product. In such stores, the communication time between promoters and customers is limited. The simplest method is comparison. For example, to promote a moisturizing paper, have the promoter prepare a pack of unbranded dry tissue and compare it with the moisturizing paper, letting consumers make their own choice. But Hema is different. Its core is reach, experience, and customer stickiness, truly making consumers feel at home and repurchase frequently. Hema's shopping guides have requirements on height, education, and weight, and they must undergo a week of training before taking up their posts. The training is divided into three parts: First, product knowledge. It is not enough to just give the product manual to the promoter; they must also refine the guide's script, the product's selling points, and the differences from competitors (without disparaging competitors). For example, for a steak, how big to cut, how many minutes to fry each side, how many grams of pepper and salt to sprinkle, all have unified standards. After training, the promoter must fry on the spot until the master chef is satisfied before passing. Second, train Hema's management mechanism. For example, when a guide enters the store and does tasting promotions, what are the rules? What cannot be touched? What are the red lines? And so on. Third, train marketing skills. This marketing skill is not to make the promoter keep selling, but how to make customers comfortable and satisfied. In Hema's promoter assessment, only 20 points out of 100 are sales KPIs, and the remaining 80 points assess the service process. Let me share an interesting phenomenon: in some Hema stores in high-end communities, elderly people often come to chat with our promoters, often for an hour, and the promoter just accompanies them in chatting. Whatever product the elderly look at, introduce it; if they want to experience it, take them to experience it. As long as consumers are still interacting with you, you cannot leave them alone. Through such a series of methods, Suzhou Leye gradually mastered the ability to co-create with manufacturers in KA product operations. Many brand owners will proactively seek Suzhou Leye's views on products and jointly create good products, rather than blindly letting distributors push them. Not Just Offline, Online Development in Parallel When talking about the company's development direction, Zheng Juan said, Suzhou Leye will move towards becoming a diversified service provider. While doing well offline, it must also develop online simultaneously. From offline to online is not just a change in thinking; it also requires talent who understand online operations professionally. The return of her brother Zheng Yue to China just solved this problem. Before returning to China, Zheng Yue had rich online experience. In 2015, he co-founded the e-commerce platform Club Factory with Stanford partners, which once became the third-largest e-commerce platform in India. In 2018, he started his own business, received $2 million in angel investment, and founded the e-commerce platform dealtoc, which became profitable within a year but closed in 2020 due to the China-India conflict. With rich online experience, Zheng Yue returned to China, joined Suzhou Leye, and became CEO. At this time, Suzhou Leye officially launched online, with offline KA, e-commerce, and new retail as three carriages advancing together. Zheng Yue told New Distribution, the core of online is refined operations. E-commerce wants sales, so it must have stable rankings, which requires familiarity with the platform's algorithms. There are three key points: First, sales volume. If the system thinks you can sell well, it will give you a good ranking. The core here is brand influence; Second, growth rate. Ensure the growth rate is fast enough. For example, if you sell 100 today and 1000 tomorrow, with a multiple-fold growth rate every day, the system will also improve your comprehensive ranking. Third, category. The platform will give the highest weight to category keywords. A product must do well in category keywords. For example, yogurt chunks are classified as snacks on JD.com. If you choose the wrong keyword and use yogurt as the keyword, consumers may not be able to find your product. This is completely different from traditional offline. Offline may rely on customer relationships or give some fees, but online is not like that. You must know the platform's algorithm to do well. Simply investing in advertising is not something distributors can sustain. The first product Suzhou Leye did online was Yili's Xinshiji, and in just three months, it achieved a monthly sales of 1 million yuan on the platform. Zheng Yue continued, going online is only the first step. In the future, we will do well in full-channel coverage and become an operation service provider that empowers brands and new products. In the past, many distributors have always been a barrier between brands and consumers. Distributors are only responsible for selling goods, and the brand side does not know who bought them or how they bought them, knowing nothing about their customers, only knowing some channels. In the future, distributors will definitely not be a barrier, but a bridge, helping brand owners capture consumers, do consumer insights, and let the brand side reach and understand consumers through this bridge. Are you "watching" me?