Introduction: With lockdowns lifted, competition persists. Distributor bosses should adopt a positive mindset to seize the market and plan for the future.
This article is from the first session of the live series by Li Feng, growth mentor of "Li Feng New Distribution." It has been organized and published with authorization. The series is ongoing. This Thursday (December 29) at 19:30, Teacher Li Feng will broadcast "Ten Problems to Diagnose in Annual Planning for FMCG Distributors." You can click the link below to make a reservation.
As lockdowns are gradually lifted, after three years of hardship, will distributor business rebound from the bottom? We have waited three years for the gradual lifting of lockdowns. Will distributor bosses' business rebound from the bottom? That is a question. When discussing this topic, let's first address another issue. First, there is the issue of distributor bosses' cognition over the past three years. In communication with many bosses, many report declining sales and profits, with complaints accounting for 60-70%. They attribute all problems to the pandemic, but in reality, the issue lies in the bosses' cognition and lack of a positive mindset. In China's FMCG industry, looking back 20 years, having a product was enough to sell. But today, over 90% of products in China's FMCG industry are in oversupply. Current B-end clients do not lack products to sell. Goods are abundant in all industries, with supply exceeding demand, and this fact will persist for years. This is a cognitive issue. China's production capacity is now excessive, product quality is first-class, and competition in brands and channels is increasingly fierce, unlike 20 years ago. That is, as long as supply exceeds demand, there will be competition, which in today's terms is called involution. Distributors are involuting, brand owners are involuting, and fierce competition exists in all industries. Analyzing this tells distributor bosses not to blame the pandemic. Without the pandemic, competition would still be fierce; with the pandemic, competition is also fierce. So, will business rebound once the pandemic ends? Here, we must tell distributor bosses that regardless of the time, they must maintain a positive mindset and actively seize the market. We are now in an era of stock. The end of the pandemic does not mean business will rebound. In one sentence: Now that lockdowns are lifted, competition still exists. Distributor bosses should adopt a positive mindset to seize the market and plan for the future.
Second, heroes emerge in troubled times. Whether in war or peace, highly intelligent bosses often develop rapidly in adversity. Over the past three years, I have known several B2B distributors. One is a boss in Shanghai, with annual sales growth of over 50 million yuan. Another is a B2B distributor in Chengdu, growing at a rate of 60 to 80 million yuan per year, now achieving sales of 500 million yuan, with both sales and profits increasing. These cases aim to tell distributor bosses that the more they strive in adversity, the faster they will develop. Regardless of the time, such as the three years of the pandemic, it has been an opportunity for many distributor bosses. When others are giving up, they grow against the trend, integrate resources, change tracks, and operate across all channels.
Third, what state will emerge after the relaxation of pandemic prevention policies? What will be the state of consumers after the lifting of lockdowns? Responsibility for one's health shifts from the state to more individual responsibility; one is the first person responsible for their own health. At this time, distributors need to study consumer psychology. In the first two months, people will not go out much and will be cautious. But after this mindset passes, people will have freedom of movement, meaning consumers can shop freely. In this situation, distributors need to know where consumers shop and where to sell goods. When consumers are afraid to go out, where is it convenient for them to buy things? Where should distributors focus their distribution? This is a question of channel focus shift that distributors need to consider.
During the Spring Festival peak season, how should distributors respond to the tide of stocking up? First, actively stock up. Although logistics has been liberalized, regardless of what products you sell, having products in the warehouse is essential to catch this wave of opportunity. Second, after stocking up, quickly distribute to terminals. Distribute to core terminals with consumers (such as convenience stores and fresh supermarkets). Distributor bosses must not keep stocked goods in the warehouse; they should bring resources to distribute to terminals. In the era of stock, to grow, you need to seize competitors' sales. Now is rigid demand, and terminal stores will soon enter the peak season. Third, seize terminal resources. What does that mean? Transferring goods from the warehouse to the terminal customer's warehouse only completes 30% of sales. The final sales volume depends on performance at the consumer level. Whether brand owners or distributors, they must seize resources during the New Year. For example, Qiaqia melon seeds during the Mid-Autumn Festival had yellow gift boxes nationwide, displayed in floor displays in both small and large stores. This is seizing resources. Every Spring Festival, Mengniu and Yili can display 300 to 500 boxes of milk in various stores. During the holiday, rigid demand can sell out in a day or two. So, stocking up only completes 30%; it's just warehouse transfer. The remaining 70% must seize terminal consumer resources. Whether in small or large stores, only by seizing display positions, preferably floor displays, and displaying products so consumers can see and reach them, will sales be good. Some distributor bosses say that during the New Year, supermarket floor displays are expensive, but Spring Festival is rigid demand. Is there a difference between selling a box of milk at 56 yuan and 59 yuan? Is there a difference between retailing a bottle of soy sauce at 5.6 yuan and 5.9 yuan? No difference. If you seize it, you sell it; it will definitely sell. To earn consumers' money, you must invest in expenses. Fourth, definitely seize core channels. This Spring Festival, core channels should be convenience stores and fresh supermarkets, followed by welfare group purchases. Fifth, stock up on products. With the Spring Festival stocking tide, what products should you stock? First, best-selling products that are not hard to sell; second, high-profit products. What are high-profit products? For example, if you do dried fruits, you can stock more gift boxes; if you do milk, you should stock mid-to-high-end milk, with more hand-carry packs, because there is demand for visiting relatives and friends during Spring Festival.
Where are the core channels for future FMCG distributors? Let's use the elimination method. First, who competes with distributors for channels? Brand owners. Large brand owners in first-tier cities will adopt direct sales for national chain hypermarkets. Also, national key accounts and chain stores will be directly operated by brand owners, cooperating directly with manufacturers. For example, Anhui Laoxiangji chain restaurants, with hundreds or thousands of stores, purchase directly from manufacturers. Sinopec and PetroChina convenience stores are mostly directly operated by brand owners. Of course, we should understand that this is not to exclude brand owners; don't misunderstand. I am analyzing the development path of brand owners for distributors. Distributors have their own route planning. Second, large brand owners directly operate on online platforms like JD.com and Tmall, and large community group buying platforms are also directly operated by brand owners. So, it is too late for distributors to go online now because it is difficult and requires large investment. In summary, brand owners will directly operate in first-tier cities, industrial-level clients and restaurant chains cooperate directly with manufacturers, and online has become a choice for brand owners. So, where are the true core channels for distributors? In local CL small stores, community convenience stores, fresh supermarkets, and local hypermarkets. Because distributors have accumulated years of personal connections and channel resources locally, and local markets emphasize relationships and interest chains. So, where are the core regions for future distributor development? In second- and third-tier cities and township-level markets. Because no matter how far brand owners' reach extends, it is difficult to penetrate rural markets. Therefore, in rural, county, and township markets, distributors have already emerged as big players or monopolistic distributors. It is recommended that distributor bosses first achieve monopoly in a certain category in a specific region. If 70% of leisure snacks are in your hands, your channel construction is refined, and your team is strong, brand owners will come to you.
If a category is relatively strong in a region, then consider cross-category operations. Previously, you might have done cosmetics; now you can do grain and oil, or leisure snacks. In this way, you have cross-category operations, strong channel stickiness, and a strong team. Then beverage and alcohol companies will also come to you, and your business will grow bigger and bigger. In a few years, you will become an operator!
Li Feng, a landing growth mentor for FMCG distributors, has 27 years of practical sales and management experience in brand owners and distributors, summarizing the magic weapons to solve distributor sales growth, profit multiplication, and interlocking management processes.
New Distributor Academy
To help empower the growth of FMCG distributors nationwide! Realize the dream of automatic company operation, interlocking management, and doubled sales and profits! New Distribution, together with distributor landing growth mentor and "Li Feng New Distribution" host Teacher Li Feng, has established the New Distributor Academy, mainly through online live broadcasts and offline study tours to help distributors achieve landing growth.
The academy's seven major training topics for 2023: "Twenty-Five Magic Weapons for Distributor Business Team Sales Growth," "Annual Business Planning for FMCG Distributors," "Compensation and Performance Landing Plans," "Financial and Tax Practical Landing Plans," "Corporate Governance and Financial Management," "Points System Management," and "B2B Operations Landing Course." In 2023, facing distributor bosses, we will hold monthly landing growth training courses for cost reduction and efficiency, and also organize benchmarking leader distributor study tours. Making FMCG distributors nationwide automated operators is the ultimate vision of the New Distributor Academy. Welcome FMCG distributors nationwide to scan the QR code below to learn more.