Click to read the original article for details Since November last year, major manufacturers have been gearing up for a vigorous 'good start' campaign, with ordering conferences held one after another. However, due to the pandemic, this year's 'good start' differs from previous years. Manufacturers face greater pressure: if the sales lost at the beginning of the year are not recovered and the annual targets are not lowered, this year-end 'good start' will carry the burden of making up the full year's shortfall. Distributors are more confused: the pandemic rebounded in December, and they worry that if it becomes as severe as last year, the stocked goods will end up sitting in their warehouses. But no matter how the pandemic develops, business must go on. Both manufacturers and distributors share common goals: sell more, earn more, reduce risks, and avoid losses. Based on my experience, I'd like to share some thoughts on how manufacturers and distributors can win the 'good start' battle during these special times.
**-01-**Convey confidence in the overall situation, moderately lower expectations Manufacturers are both players and referees. They have various monthly, quarterly, and annual assessment and rebate policies for distributors, and they keep records of each distributor's profitability. Under the pandemic's impact, customers have lost more profits than in previous years and have stocked up more goods, making this year a nerve-wracking one. Especially for long-term partners who have weathered many storms with the company, it's not easy for them to hold on through such an external crisis. Therefore, in the face of the current unfavorable environment, manufacturers must not blindly pressure distributors just to meet their own annual targets. Instead, they should encourage and care for them first, and then reduce pressure and boost morale.
1. Moderate relaxation of year-end assessments For distributors who failed to meet assessment targets due to the pandemic, manufacturers should fully evaluate the situation. Do not impose a one-size-fits-all penalty on rebates. Instead, adjust targets based on the proportion of sales during the pandemic period relative to past sales. For example, if a customer's market was severely affected in February-March, and the annual target was 10,000 cases but only 9,000 were achieved, you can use the ratio of actual sales in February-March 2019 to the full-year actual sales to adjust the assessment. If that ratio is 15%, then the annual rebate assessment target can be adjusted to 10,000*85%=8,500 cases, so achieving 9,000 cases would qualify for the full year's rebate. If there are other assessment items, such as distribution, they can be adjusted similarly. Manufacturers should announce the year-end rebate adjustment policy before the customer payment and ordering conference, fully demonstrating a humanized approach to address customer concerns, so that customers feel secure in stocking up for the 'good start'.
2. Highlight and encourage counter-trend growth In difficult times, some people are pessimistic and complain, while others actively change. Manufacturers should set examples at this stage, giving material rewards and public recognition to distributors who actively respond to the pandemic and innovate. For example, at the year-end distributor conference, awards such as 'Courage to Take Responsibility' and 'Counter-Trend Growth' can be presented. This conveys the manufacturer's attitude, encourages more customers to follow the models, and achieves resonance with the manufacturer.
3. Clear and explicit sales rhythm At the same time, manufacturers should set reasonable stocking targets for the 'good start' phase based on the current internal and external environment. It's best to keep distributor inventory within 2 months, and also clarify the 2021 sales rhythm with distributors. For example, launch a strong water promotion in March, conduct frozen channel promotions from May to August, and have a pre-festival replenishment promotion in September. Manufacturers should communicate the resources they can provide at each stage and the goals they hope to achieve, so that distributors can stay in sync with the manufacturer, deploy in advance, and form a joint force. During this process, if the manufacturer has any online media advertising plans, they must inform distributors to boost sales confidence.
-02- Leverage channel advantages, seek resources to disperse pressure For distributors, during this uncertain period, it is recommended to choose products with strong brand power and relatively stable performance last year, in categories that consumers are more concerned about, such as health and daily-use products. When facing pressure from manufacturers to stock up, distributors should respond rationally based on their own situation, and fully utilize their networks to reduce financial risks.
1. Take stock of your channel advantages and assess rationally Distributors should carefully analyze their channel structure and review whether their main channels were significantly affected in 2020. For example, if they primarily serve catering, internet cafes, cinemas, and other entertainment channels, or modern trade channels, then stocking up should be cautious. If they mainly serve mom-and-pop stores, especially community supermarkets within residential areas, these channels are less affected by the pandemic. Even if the situation worsens, normal distribution within the community can be maintained, so normal Spring Festival stocking can proceed.
2. Visit the market to identify difficulties and reasonably communicate needs to manufacturers During special times, it is recommended that distributors visit the market more often before the festival, talk with core outlets and owners of various channel types about sales expectations for the new year, strengthen customer relationships, and improve the accuracy of market judgment. While visiting, record and organize market issues, including competitors' marketing activities. Then, when the manufacturer asks for payment and delivery, present the specific market issues. In fact, manufacturers welcome such distributors who proactively explore and analyze market opportunities, and then communicate with the manufacturer to solve problems and gain more resource support, making their stocking more secure.
3. Collect funds from downstream to reduce risk If distributors have limited funds and dare not go all-in but still want to get high rebates, they can pre-collect payments from downstream customers. Offer appropriate concessions to secondary customers, about 2-3 yuan higher than usual (for strong brands; weaker brands may need higher rebates), sign supply and promotion agreements (to avoid legal risks), or set tiered policies for secondary customers to encourage larger payments. This way, distributors can pool secondary customers' funds to complete the year-end payment task. In this way, distributors not only reduce their own capital risk but also accelerate product turnover. If conditions permit, distributors can also hold their own second-tier/terminal ordering conference, which would be even more effective.
-03- Manufacturers and distributors join forces to quickly seize the market Before the new year, major manufacturers share a common goal: to fully seize the Spring Festival sales opportunity and sell as much as possible. For many brands, sales during this 'good start' period can even account for 40% of annual sales. Manufacturers that do well must have clear goals and rhythm. We also hope that during this special period, manufacturers and distributors can interact and complement each other more closely.
1. Clear tactics, focused resources To alleviate distributors' uncertainty when stocking up, there must be clear distribution goals and execution actions for the 'good start'. Manufacturer representatives should work with distributors to help each customer calculate the numbers. What channels does the customer have? How many outlets? How much was distributed in the same period? What is the expectation this year? Which channels can sell gift boxes? Which can sell whole boxes? Which outlets can do stack displays? What terminal tiered policies should be implemented? Based on this, develop reliable distribution goals and reach a consensus. Generally, at this stage, manufacturers will have certain market or channel resources. Distributors should proactively communicate with manufacturer representatives about market investment to maximize resources. Do not sit, wait, or rely on others, especially asking for resources without clear tactics, which manufacturers dislike.
2. Step by step, act quickly With big goals, to achieve good performance during the 'good start', ideas need to be implemented quickly. Especially as the pandemic situation is uncertain, some schools have already closed early, and the return-to-work wave has come early. This year's sales rhythm should be as early as possible to increase the chances of success. Manufacturer and distributor sales staff should hold kick-off meetings to clarify which markets (cities or counties) and channels to focus on. At the same time, break down the overall 'good start' goals into weekly and daily targets: how many regular displays to maintain, how many stack displays to do, what standards for visual merchandising, how much to stock at each type of terminal, etc. At this time, create a sense of ceremony, shout slogans, and sign military orders. Use daily performance dashboards for ranking to create a competitive atmosphere. It is also recommended that manufacturers and distributors allocate special funds to incentivize sales staff and boost team morale.
-04- Prepare contingency plans, coordinate online efforts The pandemic's development is unpredictable, so distributors should have thorough contingency plans. While focusing on offline channels, summarize and reflect on effective responses to the 2020 pandemic, and deploy in advance to avoid product backlog if the pandemic suddenly worsens.
1. Focus on community supermarkets and vegetable markets, maintain customer relationships After the pandemic, offline community fresh supermarkets and nearby vegetable markets become stable sales channels. As long as the pandemic persists, these channels should be key battlegrounds and must be secured. At the same time, arrange high-frequency visits by sales staff, provide good customer service, and grab more display space in stores.
2. Don't ignore home delivery platforms, leverage online to survive the winter After the 2020 pandemic, various home delivery O2O platforms developed rapidly, such as JD Daojia, Meituan, Meicai, and other mainstream platforms, as well as local platforms or O2O platforms built by supermarkets. Distributors should ideally choose to communicate and cooperate with platforms that have significant local influence in advance to increase their initiative in responding to the pandemic.
3. Synchronize online promotion, all-staff efforts show responsibility Distributors should also use new media resources, such as H5 electronic flyers, Douyin live streaming, etc., to build their own online channel influence and provide diversified services to the regional market. Mobilize all manufacturer and distributor employees, friends, and family to share and promote, uniting everyone for the 'good start' goal. No one knows how long the sudden pandemic and normalized prevention and control will last, but both manufacturers and distributors should actively face it. Firm belief, market orientation, strengthened communication, shared responsibility, preparation, and innovation should be the attitude of manufacturers and distributors at this stage. Perhaps after the pandemic is completely over, everyone will suddenly find that they have become more proficient in understanding and controlling the market. The pandemic has taught us to better understand and serve consumers. Manufacturers can screen out a group of partners who are in step with them, and distributors can also find brand owners with responsibility and vision.
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