---
title: "Beware! Aggressive Distribution Has Risks—Dealers Should Not Rush!"
description: "For dealers, distribution is crucial because only by moving products from warehouse to retail outlets can sales opportunities arise. However, successful distribution requires clear goals, careful planning, and effective execution, yet risks remain, and many dealers only realize failures after the fact. This article analyzes the causes of distribution failure through a case study."
author: "张宇"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-06-27"
language: "en"
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# Beware! Aggressive Distribution Has Risks—Dealers Should Not Rush!

> For dealers, distribution is crucial because only by moving products from warehouse to retail outlets can sales opportunities arise. However, successful distribution requires clear goals, careful planning, and effective execution, yet risks remain, and many dealers only realize failures after the fact. This article analyzes the causes of distribution failure through a case study.

**For dealers, the importance of distribution is obvious, because only by moving products from the warehouse to the retail terminal can products gain sales opportunities. Through distribution, dealers can expand retail outlets, increase product sales, seize terminal inventory, and combat competitors.**
However, to ensure the success of a distribution campaign, dealers need clear goals, meticulous planning, proper organization, and strong execution. Even so, distribution still carries certain market risks, and almost all dealers only realize the failure after it happens. So, what are the possible reasons that can lead to a dealer's distribution failure? We can find inspiration from those failed distribution experiences.
**Dealer Li's Aggressive Distribution Story**
At a sugar and wine fair, Dealer Mr. Li secured the distribution rights for a well-known snack food brand in City S. Along with the distribution rights came the manufacturer's sales pressure. Mr. Li had been in the snack food business for many years and had accumulated experience in both manufacturer relations and his own operations, so he had no objection to the manufacturer's sales targets.
In addition, Mr. Li had his own strategy for new product promotion: in the first month of cooperation with the manufacturer, he would launch an aggressive distribution campaign, fully utilizing the manufacturer's promotional support and investing all potential product price differences into the market, aiming to quickly boost sales and distribution coverage in the short term. This would gain the manufacturer's attention and recognition, solidify cooperation, and lay the foundation for requesting more policy support. At that time, as product sales gradually increased, the profits lost during the initial promotion could be fully compensated. Under this distribution strategy, Mr. Li had successfully operated many products, and he believed this time would not fail either.
**Develop a Distribution Plan Based on Market Characteristics**
City S, where Mr. Li operates, consists of one urban area, three districts, and nine counties, with a total population of over 4 million, of which the urban population is less than 400,000, making it a small to medium-sized city. In terms of channels, there are over 900 retail terminals in the urban area, of which about 700 are suitable for selling snack foods, and only 5 supermarkets have a certain scale and influence.
Based on his years of experience in snack foods, Mr. Li knew that to complete the new product's sales target, he needed to distribute to about 500 terminals in the urban area, while the promotion in surrounding counties would be handled by distributors. Although promoting a new product has certain difficulties, Mr. Li remained confident because his company's product portfolio lacked such a big brand. If the promotion succeeded, it would ensure the company's rapid development for the next three to five years.
After a preliminary market analysis, Mr. Li formulated a detailed distribution plan for the new product:
Distribution target: 100,000 yuan in urban areas, 150,000 yuan in counties
Distribution time: mid-May to mid-June
Distribution preparation: 3 vehicles, 6 salespeople
Distribution steps: Urban and county distribution simultaneously; urban areas focus on small and medium-sized terminals (supermarkets temporarily excluded); counties focus on distribution.
Distribution policy: Promotional discounts; purchase prices for terminals and distributors reduced by 1 yuan from the original, while retail prices remain unchanged.
**Under Promotional Policies, Quickly Achieve Distribution Targets**
After finalizing the distribution plan, Mr. Li actively raised funds, paid for goods, and arranged personnel and vehicles. He also convened a meeting with distributors to discuss new product promotion in each county. Worried that terminals and distributors might not accept the new product, Mr. Li sacrificed profits and increased promotional efforts. After half a month of preparation, the new product distribution campaign was fully launched in late May.
The distribution results were far smoother than Mr. Li had expected. Due to strong promotional efforts, county distributors were highly enthusiastic about ordering and completed the set targets on time. The urban distribution also gained cooperation and support from most terminal customers thanks to thorough preparation and strong promotional policies. By June 15, salespeople had distributed to over 500 retail terminals, with distribution volume exceeding 150,000 yuan. In less than a month, Mr. Li achieved aggressive distribution in both urban and county areas, exceeding his distribution targets. Mr. Li was overjoyed, believing he had the situation under control. Meanwhile, the manufacturer's representative also highly praised Mr. Li's actions and verbally promised to apply for more market support policies for him.
**Poor Sell-Through Triggers Post-Distribution Aftermath**
Entering July, Mr. Li quickly noticed that new product sales growth was slow. Salespeople brought back bad news from terminals—most terminal owners reported slow product sales, inventory buildup, and refused to reorder. Half a month later, sell-through still showed no improvement, and some terminals began requesting returns. Mr. Li became uneasy, but this was a critical time for terminals to increase volume. Returns would undoubtedly deal a blow to the market, so Mr. Li did not agree.
However, soon after, a new situation emerged at terminals—the originally designed retail prices became chaotic. Due to the strong promotional efforts at the start of distribution, some terminal stores directly chose to sell at discounted prices, and this trend was rapidly spreading. Now Mr. Li was anxious. He asked his salespeople to quickly stop the price cuts, but it was too late. The price cuts intensified and even affected the few terminals that were selling well. The former were constantly demanding stronger promotions, while the latter complained that retail prices were too low and they weren't making money.
By August, Mr. Li and his employees had completely lost confidence in the new product. Considering his long-term business relationships with terminal customers and the company's reputation, Mr. Li finally decided to handle the returns, resulting in recovering goods worth tens of thousands of yuan. After negotiating with the manufacturer, Mr. Li received some compensation but still lost 30,000 to 40,000 yuan.
**Diagnosis: Risks and Hidden Dangers of Aggressive Distribution**
From the results, Mr. Li's distribution campaign was undoubtedly a failure. To investigate the reasons for the failure (excluding product-specific factors, as these should have been considered during product selection), we focus on Mr. Li's handling of each aspect of the distribution process and analyze what he did improperly.
**1. Overeager for Success, Overly Ambitious Targets**
Although Mr. Li had been in the snack food business for many years, he mostly operated second- and third-tier brand products. Getting the opportunity to cooperate with a big brand for the first time led Mr. Li to have overly high expectations for the product. This was evident from the start when he formulated the distribution plan. Additionally, Mr. Li was eager to leverage the brand's influence to achieve rapid company growth, which caused a subtle psychological shift and made him overlook the actual local market conditions.
First, City S, as a small to medium-sized city, has a population base that limits overall consumption capacity. Second, considering the urban population and channel structure, its urbanization process and terminal market maturity are relatively lagging. Without the support of supermarket channels, relying solely on scattered terminal stores to absorb over 100,000 yuan worth of new products created significant difficulty for new product promotion. Even if the brand has a certain reputation and influence, achieving sales breakthroughs in a blank market still requires market cultivation.
**2. Violating Price Conventions for New Product Distribution**
To reduce resistance to new product distribution, Mr. Li put considerable thought into setting the price system, but it must be said that this laid the groundwork for later market price chaos. Adopting a promotional discount strategy in the early stages of new product promotion can help increase customer enthusiasm for ordering, but it is not suitable for all types of products.
Mr. Li previously operated second- and third-tier brands, which have higher gross margins and more operational flexibility, so lowering supply prices was feasible. For big brand products, however, there is little profit margin, and sales of big brands are not driven by profits. Mr. Li's decision to sacrifice profits was unwise. Moreover, by offering discounts, Mr. Li lost control over terminal pricing. When terminals collectively engaged in price-cutting and dumping, Mr. Li was powerless to respond.
**3. Excessive Initial Inventory at Most Terminals**
The active cooperation of terminals and distributors made Mr. Li's distribution plan go smoothly. In less than a month, he distributed 150,000 yuan worth of goods to 500 terminals, meaning an average of 300 yuan per store. At first glance, this number is not large, but for a new product, it far exceeds actual sales capacity. According to the 1.5 times safety stock principle, if a store expects weekly sales of 100 yuan, maintaining inventory at 150 yuan should basically meet sales needs. Moreover, blindly increasing terminal inventory before the new product has achieved sell-through can only be seen as a sign of short-sightedness. In reality, the focus of new product distribution is to seize terminal shelf space and get consumers to see the product, which is how sales are achieved.
**4. Failure to Adjust in Time When New Product Turnover Was Slow**
Half a month after distribution ended, Mr. Li noticed that new product sell-through was not ideal and terminals had inventory buildup, but he did not pay enough attention. It wasn't until some terminals requested returns that Mr. Li realized the severity of the problem, but he still did nothing, hoping that sell-through would naturally improve. As a result, Mr. Li missed two opportunities to adjust his market strategy, ultimately leading to the failure of the new product promotion.
Every new product's success is driven by various factors, and its failure is the same. Therefore, during the new product distribution phase, dealers should not blindly stick to predetermined promotion strategies, nor should they let the market self-adjust. Instead, they should constantly monitor market feedback and promptly revise strategies. Only in this way can they curb the domino effect triggered by aggressive distribution and create opportunities for new product success.
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