Recently, I did a phone interview with a TV reporter from a station in Northeast China. The story was that a store of a well-known foreign-owned chain hypermarket in the Northeast had a payment dispute with its suppliers. The conflict escalated, and dozens of suppliers sat outside the store, holding banners that read "Unscrupulous store, unpaid debts" and "Return our hard-earned money." There were clashes with store security, turning an economic dispute into a social issue. The reporter asked for my take. My answer was simple: the suppliers are indeed pitiful, but the pitiful often have their hateful aspects. Why do I say that?
First, did anyone hold a gun to their heads and force them to do business with the store? Second, are all suppliers unable to get paid? Third, do the suppliers really know why their payments are being held up? Fourth, before cooperating with the store, did they consider the settlement issue? Did they have any preventive measures? Fifth, besides sitting outside the store, are there no other ways to recover the money?
From my experience, more than 90% of suppliers (dealers) start cooperating with hypermarkets with only a superficial understanding of them. "Know yourself and know your enemy, and you will never be defeated" is a basic business principle. If you start a business partnership without knowing the other party, it's only natural to suffer losses. Why are there so many supplier-retailer conflicts today? The problem lies here—or more precisely, it lies with the suppliers, with their unwillingness to learn.
- Why is it necessary to understand modern retailers and learn how to cooperate with them? Modern hypermarkets are standardized, scientific business institutions. Although their ultimate goal is profit, they have different ways of making money. On the surface, they seem to profit from selling goods, but that's just the simplest form. Currently, retail companies or investment institutions in China mainly make profits through the following methods:
A: Earning the retail price difference—this is the simplest and most basic form of profit. B: Using the payment terms of many suppliers to generate cash flow, providing working capital for other businesses in the group. C: Treating retail profits as operating costs, with the main profit source being the various fees paid by suppliers. D: Using retail data to analyze high-margin product categories, then commissioning production (OEM), and eventually entering the production field directly. E: Buying up property around the store in advance, using the store's foot traffic to boost local real estate prices, then selling the property for appreciation profits.
When doing business with a hypermarket, you must first understand its profit model. If it focuses on cash flow, pay special attention to payment terms in negotiations. If it focuses on supplier fees, be careful with fee-related clauses. If it focuses on real estate appreciation or entering production, then suppliers can cooperate from a different angle.
Of course, the store's profit orientation is the guideline for top management. Suppliers rarely deal with top management; they mostly interact with middle and lower-level staff, who have different goals. For example, the merchandise/procurement department cares about prices and profit rates per category, while the operations department cares about sales competitiveness and shrinkage.
In short, from top management to various departments and employees, there are different objectives. Cooperating with a hypermarket requires various models and plans. But most dealers treat all hypermarkets as the same, using one approach for all types of stores, departments, and employees. It's no wonder they hit walls and suffer losses. Take data usage as a simple example: the bigger the store, the more it values data. Whether it's setting core fees or evaluating products and suppliers, everything is based on data. But dealers rarely value this data; they just complain to the buyers, cry poverty, or even threaten—none of that works. What really helps in negotiations is data and its analysis, but how many suppliers have data analysis capabilities?
- Why are suppliers (dealers) unwilling to learn? Before modern hypermarkets appeared, dealers mainly dealt with manufacturers and local traditional wholesale/retail customers. In both cases, dealers had relatively high status. Manufacturers needed dealers, and local second-tier wholesalers and traditional retailers also needed dealers. At least the status was equal, and the cooperation was simple. Especially with manufacturers, they were the ones begging dealers, so dealers didn't need to learn about manufacturer-dealer cooperation. Over time, dealers got used to an environment where learning wasn't necessary.
But hypermarkets are different. Rarely do they beg dealers to supply. The unequal status makes learning necessary. It's like in dating: men chase women, so women have the advantage, and we see many books on how men should chase women, but few on how women should chase men. When dealers face the new hypermarkets, they habitually use old business thinking to consider cooperation, rarely thinking about learning about the store. The main reason is that past success dominates their thinking. Many dealer bosses think, "I've been in business for years, I've handled big brands and big manufacturers, so what's so hard about hypermarkets?" Naturally, they don't think about systematically learning how to understand hypermarkets and cooperate with them.
Education cannot replace experience, and experience cannot replace education. Hypermarkets are new, and the status is unequal, so learning is essential.
- What are the consequences of suppliers not learning? In my view, cooperating with a hypermarket without fully learning and understanding it is like hitting a stone with an egg. First, not knowing the store's core needs means you can't meet them and achieve good cooperation. Second, not knowing the store's weak points means you can't restrain or control it to some extent; you just stick your head out and let it slaughter you. Many dealers are controlled by hypermarkets because they only cooperate at the product level, where the store has a huge advantage and can basically do whatever it wants with the dealer. So dealers are indeed hitting stones with eggs. In fact, any business institution has its strong side and its weak side. As a dealer, do you know where the store's weak points are? Do you know its Achilles' heel? Without knowing these, how can you get your payments settled smoothly? How can you reduce the high sales fees? How can you get a meeting with top management?
In the past, the most advanced business form dealers encountered was manufacturers. Some dealers thought that understanding manufacturers meant they understood the most advanced business form. But hypermarkets are several times more complex than manufacturers, because they handle tens of thousands of SKUs, requiring highly advanced operations and management. Manufacturers typically have only a few hundred SKUs at most. The complexity of operations is incomparable.
As a dealer, different customers require different approaches. Using the simple model for manufacturers to deal with today's complex hypermarkets will inevitably lead to various problems. The fundamental solution is learning. Learning drives progress. Past success only represents the past. Hypermarkets' market share is increasing daily. As a dealer, you must quickly and systematically learn the knowledge of cooperating with hypermarkets. This is also a guarantee for your profitability and future development.
Huang Jing, graduated from Wuhan University Law School, full-time hypermarket purchasing manager, deputy general manager of Senpan Textile Trading (Shanghai) Co., Ltd., freelance consultant for KA projects. Contributing writer for several professional media outlets. Email: marchhuangjing@yahoo.com.cn -END- The best learning platform for FMCG dealers in China Focusing on providing professional, practical, and applicable courses for companies and dealers Committed to helping Chinese FMCG dealers grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get the corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Dealer market operations | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing dealers | 008 Dealer development | 009 Dealer internal operations management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 First lesson for new salespeople | 015 Internet, brands | [Long press QR code to follow] To join QQ/WeChat groups, click: Read original text