During the Mid-Autumn Festival period (July, August, September), it's the best time of the year to stockpile inventory. Manufacturers encourage distributors to stock up for the Mid-Autumn Festival through various policy incentives, and distributors then push products to channel partners through tiered distribution policy rewards or by organizing ordering meetings. This has basically been a tried-and-true tactic for FMCG, especially for channel gift products, over the years. Undoubtedly, it's acceptable for manufacturers to occupy distributors' warehouse space and funds before the peak season, and for distributors to use the same tactic to squeeze channel partners' resources. It's also an annual routine in the FMCG industry. However, in the past two years, more distributors have lamented: Why is Mid-Autumn business getting worse year by year? After occupying channel partners' funds and warehouse space, the result is that after the Mid-Autumn Festival, sell-through is very slow, and terminals either demand returns or have credit accounts with no repayment date. After the festival, looking at the stockpiled goods, you haven't sold much, and you have a pile of IOUs, but you dare not ask for payment. If you do, the terminal owner will be more anxious than you: "Lao Wang, take your goods back; we barely sold any during Mid-Autumn..." Whether you admit it or not, actual sell-through during Mid-Autumn in the past two years has indeed been worse than in previous years, specifically, it's been declining year by year. First, let's sort out why the Mid-Autumn sales atmosphere has been getting worse. People's Awareness of Mid-Autumn is Fading Mid-Autumn is one of the three most important traditional festivals in China, but with the fast pace of modern life, the festive atmosphere is getting weaker. I remember when I was a child, during Mid-Autumn, there would be visits to relatives, gift-giving, and elderly family members would receive many gifts. Now everyone is busy making a living, so these old traditions are gradually weakening. When Does Actual Sell-Through Happen? Currently, for Mid-Autumn products, especially channel gift markets, the main consumer groups are the post-70s and post-80s generations. Unlike the past, these mainstream consumers either work away from home or are busy with business, so they try to save time by not visiting friends and family. Terminal merchants often say every year: "It's almost the 14th of August (lunar), why haven't we sold much?" In fact, the real sales time for these gift markets is only the two golden days of the 13th and 14th of August (lunar). Mid-Autumn is not like Spring Festival, which has a new round of small peak from the 2nd to the 15th of the first lunar month. Terminal Merchants' Stocking Pace is Lagging Due to slow sell-through, terminal merchants are delaying their stocking. Distributors often sigh after pre-stocking has little effect: "Terminal merchants are getting harder to fool!" Because after years of the same tactics, channel partners know the trick: "Don't tell me the policy is only for these days; when I ask for delivery closer to Mid-Autumn, you'll have to give me the same incentives." Indeed, channel partners and consumers now have plenty of product choices. Additionally, with the economic downturn in the past two years and weak consumer purchasing power, terminal owners are unwilling to tie up large funds except for essential goods. "I'll take it on credit and pay after Mid-Autumn, okay?" "Credit? Sorry, I have no place to store it!" Whether you admit it or not, this is the actual situation in many markets. But as a distributor, the problem is: manufacturers use various pressures and temptations, market competition is fierce, if you don't push inventory to channels, others will, and for every extra competitor product sold, you sell one less. How should we deal with these contradictory problems?
- Reasonably Estimate Mid-Autumn Sales No matter how strong the manufacturer's incentives, distributors must understand the local market situation, even down to each terminal outlet. Analyze historical sales data for each terminal outlet during the same Mid-Autumn period (usually August, September, October), combine it with this year's growth (or decline) trend for the product category in the local market, the competitive landscape, your own product line, team, and other factors to come up with a comprehensive estimate for this year's stocking. Of course, also consider the manufacturer's policy for the product and shelf life. After these data are in place, you must also consider a pre-digestion plan in case problems arise. Remember, distributors should not rely on gut feeling. Objective Mid-Autumn stocking is indeed a technical and detailed task, and it tests a distributor's daily team management and channel control capabilities. If you have a drink with the manufacturer's sales rep and say, "Brother, no problem, how much more can you stock?" and then hide in the bathroom after the festival slapping yourself, it serves you right.
- Deep Maintenance is Fundamental Especially for products with channel gift attributes, such products are usually pushed to terminals with few SKUs but large quantities. If distributors do not have assessment and management for their sales team's maintenance, the result is often that salespeople take their commissions, and after the festival, a pile of damaged products is returned. Market competition is fierce; you know the importance of channel stocking, but so do others. Others may even do it better. This 'better' is largely reflected in terminal maintenance and follow-up. So, if you neglect your 'children' after 'birth' and suffer losses, it shows your management is too primitive.
- Selective Outlets and Appropriate Stocking is Best Often during pre-festival stocking, distributors either don't understand their terminal outlets, or salespeople maximize commissions, or make random promises, leading to overstocking at some terminals far beyond their actual sales capacity. Ultimately, the distributor pays the price. What to do? Distributors must understand the historical data of each terminal outlet and, based on that and the actual situation of the outlet this year, set stocking tasks for each store. This way, you can avoid random overstocking. Pre-festival channel stocking has indeed become an increasingly confusing issue for distributors in the past two years, especially for the Mid-Autumn period, which is weakening and facing fiercer competition. I hope distributors can make good use of this double-edged sword to maximize both market share and profit. Source: 快消家 (Kuaixiao Jia) The 3rd (CFIC) China FMCG + Internet Conference will be held in Chongqing in November 2017. The conference will closely focus on the theme "New Forces, New Ecology" and invite 1,000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions to jointly explore new chapters of cross-border integration! Core Topics of This Conference:
How can the FMCG industry leverage B2B to achieve new growth opportunities?
How should the new supply chain behind new retail be built?
How can intra-city logistics help B2B achieve leapfrog development? Highlights of This Conference:
The industry's first "2017 China FMCG B2B Industry Competitiveness White Paper"
Case sharing of excellent transformation and upgrading distributors
Conference + Exhibition upgrade, Hall 6 Internet Technology Exhibition strengthens networking
Alibaba Retail Link, Puhua Financial, Eternal Asia Supply Chain, Best Store Plus, Yijiupi, Haiding - leaders from various well-known enterprises will deliver speeches and share pioneering views.
November 8-9, 2017 Chongqing Yuelai International Conference Center, Xinyue Hall Registration is now open. Long press the QR code below or click "Read Original" to register. Add friend and note "Conference Registration" Click the links below to review the highlights of the 1st and 2nd FMCG + Internet Conferences: 2016 "FMCG + Internet" Summit Forum -END-