Go Check Out Your Competitors Are there many competitors in this city? How are their sales? How do they sell? What are their gross margins? What are their trade terms? What is their personnel structure? Generally speaking, it's best not to cross industries when looking for customers, because the rules of the game differ greatly across industries, and the required personnel qualities are completely different. A distributor that is a "good match" is the most reliable, including: if you are a high-end brand, ideally the distributor also represents high-end brands; if you are a foreign brand, ideally the distributor has experience with foreign brands; if you do skincare, the distributor must have relevant industry experience, otherwise later communication will be very difficult. Therefore, approaching your competitors' distributors is a good choice, especially when your trade terms are better than theirs. On one hand, the distributor has operational experience; on the other hand, you can directly grasp competitor dynamics from the source and then defeat them with your advantages. Of course, this is difficult, and distributors generally do not allow such a situation, so it's left to market selection! If your gross margin and expenses are lower than competitors', it's best to choose agents of other brands in related categories. If we are a high-end brand in the category, we can find distributors that represent mid-to-low-end brands. This makes cooperation easier and helps the distributor strengthen the category, enhancing their bargaining power in retail stores—a win-win. At this point, you can start collecting information on industry distributors. Suppose I have a high-end toothpaste; I would gather information on all distributors that represent toothpaste in the market. Then should I call and schedule meetings? Don't rush! The most critical step hasn't started yet! Walk the Market to Filter Potential Distributors Generally, I evaluate potential customers based on the following factors. These are the KPIs for the manufacturer's sales staff, but they are also the distributor's KPIs, because only when the distributor's KPIs are met can your KPIs be achieved. Distribution There's no other way: spend a week visiting all large stores, small stores, and wholesale stores to observe the potential distributor's product distribution. The best scenario is that all outlets that should have distribution do have it. [Note] Some brands are directly supplied to KA channels; if the brand performs well, it may not be the distributor's achievement. Distribution capability is a key ability of distributors, especially evident in how quickly new products are distributed. If a product's TV ads are everywhere but the product is never seen at retail, it only shows the distributor's poor distribution capability (unless there is no distribution nationwide). Display This is the most intuitive parameter to evaluate a distributor. Local KA and small and medium stores are key reference points. But if some large stores are directly supplied by the manufacturer, even if the display is great, it has nothing to do with the distributor. [Note] When looking at displays, focus on the main display and secondary displays. Is the main display impressive? Are there enough secondary displays (floor stacks, side racks, end caps, etc.)? Are the displays tidy? Is stock sufficient? Is inventory fresh? If all answers are average, it's worth investigating whether the manufacturer or the distributor has issues. If 80% of this customer's product displays are good, it's still negotiable, because some manufacturers may have reduced display budgets. Poor display is a big taboo; it likely indicates the distributor has limited financial strength. Promotions Focus on whether the potential customer's brands (especially competitors) have ongoing promotions, whether they are impressive, whether the location is good, whether there are enough giveaways, etc. Personnel Are there enough promoters? Are they paid by the manufacturer or self-funded by the distributor? Are they trained frequently? How often do merchandisers come? How often do sales reps come? Do more people come from the distributor or the manufacturer? [Note] As brands expand, many large manufacturers send third-party personnel to assist distributors, reducing distributors to logistics providers. Sometimes the market looks good, but it's actually the manufacturer's personnel doing the work; the distributor only handles delivery and has few sales reps, mostly for account reconciliation. If you know the market well and your company provides strong personnel support, you might consider such a distributor, since your own people are more reliable and efficient. But if your company offers little support and has high market demands, the distributor's sales team becomes a key parameter. After walking the market, you may eliminate some distributors, leaving three to five potential customers. Don't rush; invite a familiar buyer or industry insider to dinner to gauge the reputation of these prospects. Once you have a good idea, you can schedule meetings. What to Look for in the First Meeting Do They Seem Like a Good Fit? Finding a customer is like finding a partner; you'll be working together long-term. If you always disagree and have conflicting views, later communication will be even more problematic. Office Environment It's not required that the distributor works in a luxury office building, but the office should be clean and organized. I once saw a customer whose office was in his home, with children running around, crying constantly, a dirty and messy bathroom, goods piled up randomly, and a warehouse often flooded. These are just surface phenomena, but "if you can't sweep one room, how can you sweep the world?" Financial Strength Whether they have money is sometimes hard to tell. Do you think a company representing 30 brands is necessarily stronger financially than one representing 10? Not necessarily! Some distributors pursue one-sided brand expansion, taking on anything they come across, only to keep increasing loans. With too many brands, none get enough attention; can you expect them to help you meet your targets later? Hard! Financial strength isn't about being as large as possible; it's about being sufficient. Personnel Structure Distributors naturally can't compare with large companies. I think the simpler and flatter the personnel structure, the better. Some distributors, trying to imitate large companies, set up marketing, sales, finance, data, HR, admin departments, plus general manager, chairman, etc. The marketing department is further divided into new product, display, and other sub-departments. A customer with annual turnover of less than 20 million yuan having so many departments results in inefficiency. Don't think this is professional. I'd rather have a more direct customer: one sales department, finance, admin, and warehousing handle everything. The sales department is divided by store, with one person responsible for one or several systems, making communication easy and efficient, and approvals only need the sales head's signature. Retail stores already have enough procedures; if you have to go through several days of internal processes at the distributor, isn't that a waste of time? Employee Age and Gender Ratio The gender of sales reps doesn't matter, but I once saw a customer where the boss was the only man, and all employees were women, all fresh graduates. I suspect this distributor was insecure, afraid that experienced sales reps would disrupt his carefully built "Eden." Such insecure customers are definitely not acceptable. Future Plans Not to mention "century-old stores," I usually ask distributors about their future plans: Do they plan to continue as daily chemical distributors? Which brands do they intend to take on? How do they plan to improve their product portfolio? Do they intend to stabilize their current brands before taking on new ones, or do they have other plans? Some distributors have lost interest in representing brands and have shifted focus to real estate or home textiles. If you approach them for cooperation, even if they agree, it's a hidden worry for the future. Cooperation Intent This should be the top priority. Cooperation also depends on fate. I advise you to give up on customers who are reluctant to sign; if they have no interest in cooperation, how can you expect their support later? It will be slow and difficult! As an employee, you are tasked with developing the market, improving it, and meeting targets—all of which require the distributor's cooperation. Without their cooperation, everything is zero. Cooperation Model Some distributors have efficient execution teams and want to take the lead, preferring that manufacturer personnel not contact retail stores directly. That's not to say it's impossible, but the prerequisite is that the customer's execution and professionalism have reached a certain level. The worst are distributors who lack capability, can't do things well themselves, and still obstruct manufacturer personnel. Play Detective: "Sneak" This Information After the first meeting, you can basically select the distributor, but you still need to dig into the information behind the distributor. If the selected distributor fails more than half of the following conditions, resolutely eliminate them. Boss's Personal Situation From my experience with distributors, the most stable and entrepreneurial group is male-dominated, aged 36-45, married with children, and with young kids. They are in the prime of life, confident, efficient, and communicative. You can trust them with the market. Conversely, distributors over 35 who are unmarried, childless, or even without a girlfriend are dangerous. "Food and sex are basic human needs." These bosses leading a colorless and tasteless life often have eccentric and unpredictable personalities. If they lack basic human nature, how can they handle anything else? Employee Turnover Rate Both high turnover and extremely stable employee situations are questionable. High turnover leads to gaps and inefficiencies, affecting cooperation. Extremely stable staff may indicate imbalanced internal power distribution, hindering deeper cooperation. How They Treat Manufacturer Personnel Good distributors respect manufacturer personnel, communicate often, learn from each other, occasionally have meals together, chat about industry gossip, enhance mutual understanding, and work together to improve the market. To put it bluntly, although distributors are on the front lines, resources come from the manufacturer. Without manufacturer investment, it's hard for distributors to do well alone. I once saw a customer who always wanted to dominate manufacturer personnel. Besides frequently padding expenses and falsifying accounts, they threatened manufacturer personnel with various demands. Some even went so far as to charge manufacturer personnel for photocopying and printing costs, which is disheartening. Sometimes it's not big things that break people's spirits but these common trivialities, and some distributors even gloat over such petty gains! After selecting your distributor through these four steps, your product is bound to be a hit. -END- The best FMCG distributor learning platform in China Dedicated to providing professional, practical, and actionable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors 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 Distributor Market Operations | 003 Terminal Visit Management | 004 Sales Supervisor Skills | 005 Sales Boost Techniques | 006 Channel Expansion | 007 Managing Distributors | 008 Distributor Development | 009 Distributor 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 | 016 Distributor B2B Transformation | [Long press QR code to follow]