In a county in Xuzhou with a permanent population of only 700,000, a distributor represents nearly 20 first-tier brands such as Haitian, Niulanshan, Yili, Mars, Nice, Unilever, P&G, and Yunnan Baiyao. Adhering to offline development, he achieved a 40-fold sales increase in 6 years and opened 6 supermarkets of over 800 square meters in one year. How did he do it? What tools did he use? What changes did he make? Listen to Jia Yongshun, General Manager of Jintong Trading Food Co., Ltd., tell how to maintain high growth in the field of commercial circulation.
From diversified operations to team building, Jintong Trading has gone through three development stages: from initial single-product single-operation to multi-brand multi-category divisional operation, and then to related diversified industrial operation. In the early days of entrepreneurship, the company adopted a single-brand, single-operation model. This model has disadvantages such as low ceiling and no bargaining power. For example, if only representing Haitian, the volume is about 20 million, and to increase the scale of operation, one can only develop horizontally, that is, multi-brand, multi-category divisional operation. Currently, 80% of distributor bosses are still stuck in the single-operation stage, and this kind of business is unstable and unhealthy.
For example, if a distributor boss in a county only represents the Yili brand and achieves 60 million or 70 million in annual business, there may be an unequal treaty relationship with the manufacturer. For a single-brand distributor, their business plate does not truly belong to them, and they lack bargaining power. It is recommended that a brand account for no more than 40% of a distributor's business plate.
Only by mastering bargaining power can distributor bosses negotiate fees and conditions when brand owners force inventory. Distributor bosses stuck in the first stage often dare not negotiate conditions with brand owners, thus unable to gain better development space. Jintong Trading has many first-tier brands, and no brand comes to negotiate with a strong attitude because each brand accounts for no more than 20%. The advantage is that manufacturers rarely propose unequal treaties. With a stable overall business plate, the company's team scale is also continuously expanding. In nine years, it achieved rapid growth in sales and profits. In summary, it adopted strategies of partnership system, daring to delegate power, daring to share profits, creating dreams, and realizing dreams.
The partnership system and daring to delegate power mean allowing team members to participate in decision-making and authorizing them with more responsibility and power. In terms of profit sharing, we must not only ensure the stable operation of the company but also let employees receive due rewards. Especially in the development and entrepreneurial stages, it is not advisable to be reluctant to share profits. Creating dreams and realizing dreams is to keep employees always having a beautiful vision for the future. By continuously painting pies and feeding pies, giving employees confidence and motivation, and repeating this cycle. Distributor bosses should be clear that the core of the company is employees, and they are the ones who actually do the money-making work. Therefore, how to mobilize employee enthusiasm is very important. Whether it is the partnership system, delegating power, or sharing profits, the ultimate goal is to mobilize employee enthusiasm. At the end of 2022, the company purchased three Audi A6s to reward relevant responsible persons. With such top-level rewards, employees have no reason not to think for the company.
Digital application + performance incentives: Since Jintong Trading's growth, the core of consolidating the basic plate is mainly two aspects: digital application and performance implementation.
- Digital application: Distributor bosses are usually entangled with various trivial matters, and the company almost cannot operate normally without them. To make the company operate independently and efficiently, it is necessary to establish a relatively mature management system. Take Jintong Trading as an example; the boss and management are relatively liberated, and digital application is the core secret: what system software can solve, never let people do it.
Digital management can bidirectionally improve internal and external efficiency. For internal management, digital tools can be used to measure the performance of employees, internal affairs, warehouse, logistics, and other daily work content. For example, the number of store visits by salespeople, performance achievement rate, visit time, and lunch time can be viewed at any time. At the same time, digital management can analyze efficiency issues during visits and solve them in a timely manner, achieving fair assessment and precise rewards and punishments. In terms of salary increases, supervisors can also make objective decisions based on actual data, so that every effort of employees can be reflected in data and linked to income, not letting Lei Feng suffer, and tilting toward strivers. For external management, it is to achieve digital spending, spending money better and more accurately. Since distributors need to make correct expense allocation decisions based on the stores with the highest input-output ratio, thereby ensuring profit maximization. Digital management can help distributors analyze key indicators such as sales and input-output ratio, and optimize store selection and expense allocation, thereby improving external efficiency.
- Performance implementation: To better promote business development, sales personnel are subject to performance assessment, with a salary of 5,000 yuan, specifically divided into five major evaluation items: sales 20%, gross profit 40%, attendance days 10%, product mix achievement 20%, and comprehensive bonus 10%. The purpose of the assessment is: more rewards than penalties. The first item is sales. Suppose the monthly sales target is 300,000 yuan, and the month-end statistics show he completed 320,000 yuan. According to the reward and punishment system, for every extra thousand yuan, reward 30 yuan, and for every less thousand yuan, deduct 10 yuan. Then he will get 20 thousand-yuan rewards, which is 1,600 yuan. The second item is gross profit. Suppose the monthly gross profit assessment indicator is 18 points. According to the assessment rules, selling 300,000 yuan can earn 54,000 yuan. For every extra hundred yuan, reward 30 yuan, and for every less hundred yuan, deduct 10 yuan. When achieving 57,000 yuan profit, there will be an extra 3,000 yuan, and the final gain is 4,900 yuan. The reason is that an additional reward mechanism is set up: if the gross profit reaches the balance point, an additional 2,000 yuan is rewarded; if it exceeds the balance point by 10%, an additional electric vehicle worth over 1,000 yuan is given. The third item is attendance days. With 4 rest days per month, the monthly attendance assessment is 26 days. For each extra day, reward 120 yuan, and for each less day, deduct 100 yuan. Assuming working 28 days, the bonus will increase from 500 to 740 yuan. The fourth item is product mix achievement. The assessment focuses on slow-moving products in the warehouse, high-margin products, or new products. The fifth item is comprehensive bonus, which is directly evaluated based on performance. Finally, his monthly salary is the sum of the five items, which is 8,800 yuan. In addition, our company has some basic assessments that will be added. This complete performance assessment is not static; it can be flexibly used. The core is still to look at employee achievement. Suppose there are five salespeople, and each month they are always late or take leave; then change attendance from 10% to 40%. If an employee is very diligent and always gets full attendance bonus, but has low gross profit, then focus on assessing gross profit.
"Transformation" new ideas: In recent years, we have noticed that many companies have transformed into B2B distributors or online merchants. In contrast, Jintong Trading has chosen a different path—self-built channels and diversified operations. Currently, the supermarkets created by Jintong Trading have occupied a leading position in the local chain brand market, expanding to six branches in just one and a half years. Jintong Trading's warehouse has also become the source of goods for nearly one-fifth of local retail stores. If 10, 20, or even 30 more branches are opened in the future, it will greatly promote the development of the distributor business. Self-operated supermarkets not only help stabilize the trading business but also continuously break through with new growth, specifically manifested in four points:
First, control: As a distributor, reliable channels and stable brands are crucial. Operating self-operated supermarkets can truly control high-quality terminal channels and brand rights. Like Jintong Trading, it now has many stable brands and is constantly seeking new brand partners. More importantly, our criteria for selecting brands are based on our needs, not letting brands choose us. When negotiations with certain brand owners fail, they also need to consider the ten or twenty distribution stores controlled by Jintong Trading, thus carefully deciding whether to withdraw cooperation. In addition, the company's plan this year is to open 10 stores to continuously strengthen the channel side.
Second, cash flow: The importance of cash flow to enterprises is self-evident. However, even if the same sales of 2 million are earned, the cash flow situation of a distributor and a self-operated supermarket is completely different. As a distributor, although earning 2 million a year, due to various payment terms with manufacturers and customers, the actual cash received is very little, so not much money is seen on the books. In contrast, the cash flow of a self-operated supermarket is better. Earning 2 million, the money on the books must be greater than 2 million, sometimes even reaching 3 million, because there is a payment term with suppliers, and there is no need to pay suppliers' goods money in time. Whoever holds the surplus funds can get additional revenue.
Third, clearing tail inventory: Distributors need to handle a large amount of returned goods every month, which is a very headache-inducing task. However, if you have self-operated supermarkets, you can package these tail goods as traffic-generating products and sell them at special prices. Jintong Trading has practiced this method and found it very popular. By clearing tail inventory, not only can you gain more sales revenue, but also improve inventory turnover, reduce waste and loss, and bring more value.
Fourth, maximizing profit: As mentioned earlier, Jintong Trading has been able to negotiate equally with manufacturers, thus can obtain maximized profit resources.
Finally: Jintong Trading has always been a trading company, and self-operated stores are only to better promote the development of the trading business. The ultimate goal of self-operated stores is asset-light operation. Once a certain number is reached, we will summarize to achieve scale, process, and standardization. After this system is established, we can consider opening franchise stores, managed stores, or introducing professional management, thereby further enhancing profit sources.
Ultimately transforming into franchise stores and participating in centralized procurement and unified distribution. Therefore, the final profit still comes from the development of the supply chain.