When it comes to channel refinement, I think every dealer knows that whether driven by their own business needs or manufacturer requirements, channel refinement runs through our business from start to finish. But few dealers have seriously thought about how to achieve channel refinement, or how to maximize sales and profit output based on it. Previously, I met a county-level dealer who, in a county with a population of 1.3 million, used 19 vehicles and 20 salespeople to serve 1,000 traditional small stores and 3 KA supermarkets, achieving annual sales of 50 million yuan. From the numbers above, it can be seen as channel refinement, but this dealer boss complained to me that despite high sales, there was little profit at year-end. Therefore, the foundation of channel refinement must be built on the input-output ratio. The problem in the above case is that with 1,000 terminal customers, each person serving 50 small stores is too inefficient. Conversely, the waste of human and vehicle resources is severe, with excessive configuration, which is the key to no profit. Normally, 6-8 salespeople and 6-7 vehicles can fully achieve the scale of 50 million. How to do channel refinement well, how to allocate human resources and vehicles for different types of channels, and what are the core operational key points? To this end, New Distribution invited Mr. Li Feng, General Manager of Hongye Hengda Trading, to discuss channel refinement strategies for current mainstream channels, hoping to provide dealer friends with some reference and inspiration. It should be emphasized here: due to differences in FMCG categories, product differences, and varying business scales of dealers, there is no standard numerical answer in operational methods, but what can be provided is the logic of operational thinking and key business points. -01- Wholesale Channel: Fast, Simple, Few Although I do not advocate doing wholesale channels, many dealers have large coverage areas and have no choice but to rely on wholesale channels for rapid distribution. Therefore, the simpler the wholesale channel, the better; the fewer people, the better; the faster the turnover, the better. For wholesale channels, people are the first element, and there should not be too many. Highlight advantages, suppress competitors, and make money through speed and volume. In terms of product structure, bestsellers plus second- and third-tier brands, and even some "high-profit" products, can increase profit margins. I want to remind: If you want to do a long-term distribution business, the wholesale channel is only a transitional stage for growing your business. Direct operation of terminals is a path every dealer must take. If you cannot directly operate terminals, you cannot truly help upstream manufacturers achieve channel refinement, and your value to brand owners naturally diminishes; if you cannot directly operate terminals, you also cannot continuously promote new products or high-margin products, and profits cannot be guaranteed. -02- Traditional Channel: Fine Management, Focus on Process Rather Than Results Traditional circulation small stores are the most familiar channel for dealers and the one they do most, but relatively the most complex to manage. How to operate traditional circulation small stores well? I think the core is two handles: one is organizational management; the other is store management. 1. Organizational Management First, dealers need to calculate the number of stores to allocate personnel. For example, for grain and oil categories, use one store per thousand people, and position your store customer count based on population. A market with a population of 1 million should have at least 1,000 terminals. For example, for beverages, it might be 1.5 stores per thousand people, or 1,200-1,500 terminal stores. After determining the target number of stores, start planning salesperson routes and design standards. For instance, each salesperson manages 150 customers, divided into 6 routes, visiting 25 stores daily. After planning visit routes, dealers must fully utilize digital tools to manage, assess, and check salespeople. This is the foundation for ensuring store activity; without visits, there are no active stores. Here, some dealers may be entangled because they represent multiple brands, wondering whether to plan routes by region or by brand. My suggestion: Try to divide by region, not by brand. Try not to visit separately; if there are many brands, you can appropriately reduce the number of customers served and concentrate on visiting outlets. When one person visits with multiple brands, the salesperson can have resources to negotiate and maximize the use of various product resources to demand from terminal stores. If visits are separated, it not only causes fragmentation but also wastes resources. For dealers, the personnel cost of salespeople is the most expensive and the largest proportion of costs. This is the strategy for salesperson store visits, but it is not enough. Dealers must learn to evaluate the input-output ratio of individual salespeople. For example, a salesperson responsible for 100 customers should have at least 100,000 yuan in monthly sales. At the same time, combine product gross profit and output profit to measure the salesperson's contribution value. 2. Store Management Regarding store management, the core is to do 5 points: expand customers, expand products, expand displays, adjust structure, and provide service. This is the core of traditional channel store management. For the dealer's business, the ultimate goal is to increase single-store output, maximize profit, maximize sales, and maximize product share. In traditional circulation channels, the core tasks of salespeople are to expand customers, expand products, expand displays, adjust structure, and provide service. Dealer bosses need to check whether the above core tasks are achieved according to set standards, and promote execution through terminal performance and process indicator assessments. The ultimate goal is the result pursued by the dealer; based on the result, push back and assign tasks to salespeople. The core of terminal store management is that salespeople execute process indicators based on assessment, and dealers design process indicators based on goals. In addition, there is price management in store management, which is particularly important. Regarding the key points of price management, my suggestion is that no matter what product you sell, at least 2-3 points higher than the manufacturer's suggested price. For example, if the manufacturer says sell at 40, you sell at 41. Of course, the extra 1 yuan is not for you to put in your pocket as profit, but to give to the salesperson so they have resources and leverage to negotiate with terminal stores. For example, expand shelf space, add new products, or product bundling. Although this 1 yuan eventually flows to the terminal store, through this form, the salesperson has money in hand and dares to negotiate with the terminal, exchanging conditions for conditions. Of course, price management in circulation stores should be unified, whether large or small stores, with the same supply price and unified management, especially the price stability of bestsellers. In addition, price management also involves price increases and decreases. Regarding price increases in traditional channels, I think there is a "three-step": First, increase the price and definitely stock up a batch of goods in advance; this batch is for the store as a transition, with prices unchanged; second, use the new price for customers, but adopt a bundling form, so after bundling, it is still the original price; third, only then truly increase the price. Through these three steps, gradually let customers accept, and this way you won't lose customers or sales due to price increases. Even if the manufacturer does not provide any resources, my suggestion is that dealers earn less for 1-2 months to ensure a smooth price transition and retain customers and sales, which is a long-term strategy. Regarding price reductions: do not immediately reduce prices for customers. At this time, if customers have inventory, they may scold you. If you want to reduce prices, first use bundling to maintain the original price system, and after customers' inventory is mostly cleared, then use bundling to reduce prices for customers. My suggestion is that if the reduction is not large, try not to break the price system; consider turning the price reduction policy into your profit, into your promotional resources, for displays and process indicators, which may be more effective. -03- Modern Channel: Relationship, Professionalism A dealer friend with annual sales of 40 million yuan only does modern channels, with a team of 6 people: 4 salespeople plus 2 clerks, and 2 vehicles. Output is very high; even if you only do one channel, if you do it well and finely, you can still make money. Regarding operating modern channels, I think the core is two points: first is relationship; second is professionalism. Relationship refers to the relationship with buyers and salespeople, which I won't elaborate on here. Regarding "professionalism," the key is to have sales analysis capabilities. In addition to mastering your own product sales, sales items, and profit margins, dealers also need to obtain data on competing products, find the top 3 products in the category in terms of product structure, price, and specifications, and identify problems through comparative analysis. My suggestion: Analyze competitor POS data monthly, and use the data to target the largest competitor. If your product is the largest, defend well to prevent competitors from catching up. Also, analyze your own POS data to optimize expense investment and product structure, and find room for growth. In operating modern channels, "fee-to-sales ratio analysis" is a key indicator of whether a dealer can be profitable. Analyze the money invested, and then invest limited funds into stores that can produce the most sales. Finally, in process management, do a good job of tracking accounts receivable, which is the most important part of management. Large stores generally have credit periods; if the process is not done well, money is easily lost. Especially the relevant reconciliation dates and invoice mailing dates should be clearly defined in the system. If the bill is not sent by the specified time, you have to wait until the next month, and the payment will be delayed, which directly affects the dealer's use of funds and leads to profit loss. -04- Catering Channel: Professional Knowledge, Payment Management Are Key The catering channel is relatively special; the purchaser is usually the head chef. Therefore, the relationship with the head chef is very important. Catering channel visit times are limited and need to be flexible; for example, generally 2-4 pm is the best time. Also, salespeople should not be responsible for too many stores; too many cannot be visited. It is recommended that each salesperson visit within 60-100 stores. Operating catering stores requires higher requirements for salespeople, especially for rice, flour, oil, and seasoning categories; salespeople must have strong professional knowledge of products, have common language with the head chef, and clearly know the characteristics and uses of products. When promoting new products, the best way is on-site demonstration. The operation of catering stores has certain thresholds compared to traditional circulation channels; therefore, to build confidence in salespeople, the best way is to win over the best local hotel and set a benchmark for salespeople. This can also be used as a case to persuade other catering stores. Regarding payment management, many catering dealers have a common problem: because of good relationships, they do not sign contracts. Finally, the catering boss runs away, owing hundreds of thousands. Unlike modern channels, catering customers are relatively riskier. Whether large or small stores, or regardless of credit period length, contracts must be signed, and payment standards must be established. Establish a tracking system; once payment is not timely, handle it immediately. -05- E-commerce Channel: Not Recommended to Enter With the rise of new retail and home-delivery e-commerce, many dealers are eager to try. It is okay to be enterprising, but I still suggest dealers be cautious about entering e-commerce channels. Most dealers have been on traditional paths for over a decade, with strong inertial thinking, and the e-commerce play is quite different from traditional distribution thinking, so it is often difficult for dealers to adapt quickly. Of course, if your business scale is large enough and you have manufacturer support, you can try, but you must build a professional team. Overall, I do not recommend dealers to touch e-commerce channels; the dividend of online e-commerce has basically disappeared, and FMCG offline business still accounts for a large share. Spending time and energy on traditional offline business may not earn less, but you must use the right methods. Online business seems to directly reach consumers with good profit margins, but the energy, time, and related costs are not low at all! Instead of spending time, energy, and resources on figuring out a new thing, it is better to bury your head and study how to mine more increment in the existing market and find more profit. The above are my personal views and opinions on the operation of current mainstream channels. For local and regional dealers, rooting down to do traditional circulation channels well, and if capable and conditional, or with corresponding products, operating catering channels, these two types are the foundation for a dealer's survival!