Introduction: Re-do the terminal once more, starting from grabbing a floor display and occupying a shelf facing.

Hello friends. Seeing this is like meeting in person; I am Yuan Lai. Recently, I chatted with some dealer friends to explore changes, challenges, opportunities, and future directions in the dealer business. Among them were dealers with annual sales of billions and others with tens of millions. Despite differences in scale, everyone mentioned business philosophies and directions such as deepening services, enhancing professionalism, and expanding product categories. After listening to what the dealers shared, I briefly summarized the current business direction for dealers, which boils down to six characters: "build strong fortresses, fight stubborn battles." This article revolves around the dealer business, discussing future directions and business planning, hoping to inspire and provoke thought among dealer friends.

The dividends are completely gone.

Earlier, I chatted with a dealer friend with annual sales of billions. I asked, "Why have you been able to grow so big? Compared to other mainstream dealers, why did you stand out?" He smiled and said, "Actually, there are many factors in growing a business, and it's hard to evaluate objectively. In the early days of entrepreneurship, I happened to meet a few right brands, followed some system stores, plus a bit of courage, and finally good luck, so the business took off. To be honest, sometimes growing a business has little to do with one's subjective abilities; being led by brands and following systems, the business just grows." Indeed, around 2000, if a dealer could bet on a brand and follow it, wherever the brand pointed, the dealer fought, and the business basically succeeded. Additionally, with the rise and expansion of supermarkets and hypermarkets, deeply binding with a system supermarket chain meant business grew "with eyes closed" every year. On a timeline, before 2013, dealer business growth was mainly driven by the "three carriages" of population demand dividends, brand growth dividends, and retail expansion dividends. Of course, this doesn't mean personal effort was irrelevant—it mattered—but objective dividends outweighed subjective ability. After 2013, industries gradually entered peak stock, and the demographic dividend disappeared first. In 2015, the hypermarket format experienced its first "negative growth," and traditional hypermarkets and supermarkets gradually declined. Meanwhile, online e-commerce grew exponentially. This posed difficulties for dealers entirely focused on offline, especially those primarily in daily chemical products. Additionally, brand growth, along with demographic dividends, gradually became slight or marginal growth, with 5% annual growth being the norm. Now, few top-tier brands wave flags claiming over 20% growth. If you look closely at the earnings reports of FMCG giants, they all talk about premiumization, youth orientation, refinement, efficiency, and quality—in short, moving from selling more to selling more expensively.

Looking solely at the offline market, there has been basically no significant dividend for dealers since 2015. If dealers still achieved significant growth after 2015, it was likely due to their own efforts.

What drives dealer business growth?

Although there are no longer dividends like population, brand, or system supermarkets, small dividends continue to emerge, such as community group buying around 2019 and short-video live streaming after 2021. However, these dividends are not universal; they require certain capabilities and insight. In recent years, many regional dealers have fallen into a vicious cycle regarding business growth, believing that growth can only come from capturing community e-commerce, B2B e-commerce, or certain group-buying customers, and firmly believing that pure offline stores have no opportunity at all. Online keeps growing, offline keeps being squeezed; if you can even maintain existing stock, how can you talk about growth? Is offline really without opportunity? In fact, the chance of external big dividends from natural market growth is indeed gone, replaced by endogenous growth—grabbing share from existing stock. Whose volume to grab? Definitely competitors' sales. Dealers, think about this: How long has it been since you adjusted your salespeople's compensation structure? If over the past five years, the compensation structure (not the amount) hasn't changed, or only ratios were tweaked, it's basically safe to say your business hasn't changed much in five years.

Recently, I met a daily chemical dealer with annual sales of 50 million. When discussing the past few years, he said, "We're doing okay, at least 20% growth, and gross margins are decent." I was curious—these years have been the toughest for daily chemical dealers, so how did he maintain sales and profit growth? His answer was simple: intensively cultivate the market, increase outlets, grab shelf space, and seize resources. In terms of compensation, he abolished base salary and switched to POS commission plus profit commission. It's not that offline has no volume; it's that you haven't grabbed it! This is why I propose the core of "build strong fortresses, fight stubborn battles." It's not that there's no sales volume, but the way we acquire volume must change: compensation assessments must change, store services must change... The increase in the number of outlets is minimal, but improving outlet quality still has great potential.

Increase efficiency and reduce costs, not reduce costs and increase efficiency.

In the past two years, from brand owners to retailers, everyone has been talking about cost reduction and efficiency improvement, and many dealers too. But I think sometimes people misunderstand, because the first thing they think of is cutting costs. Growth is gone, profits are gone, so quickly cut costs: reduce promoters, cut salespeople, minimize drivers... All cuts are direct business costs. But when it comes to improving efficiency, dealers are at a loss—how to increase efficiency? No methods, no paths. With dividends gone and the market tough, we need to increase efficiency and reduce costs. Efficiency is the cause; cost reduction is the effect. How to increase efficiency? From sorting out sales management systems and processes, to adjusting compensation structures and fully applying digital tools, to upgrading business models—these are all methods and paths. Because changing compensation from sales-based to profit-based alters salespeople's motivation and initiative in the market, leading to efficiency gains. A 500-yuan floor display fee at a store, originally unrelated to the salesperson, becomes 0 or 200 yuan after profit-based assessment ties it strongly to the salesperson—that's true cost reduction. Re-do the terminal once more, starting from grabbing a floor display and occupying a shelf facing.

With external objective dividends gone, the next step is to rely on "building strong fortresses, fighting stubborn battles." Treat every store as a territory, conquer territories, and extract maximum sales. In the past, our sales growth relied entirely on manufacturers' sales teams; as manufacturers invested and grew, our business naturally grew. But now that's not enough; relying on a single brand's store-level competition can no longer support costs. Now it's about multi-brand combined competition, with shared investments. Playing a brand combination strategy in stores is the only path for dealer growth.

Therefore, it's not "reduce costs and increase efficiency" but "increase efficiency and reduce costs." Efficiency is the cause; cost reduction is the effect. Don't reverse the order. How to increase efficiency? What you can do right now is adjust the sales compensation structure so that store sales and gross profit are all tied to salespeople. What dealers need to do personally is to complement categories and brands: broaden categories horizontally and deepen brands vertically. Let salespeople focus on grabbing within categories, not just a single brand.

Conclusion

Without external dividends, there is no natural growth. In the next five years, dealers' business will rely entirely on their own internal strength—build strong fortresses, fight stubborn battles. There are no so-called "new channels" in the offline market anymore. Go all out on basic skills, maximize sales in every store, and treat fellow dealers as competitors. First find competitors' weak stores and weak regions, then through multi-brand combinations and increased promoter investment, gradually conquer them step by step. This is the core path for dealer business growth now and in the future!

Finally, let me update you on my recent work regarding "dealer business research and thinking." After nearly half a year of preparation, the "New Distribution" Dealer Membership Club has officially launched, and recruitment is underway. In just one week, nearly a hundred dealer bosses have joined our club. We will officially go live in June 2023. If your business is facing challenges and you're stuck in a rut, welcome to join the Dealer Membership Club to seize opportunities, reduce costs, and increase volume. Here, you can find suitable learning objects and path references! If you're doing exceptionally well in your region and have insights into management, we welcome you even more. Walk with experts, learn from each other, and progress together to become future leaders in the FMCG trading industry!

Scan the QR code to add WeChat; welcome to join! Attached: 200,000-word dealer business management case analysis collection PDF.