More than half of 2019 has passed, and all dealers are complaining about poor market sales. Manufacturers have raised prices multiple times to balance their books, but whether consumers will accept the increases is a huge test for dealers.

In the early days, dealers aspired to represent big brands—who wouldn't want to represent a big brand? Big brands enter channels easily, have some bargaining power with supermarkets, generate high sales, and can quickly establish distribution networks.

Additionally, representing a big brand can improve a dealer's management capabilities. With the manufacturer's help, they can standardize their market, management, and marketing practices, making their operations more standardized and controllable, and making money more easily.

In recent years, the economic situation has been poor, but manufacturers' sales targets have not decreased with the market decline; instead, they have risen year by year. Forcing inventory on dealers has become a standard practice.

It's common to see targets disconnected from market reality. Representing big brands is gradually becoming a headache for dealers. Since 2016, the consumption decline caused by the financial crisis has been accelerating the reshuffling of the FMCG industry.

Representing big brands is gradually becoming a chicken rib—discarding it is a pity, but keeping it is exhausting.

Representing a big brand is a huge test of a dealer's financial strength, team capability, and market development ability.

Dealers need substantial working capital. Investing money in inventory may not yield the expected returns. Some big brands have a vast number of products. Although the brand is well-known, the product line is too long, with too many individual items and a lack of star products. Market competitiveness gradually declines. Products sit unsold, and dealers resort to swapping for fresher stock, price promotions, etc., leading to shrinking profits and many losses.

The meager profits are incomparable to the early market. Bosses earn less, and excellent talent cannot be retained because salaries can't keep up. Good people can't be recruited. The overall quality of the management team is low, and with heavy tasks and lots of handling, employee turnover is high. Hard-trained talent quickly leaves, sometimes becoming competitors.

Big brand manufacturers are extremely demanding. When the team's capabilities fall short, the boss has to step in. The boss becomes more capable but also more frustrated and exhausted, complaining about the lack of capable subordinates.

The vicious aftermath of squeezed competition due to weak consumption is evident. Some listed companies, to improve their financial reports, continuously launch new products, increase advertising, and develop more cost-effective products.

Small and medium manufacturers have to survive, fighting tooth and nail. Low prices, knockoffs, and counterfeits lead to cutthroat competition—it's kill or be killed.

More and more products are gathering dust on supermarket shelves, unsold and ignored. Representing big brands requires further market penetration and more product sell-through. Facing new market changes, past experience suddenly becomes useless.

With the spread of e-commerce, information is easier to obtain. Newer products, cooler packaging, and more engaging marketing methods emerge endlessly. Even if dealers had three heads and six arms, they would feel overwhelmed, unable to manage everything, and suffer greatly.

In 2019, only 16% of dealers felt their business was still okay. When it comes to poor business, almost everyone says the same thing.

This is the reality before us. The economic crisis, widely discussed online, spreads like wildfire in dealer circles, simply because it resonates and reflects the true current situation.

Therefore, we advise all brand manufacturers to cherish their dealer friends. Without them, your brand would still be a small brand. It is thousands of dealers who have lifted your brand, helped you conquer the market, and built your empire.

It is the dealers who unload goods at night, deliver during the day, bring back goods without a penny missing, and then sell on credit, working hard to deliver, sell, and collect payments. They are so busy they neglect their families, children, and wives... Through years of day-and-night persistence, they have built the brand's foundation, awareness, and market share.

Forcing inventory is acceptable, but please do it scientifically according to the dealer's sales progress. Don't blindly force inventory. Don't push all new products onto dealers at once. You can let dealers trial-sell, but there should be a limit. Don't, for the sake of promoting a mediocre new product, tie up all the dealer's funds, leaving them without money for market development and no heart for brand building.

Don't keep changing market policies. Changing policies with each salesperson makes the brand synonymous with dishonesty. Don't apply a one-size-fits-all policy nationwide. Each region should be adjusted appropriately based on actual conditions. Treat each county as a country to operate, rather than giving random, blind commands. Don't ignore dealer feedback—missing it could mean losing the market. Competitors are always ready to strike. Don't stay trapped in the ivory tower of your brand.

R&D personnel must go to the market more often and understand the frontline. Don't create seemingly nice new products that are disconnected from the masses and become chicken ribs.

Cherish the hard-earned big brands, and even more so, cherish the dealers who have always supported us silently and worked hard for our brands.

Don't casually replace dealers or take away their agency rights. Dealers have worked hard to build the market. If a salesperson takes a dislike and wants to replace the dealer, where is the manufacturer's friendship? Where is the morality? Where is the business ethics?

A brand is not just the trust consumers have in product quality, but also the trust dealers have in the manufacturer's management and credibility.

Source: Dealer Weekly

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