---
title: "Deep Distribution Is Just a Tool"
description: "As an FMCG, the gross margin cannot support the cost of deep distribution; even well-known brands rely on distributors to reach the market. Although deep distribution gives companies control over channels and greater autonomy in marketing and pricing, it faces many insurmountable problems, and simply relying on it to develop the market is ultimately counterproductive. Therefore, deep distribution should only be used as a tool and put away after use to avoid becoming a burden."
author: "郝星光"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2014-08-15"
language: "en"
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# Deep Distribution Is Just a Tool

> As an FMCG, the gross margin cannot support the cost of deep distribution; even well-known brands rely on distributors to reach the market. Although deep distribution gives companies control over channels and greater autonomy in marketing and pricing, it faces many insurmountable problems, and simply relying on it to develop the market is ultimately counterproductive. Therefore, deep distribution should only be used as a tool and put away after use to avoid becoming a burden.

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As an FMCG, the gross margin cannot support the cost of deep distribution; even well-known brands rely on distributors to reach the market.
Although deep distribution gives companies control over channels and greater autonomy in marketing and pricing, enabling more effective market control, there are many difficult problems in between. Simply expecting deep distribution to develop the market will ultimately be counterproductive. Therefore, deep distribution should only be used as a tool, and after use, it should be put away to avoid becoming a burden.
Deep distribution has the following problems:
**1. High costs**
The initial investment in deep distribution is quite high, and the subsequent maintenance costs are also a considerable expense, unless the unit profit and sales volume of the product can be guaranteed. Generally speaking, only companies with sufficient strength and industries with sufficient profit margins adopt this approach.
Building self-operated terminals, especially in the FMCG industry, which is in a state of meager profits, combined with a market environment of oversupply, reaching the break-even point is not a simple task. These factors can bring potential crises to the enterprise.
**2. Channel conflicts**
Deep distribution practices have already affected the survival of other distributors. The root of the conflict lies in the competition between the enterprise and distributors for control over channels and terminals, leading to channel panic. As a result, they unite to resist the enterprise. This conflict is irreconcilable because interests are involved, and self-operated terminals face numerous crises.
If the enterprise is not careful in handling relationships between channels, or attempts to replace the original channel model with deep distribution, it may trigger continuous channel conflicts at the least, or even channel turmoil. In such cases, the guns are not pointed outward but inward, causing internal strife.
**3. Difficulty in rapidly increasing sales**
Thinking that doing it yourself is better than distributors, and that deep distribution will surely significantly increase sales, is often wishful thinking. These distributors, through long-term network construction and accumulation, are still adept at promoting new products. However, when enterprise personnel build channels and terminals, they must establish a trust and cooperative relationship with the terminals, which cannot be accomplished overnight. In fact, after many enterprises spend a lot on deep distribution, the increase in sales is very limited, and the enterprise also becomes exhausted.
**4. Higher demands on company management**
Deep distribution not only requires the rapid expansion of the personnel team and increased management difficulty, but also requires improved operational capabilities. When various factors combine and the loopholes are too large, it ends up losing money for the enterprise, losing the market, and benefiting some individuals. How can we leverage its advantages and avoid its disadvantages? Treating deep distribution as one of the channels and an important means for enterprises to explore the market is a very powerful weapon. If used properly, it can achieve twice the result with half the effort.
**Deep distribution has the following functions:**
**1. Attacking competitive brands.** The spokesperson for local competitive brands is the local distributor. Enterprises can concentrate their efforts on attacking these distributors, competing for their core markets. No matter how strong the distributor is, they cannot confront the enterprise, and results can be seen quickly.
Key points:
1. Cooperate closely with your own distributors to attack together, avoiding each going their own way and failing to concentrate strength.
2. The terminals captured should be given as rewards to your own distributors, encouraging them to fight bravely and promote your products.
3. This plan should only be carried out short-term, not persistently, to avoid internal strife and interest disputes.
**2. Supporting distributors.** Cooperate with distributors to develop the market, especially for smaller distributors with high loyalty to the manufacturer. The enterprise can use deep distribution methods to assist distributors in becoming stronger and bigger. Once such a distributor develops, they will have high loyalty to the enterprise.
With the core concept of creating value for distributors, the enterprise fully utilizes the distributor's existing capital, network, and logistics, and on the basis of controlling market dominance, guides and helps distributors become stronger and bigger. Self-operated terminals serve as an effective supplement and adjustment to regular channels, fully playing their role in brand promotion and reform piloting. The two are effectively integrated to complement each other's advantages.
Key points:
1. Treat distributors as partners, treat them equally, and provide assistance in the areas where distributors are weakest.
2. Make assisting distributors the ultimate goal of deep distribution, avoiding conflicts with distributors.
3. The terminals developed should be handed over to distributors for responsibility and service according to their actual situation.
4. The team responsible for channel construction can operate under the leadership and command of the distributor.
**3. Coercing distributors.** To win competitiveness, it is essential for enterprises to fully utilize their own resources and distributor resources to operate the market. When encountering distributors with strong strength but uncooperative, it is necessary to adopt a coercive approach. Use the enterprise's strength to contain the distributor, ultimately prompting the distributor to increase cooperation with the enterprise and increase enthusiasm for product promotion.
Key points:
1. Uncooperative distributors can be set aside, and the terminal development of deep distribution can be used to assist those loyal and obedient distributors to grow and strengthen, which in itself is a threat.
2. For the markets of uncooperative distributors, the strength of the enterprise's deep distribution should be strengthened as a means of containment and supervision.
3. The above methods are only a posture. When uncooperative distributors become cooperative, the deep distribution methods can be canceled or weakened.
**4. Filling market gaps.** For some markets that are difficult to develop and distributors are unwilling to enter, the enterprise can adopt deep distribution methods. Use a team with strong execution to implement policies and plans thoroughly, and after making the market promising, hand it over to distributors. Key points:
1. This market development is targeted; avoid starting everywhere, which increases marketing and management costs.
2. After development, deep distribution has completed its task. Handing over to distributors can avoid rapid cost expansion and management loopholes.
3. This market development can be considered part of the initial market advertising investment, and this form is much better than market advertising.
**5. Promoting new products.** If the enterprise promotes a high-priced premium product, due to certain market risks, distributors are unwilling to distribute it. At this time, market development can be carried out through deep distribution. Due to the profit margin, once this development form succeeds, the enterprise can retain it long-term as a source of profit.
Precautions:
1. In market operations, leave some space as investment for deep distribution.
2. Team building becomes the key to the success of this deep distribution.
3. Do not hand over to distributors whose consumer terminals differ from those of the product; otherwise, they will make the entire market worse.
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