"Business is hard" has become a common sentiment among most distributors. Especially with the rapid expansion of snack stores and frequent closures of traditional supermarkets, it has become even more difficult for snack food distributors focused on traditional offline channels, as their market share is gradually eroded. However, in such an environment, there are still a group of outstanding distributors who, through new thinking and new methods, have not only stabilized their market but also found new growth points. Today, the protagonist of "New Distribution 100 People" is Li Fen, General Manager of Xuzhou Runzhong Yigou Supply Chain Management Co., Ltd. She is a snack food distributor who is adept at finding incremental growth in adversity, representing well-known brands such as Mondelēz, Lay's, Dali, Panpan, and Yinlu, with annual sales reaching 150 million yuan.

Not long ago, "New Distribution" conducted an exclusive interview with her. This article will detail how she stepped by step found her direction, positioned herself precisely, and grew stronger.

Choosing any industry requires being ahead of the curve

In 1999, Li Fen returned to her hometown after graduating from university and entered the trading field. At that time, most distributors were still focused on reselling goods, pursuing quick profits. The market environment was generally about selling whatever made money, whatever was available, and simply putting products on shelves. Li Fen, however, saw the limitations of this model. "If you earn tens of thousands this year and tens of thousands next year, when will you ever achieve scale?" She believed that choosing any industry requires being ahead of the curve, making the right decisions, and having the right direction. In the initial stage, Li Fen made three correct decisions:

First, she adopted a mobile sales approach, visiting stores directly, rather than the traditional sit-and-wait mentality of other peers.

Second, she focused on brand agency, doing brand business.

Third, on the basis of brand agency, she pursued differentiated product selection, focusing on categories.

At that time, there was no wholesale market in the local area, but a neighboring city had a strong wholesale market. So every other week, she would go to the neighboring city's wholesale market to find products not available locally, then introduce them to the local market for trial sales. In this way, she continuously filled market gaps and gradually achieved full coverage of the county's sales network.

By 2003, Li Fen successfully expanded her business to the urban area. However, although the city's food city was full of shops, most merchants still had weak brand awareness. Even first-tier big brands rarely used mobile sales models; they mostly relied on manufacturer sales reps for ground promotion, then had warehouses deliver goods. Peers basically played a distribution role. Facing this situation, Li Fen adhered to her brand route and replicated her successful county mobile sales model in the urban area. Despite peers' skepticism, who generally believed that mobile sales were too costly and risky, it turned out that Li Fen's strategic vision was accurate. When peers were still sit-and-wait merchants, Li Fen had already become a traveling merchant; when peers started mobile sales, she had already set her sights on brand agency; and when everyone began to take on brand agency, she became a category operator first. At this stage, Li Fen constantly thought about how to thoroughly understand a category and how to ensure these brands are fully distributed to every terminal?

How to thoroughly understand a category?

Mainstream distributors often achieve growth by continuously adding items, brands, and categories. Often, the business team hasn't fully understood one product before adding another, and the learning speed can't keep up with the speed of adding products. Naturally, employees are not proficient in every category, and sales effectiveness suffers. To avoid this problem, Li Fen proposed "category focus". As the saying goes, "if you bite off more than you can chew," you must first do one category well before moving to the next to ensure each category is thoroughly understood. How to thoroughly understand a category? First, the boss needs sufficient cognition and understanding. Li Fen expanded her business from the county to the urban area, using a red wine as the entry point to open the market. At that time, most ordinary people knew little about red wine; common sweet wines were just blended beverages. Li Fen deeply studied red wine knowledge, taught many sit-and-wait merchants how to sell red wine, continuously cultivated local awareness of red wine, and distinguished between sweet wine and dry red. She believed that improving product awareness is an important factor in driving product sales. After mastering the category, the key is how to effectively cover outlets. As the first person in the local market to promote mobile sales, Li Fen adopted a direct terminal control strategy, without setting up second-tier wholesalers or distributors. All outlets were directly operated by her own frontline team, keeping terminals firmly in hand, successfully seizing market opportunities. It was also thanks to the direct terminal control model and experience that Li Fen successfully entered the snack food and beverage categories by chance. With the increase in categories, especially heavy goods like beverages, the original self-operated logistics model gradually became less efficient, costs rose, and managing 30-40 delivery vehicles became a headache. Facing this challenge, Li Fen decisively adjusted her strategy, sold off vehicles, retained only a small warehouse of over 1,000 square meters, and added 6 sub-warehouses, placing heavy goods in sub-warehouses. In 2019, Li Fen further optimized the logistics system by completely outsourcing the entire logistics chain, including warehousing, distribution, and unloading, to third parties. To maintain balance, she cooperated with two logistics companies simultaneously, but sales, business promotion, and after-sales service remained with her own team. When the team works on the front line, they often encounter a variety of problems. For experienced salespeople, they may have formed their own coping strategies in practice, but for new salespeople, it is extremely challenging. Runzhong Yigou, on the basis of "old leading new," compiled a standardized terminal operation script manual from both the manufacturer and distributor perspectives. On one hand, it includes the brand's product manual scripts; on the other hand, it covers every problem the distributor encounters in actual terminal operations. By combining product manuals, regional characteristics, and channel characteristics, they continuously adjust and improve, ensuring the content is practical and up-to-date. Even newcomers unfamiliar with the company's business can quickly grasp the tricks with this manual and handle various terminal situations calmly. Moreover, for refined operations, the company has set up "theme weeks", formulating visit frequencies based on each brand's turnover period and characteristics, ranging from once a week to once a quarter. For example, batteries only need to be distributed once a quarter. Concentrate efforts on promoting a specific brand or product to increase exposure and sales; at the same time, further set "theme+" activities, adding related items on the basis of the main category to create complementary effects. For example, if this week's theme is potato chips and other puffed snack weekly activities, not every store needs to strengthen puffed snacks. Therefore, on the basis of puffed snacks, add some SKUs close to weekly activities, such as melon seeds and biscuits. During this period, all links, brands, secondary displays, hanging strips, etc., are fully understood, and all behavioral and performance indicators are clearly set. The team works together to thoroughly penetrate this category before moving to the next. Behind the frontline market combat is strong data support. Li Fen majored in finance in university and places great emphasis on data analysis in company operations, especially in product management and organizational structure. Traditional distributors only have two or three finance staff, but Runzhong Yigou's finance department has more than ten people, responsible not only for routine cost accounting, accounts receivable management, inventory checks, and stocktaking but also for data analysis of brands, SKUs, and even salespeople. They create report analyses for each brand on indicators such as sales volume, gross profit, store activity rate, secondary display, and advertising execution, constructing a "four-quadrant analysis matrix", dividing brands into cash cows (high sales, high gross profit), dogs (low sales, low gross profit), stars (high sales, low gross profit), and question marks (low sales, high gross profit). Often, traditional distributors only focus on high-volume single products and easily judge that a certain brand is not profitable. But in reality, every brand has some profitable items, which need to be discovered through systematic analysis. Therefore, after completing the four-quadrant analysis of brands, Li Fen further analyzes the individual items under the brand, forming a profile, focusing on big single products, and streamlining SKUs. Although the number of products decreased, overall output did not decline. Instead, because some inefficient products were filtered out, gross profit margin and inventory turnover rate increased, and the return rate decreased. With this data support, Li Fen can make specific plans, clarify the strategy and required support for each item, and more accurately suggest to brand owners and fight for resources. Similarly, brand owners need this downstream feedback to help them formulate more effective strategies.

Find the right position, preserve the stock, and capture the increment

The market is unpredictable, and consumers are polarizing. Although high-income people's incomes have declined, it has little impact on FMCG, at most reducing bulk purchases or luxury goods; ordinary people's consumption has decreased, and they prefer to go to snack stores or discount stores to buy more with less money. Large supermarkets are weakening, and traditional small stores are also being squeezed. Facing this change and impact in business structure, Li Fen believes that it is normal for distributors to have a sense of crisis, but overall demand still exists. The key is how to find the right position, preserve the stock, and capture the increment.

First, preserve the stock. Li Fen adopted a strategy of optimizing traditional channels by analyzing supermarket store location, shelf display, and shelf contribution rate; helping stores introduce popular single products from snack stores; suggesting converting bulk-pack concessions to self-operation to avoid some concessionaires selling low-quality goods at high prices and consuming customer relationships; and suggesting opening "store-in-store" concepts, designing and unifying the decoration specifications of each area to win back customer traffic.

Second, capture the increment. In the past, local dairy stores only sold dairy products. To get products into stores, Li Fen urged salespeople to continuously promote the concept of multi-category operation to dairy stores, to meet consumers' demand for diverse gift boxes during festivals. At first, store owners were worried about not selling well and only agreed to stock regular circulation products. But these products had low gross profit. To overcome store owners' concerns, Li Fen adopted a method of delivering goods first and collecting payment later, gradually expanding from circulation products to oatmeal, snacks, nut gift boxes, etc. At this stage, cooperation with dairy stores is basically cash on delivery, and moreover, supply often cannot meet demand. In addition, Li Fen cooperates with brands to develop customized products to enhance market competitiveness. For example, after the Mid-Autumn Festival, when the author visited the front line, many distributors reported that this year's gift box market was very sluggish, but at Li Fen's place, it grew against the trend. Why? On one hand, many distributors purely focused on snack food categories, emphasizing shelves and not being good at whole-box gift boxes. Li Fen, however, came from a beverage background, and with the foundation laid in supermarket operations, she is very clear about where each gift box should be sold, how to sell it, and how to price it. On the other hand, the positioning is precise. In addition to regular unit group purchases and centralized procurement, local discount warehouses also contributed significant sales. During the research of discount warehouses, she observed that in the early stage, the ratio of branded to white-label products in discount warehouses was basically 8:2 or 7:3, but now the ratio has gradually become 50:50. One reason is that big brands don't have so many near-expiry products to supply; another is that discount warehouses need higher gross profit. In communication with discount warehouse owners, Li Fen further learned that they hope to introduce differentiated products because standard products have thin profits, and wanting to sell different products requires cross-regional procurement, which is inefficient and costly. Based on this demand, Li Fen began to negotiate customization with brands, starting with gift boxes. On one hand, gross profit is high; on the other hand, it also avoids discount warehouses impacting and undercutting prices. Surprisingly, this Mid-Autumn Festival, the customized gift boxes for this channel achieved explosive sales!

Final Thoughts

The current industry is all about "involution". Distributors should, on the basis of deep internal practice, seek internally and externally! Seek internally: refine team management, deeply cultivate categories, screen brands, and streamline SKUs; seek externally: help terminals diagnose their business; continuously showcase highlights to brands, and strive for support and promotional resources through market performance. The macro environment has changed, and the original business environment and the foundation and direction for survival and development have changed. Distributors must quickly keep up with the pace of change, go out and keep learning. Tactics can be borrowed, but never copied mechanically. Play to strengths and avoid weaknesses. First, thoroughly do the channels and categories you are good at, then replicate across categories, and polish a model suitable for regional development. Big merchants eating small merchants is an inevitable phenomenon at this stage. Don't give up. Hone your hard skills and persist to the end. Maybe it's us who roll away others.

Finally, I wish all distributors: learn, persist, change, and strive! In the tide of the times, be the most combat-effective version of yourself!

【New Order · Symbiosis】

The 10th China FMCG Innovation Conference

Time: March 17-19, 2025

Location: Chengdu, China