Distributors | Are High Sales Costs All the Fault of Van Sales and Visit Sales?

Almost every distributor starts with van sales in the early days of their business. In a sense, van sales is the simplest and most practical sales model, where salespeople carry goods in vehicles to visit customers, sell and collect payment on the spot, and handle tasks such as posting promotional materials, product display, and customer complaints, making management relatively easy for distributors.

However, as labor, fuel, and vehicle costs continue to rise, and competition among homogeneous products intensifies, higher demands are placed on distributors' terminal operations.

Many distributors complain that van sales costs are too high and inefficient, leading to thin profits or even losses, but tracing back to the root, it is because the van sales model has inherent drawbacks. So, how should distributors adjust and improve their sales models to maximize profits?

Profit or Loss: First Calculate the Cost

Whether van sales is profitable or not, distributors must first learn to calculate costs.

Suppose the average gross margin of the products a distributor operates is 15%. Based on a monthly sales volume of 100,000 yuan, the gross profit would be 15,000 yuan. However, this is without accounting for expenses and costs, so it can be called "pre-sale gross profit."

Now, the basic configuration of van sales is one vehicle with two people (salesperson and driver), plus the costs of warehouse and logistics personnel and other overheads, such as monthly taxes and entertainment expenses. These all fall under "fixed costs." Subtracting "fixed costs" from "pre-sale gross profit" gives the distributor's final profit.

Calculating pre-sale gross profit is not complicated; the key is calculating fixed costs. For just the "one vehicle, two people" of van sales, the combined salary and commission for the driver and salesperson is no less than 150 yuan per day, and fuel and vehicle wear are about 150 yuan per day. That is, a distributor's cost per vehicle per day is at least 300 yuan.

From this, we can roughly estimate the break-even point for distributors: at a 15% gross margin, a vehicle's daily sales reaching 2,000 yuan basically covers costs; above 3,000 yuan yields a small profit; and reaching 5,000 yuan creates good returns.

So, van sales is not necessarily unprofitable; the key is sales volume. Distributors need to calculate the break-even point per vehicle based on product sales and gross margin, and use this as the minimum sales target for sales personnel. If salespeople cannot even complete the minimum task, it means not only no profit but also losses. At that point, distributors need to analyze the reasons from the sales perspective and find ways to increase sales.

The "Troubles" Behind Van Sales

Currently, van sales remains the primary sales model for most distributors, but this does not mean it is suitable for every stage or every product. In fact, distributors often encounter various "troubles" during van sales, which significantly increase costs.

There are two main constraints of van sales: one is time—goods must be sold the same day, loading and unloading take time, and unsold goods must be brought back; the other is space—terminal customers may be far apart, causing wasted trips and wasted transport capacity. This constraint is especially obvious for distributors with many product items, because they don't know what the customer has or lacks, leading to inaccurate loading forecasts for each item. Even for a few scattered small customers, they must make another trip the next day.

Additionally, factors such as weather, road conditions, prices, salespeople's negotiation skills, and customer size make it difficult to accurately predict daily sales. If the load is too small, returning midway for replenishment is impractical; if too large, there is a risk of returns, causing waste of manpower and materials.

Of course, van sales is not without merits.

First, it helps improve the closing rate. Customers can see the physical product, and can unload, pay, and complete the transaction on the spot, which also facilitates cash flow for the distributor. Especially during peak seasons, transactions at some C and D class terminal outlets are highly random, and the salesperson's negotiation skills can play a role in urging on-the-spot deals, adding to overall sales.

Second, it facilitates terminal customer management. Ordering, delivery, visual merchandising, and customer complaint handling are all handled by the designated salesperson on the vehicle, and customers know exactly who they are dealing with. Problems can often be solved on the spot (such as returns and exchanges), greatly reducing the possibility of employee disputes and shirking responsibility.

Overall, the van sales model is more suitable for products with fast turnover or high individual delivery costs, so as to fully leverage its advantages and achieve a reasonable input-output efficiency. However, in the context of sluggish terminal sell-through and persistently high inventory, the sales value of van sales has been greatly weakened, and the corresponding cost pressure has become an increasingly unbearable burden for distributors.

Is Visit Sales a Better Choice?

It is necessary to use the van sales model in the early stages of product promotion, but for mature products with stable sales, the significance of van sales diminishes. Therefore, distributors need to flexibly adjust and change their sales models based on the product's market stage. Introducing the visit sales model at the right time might be a better choice.

Visit sales, simply put, is a sales model where orders are taken first and delivery is made later. That is, salespeople visit terminal customers on a fixed route periodically, collect orders, and then the delivery department delivers the goods. Compared to van sales, visit sales emphasizes division of labor and efficiency: salespeople work alone, focusing on order taking, visual merchandising, and complaint handling, while the delivery department can arrange loading for different items based on orders, improving vehicle utilization and making delivery faster than van sales.

However, there are prerequisites for introducing the visit sales model, the most important being a certain sales scale. For example, for a new beverage product, when monthly sales reach 3,000 cases with a gross profit of 5 yuan per case, the total profit is 15,000 yuan, basically overcoming the early loss stage. At this point, van sales is still necessary because, based on 600 effective terminals, the average monthly sales per store is only 5 cases, so 24-hour delivery must be ensured to avoid stockouts.

Later, as the sell-through atmosphere gradually opens up, the product will experience leapfrog growth, possibly breaking 10,000 cases in a short time. At that point, daily sales can reach over 300 cases. With this sales base, the timeliness of delivery is no longer as important. Distributors can try to moderately push inventory to terminals, ensuring store inventory can support a week, while integrating delivery routes and steadily transitioning from van sales to visit sales.

For example, within a radius of 40 kilometers, there are 6 townships. One salesperson takes orders, visiting two townships a day, and after three days, a large truck delivers all orders at once, improving efficiency and reducing costs, thus ensuring distributor profits.

It is worth noting that the visit sales model not only has certain restrictions on the distributor's sales scale but also imposes higher management requirements. First, it requires increased investment in personnel and vehicles. If adopting the traditional van sales model, a distributor only needs to assign one salesperson and one driver per vehicle, and sometimes can even use a salesperson-driver to save labor costs.

The visit sales model requires the separation of sales and delivery departments. Not only does the salesperson need a separate vehicle to visit terminals, but the delivery process also requires two people: a driver and a delivery worker. This is one of the main reasons some distributors are unwilling to introduce the visit sales model.

Mobile Internet: Bringing Qualitative Change to Sales

From the above analysis, it can be seen that neither van sales nor visit sales can fundamentally solve the problem of high sales costs. The reason is that the primary responsibility of distributor sales personnel is still sales, or order taking, followed by new product promotion, new outlet development, terminal visual merchandising, and complaint handling. But in fact, after completing the sales act, the energy salespeople spend on these tasks is already very limited. This is also the root cause of the "heavy sales, light marketing" phenomenon in distributor sales teams.

So, back to the initial topic: How should distributors adjust and improve their sales models to maximize profits?

The answer is: Mobile Internet!

With the rapid development of the Internet, especially mobile Internet, sales and purchasing behaviors are undergoing qualitative changes. In the past, this change was mainly reflected at the consumer level, that is, C-end e-commerce represented by JD.com and Taobao, which realized the onlineization of product sales or purchasing behaviors. Similarly, can distributors' sales behaviors be transformed from offline to online, thereby freeing up sales personnel and reducing sales costs?

Of course!

Let's imagine: retail terminals place orders independently through an e-commerce system, the distributor receives the order and directly transfers it to the delivery department, while sales personnel focus on new product promotion, outlet development, terminal visual merchandising, and customer relationship maintenance. As a result, not only are sales costs significantly reduced, but the marketing function of the sales team is strengthened, thereby driving sales through marketing and achieving a virtuous cycle of the entire sales system.

This is the distributor's Internet+, also known as B-end e-commerce! From the van sales model to the visit sales model, and now to B-end e-commerce, this is the result of the development of the times and technological innovation, and also an urgent need for distributors' transformation and development.

In 2016, B-end e-commerce has arrived!

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