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Manufacturers directly controlling second-tier distributors is a major concern for many first-tier distributors. They feel that they once worked with manufacturers to build the market together, but now manufacturers are changing their minds and abandoning them! This concern is a "wail" from the hearts of first-tier distributors, a helplessness about their living space being squeezed and occupied. And this seems to be an inevitable trend in manufacturers' future channel strategies! This sounds terrifying!
So, can we calm down and first look at why manufacturers want to directly control second-tier distributors, and where do manufacturers stand on large distributors?
To meet competition, manufacturers have to stay ahead of competitors in every marketing link, including the reform and adjustment of the channel, which is the most important part of marketing. Therefore, channel management is undoubtedly becoming more refined, and companies are urgently advocating management down to the terminal. Directly controlling second-tier distributors is one of the most cost-effective ways to manage the terminal. So, companies no longer need first-tier distributors who only rely on circulation and inventory transfer. Companies need to control second-tier distributors to stay ahead of competitors in the channel and grasp more channel resources. Comment: The survival issue of the enterprise. Competition orientation determines everything. The competitive pressure is too great, forcing companies to consider making changes in the channel. This shows that companies have greatly improved their understanding of market operations, while first-tier distributors are still sleeping on their past achievements.
Companies no longer need first-tier distributors who seem "all-around" but are often "incompetent" in terminal and consumer operations. They can only functionalize first-tier distributors as logistics providers or nominal market managers. This shows that companies have changed their positioning of first-tier distributors. But first-tier distributors still position themselves as the company's eternal "meritorious officials" that the company cannot do without. Comment: The development issue of the enterprise. Development requires deeper exploration in consumers and terminals. Besides being comprehensive, specialization is a way out for distributors. At this time, manufacturers are eager to implement specialization ruthlessly among channel merchants. Let first-tier distributors handle distribution, and second-tier distributors radiate to the terminal.
The significance of managing second-tier distributors has involved the marketing concept of refined management, closeness to consumers and terminals, more targeted actual operations, and real sales. As long as the company has this management capability, directly controlling second-tier distributors is "all benefits and no harm." This shows that the company regards itself as an important part of the channel. This will inevitably bring a thorough revolution to first-tier distributors (who originally thought they were the starting point of the channel) and will cause strategic adjustments to the entire channel operation. Comment: The positioning issue of the enterprise. The enterprise is also an important part of the channel. The origin of the channel is the enterprise, not the first-tier distributor as in traditional trade. The enterprise's position in the channel has been restored.
Of course, there are many other factors and advantages for manufacturers directly controlling second-tier distributors. That is to say, this is the general trend for enterprises. Enterprises need to survive, develop, and first position themselves well. These factors constantly affect the nerves of manufacturers: gradually sinking the channel, such as directly controlling second-tier distributors!
So, under this general trend, what should first-tier distributors do? As commercial circulation institutions, as the original sole attachment of manufacturers, they also need to survive and develop! What should they do?
This is a deeper topic and also a more important issue. After all, the middle tier connects every production manufacturer and also connects countless terminal outlets.
Contracting system Contract the indicators for the region. In this way, the manufacturer will have less pressure on sales and competition in that region, giving you absolute initiative and significant decision-making power in market operations. What manufacturers ultimately want are these indicators: sales volume, coverage rate, market share, competitive dominance, etc. If a first-tier distributor can negotiate with the company to contract all the goals the company wants to achieve in that market, perhaps the company will only have the role of a consultant and no possibility of actual operation. Manufacturers directly controlling second-tier distributors is not what manufacturers want themselves; ultimately, it is the market's need. However, if first-tier distributors cannot perform as manufacturers expect in the market, manufacturers have to intervene. So, unless first-tier distributors can do the market as professionally as the company, they cannot escape the fate of being stripped, participated in, and cut off. Of course, if they can ensure that the manufacturer does not need to worry about sales, competition, market share, etc., the manufacturer will still hand over the market power to you. Manufacturers actually do not want to waste money and energy to struggle in the market themselves!
Upgrade to a company branch Before the company's branch is established in the region, show that you accept the company's comprehensive management—a way that saves the company money and effort. In this way, the second-tier distributors below, under the manufacturer's "patronage," are actually managed through you because you have intercepted in the middle. Thus, your promotion and insurance coefficient increase, and you no longer fear unstable foundations. There are many ways to upgrade to a branch, among which the "distribution collaboration" model is the most reliable. Let the company provide only one supervisor in terms of personnel, and you send your own people for other aspects. For other aspects, the supervisor will ask the manufacturer for support. As a result, this supervisor will have to "speak for you under someone else's roof"!
Specialization Professional companies will only be fought over, not abandoned by others. At this time, "retreating bravely" is not a bad idea. But this retreat is not a one-way retreat; it is retreating to advance. Retreat and think about where your true core competitiveness lies, break yourself down, find your advantages, and then maximize them. For example, if you have sufficient vehicles, why not just be a distribution provider and earn simple distribution fees? If you have sufficient funds and confidence in collecting payments, then sell on credit; the company certainly does not have this advantage! If you have a strong foundation in supermarkets, then simply give up the second-tier market and take over all the company's KA accounts! If you have exceptional experience and resources in a certain product or channel, then request exclusive distribution for that product or channel. While the company directly controls second-tier distributors, you have already expanded successfully, escaped like a cicada shedding its shell, and achieved more long-term development...
Of course, at this time, many first-tier distributors are reluctant. But truly, sometimes retreating to advance, cutting off non-advantageous aspects, and highlighting your strengths may win more thoroughly!
- If manufacturers directly control second-tier distributors, you directly control key accounts In East China, the FMCG industry is highly developed, which is reflected in many first-tier distributors "taking the lead" in key accounts. They buy the annual supply rights for some key terminal stores, then seek distribution rights from various manufacturers. At this time, first-tier distributors not only are not afraid of manufacturers directly controlling second-tier distributors, but they also go straight to the end, and manufacturers have to come to you!
Manufacturers directly controlling second-tier distributors is a big topic. In any case, as potential "victims," first-tier distributors should first think about why manufacturers do this, then understand themselves, and gain the right to speak directly with the company. Perhaps the future of first-tier distributors will be slightly better?
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