The discussion on how regional distributors can grow stronger has been ongoing for a long time, but we have mostly focused on forging their own operational systems, their cooperation strength with upstream manufacturers, the smoothness of downstream distribution and wholesale levels, and control over terminal channels. This often leads us to view distributors as independent, unsupported points with vertical radiation, while ignoring the horizontal radiation within their relatively independent regional environments—the competitive and cooperative system among distributors.
Traditional distributors focus on upstream manufacturers and downstream distribution networks, which we might call supply chain building. However, after nearly a decade of rapid development in the liquor industry has slowed, the market landscape of upstream manufacturers has adjusted accordingly, even leading to industry reshuffling, and downstream circulation channels have changed. A network with only vertical coverage appears thin and fragile. In other words, having only a supply chain is no longer sufficient to solve all problems. Driven by the times, a new economic entity of competition and cooperation among distributors will emerge, which we call the birth of a value chain.
Interests Over Positions
Within a region, distributors are often separated by strict barriers due to the "homogeneous repulsion" of upstream manufacturers. Distributors of different manufacturers basically confine themselves to their own territories, mostly defending their vested interests from the manufacturer's standpoint. But while adhering to this stance, we also see that in the same network terminal channels, distributors engage in fierce competition, playing the role of gladiators. Adhering to the manufacturer's stance seems to have its moral justification, but when the manufacturer's position always overrides the distributor's interests, can we say that the decade of vigorous development in the liquor industry was actually a decade of tragic trek for distributors?
Times change, and regional distributors under the new situation should break "conventions" and let interests drive positions. In other words, the regional market should not be completely dominated by manufacturers. Distributors' interest-oriented business thinking and strategies are bound to be rational and pragmatic. Without the "instigation" of manufacturers, regional distributors can only then take the path of horizontal development. After all, different distributors in the region have different business styles, strategic thinking, and team execution capabilities. Each has its strengths and weaknesses, which is what is meant by turning swords into plowshares.
Professionalism Over Small-Scale Comprehensiveness
The normal business thinking of regional distributors is full-channel (supermarkets, catering, circulation, special channels) and multi-series (baijiu, beer, red wine, yellow wine, and beverages). On one hand, this reduces channel costs; on the other hand, it obtains more profit sources. These are all understandable. But an indisputable fact is that the business scale created by such thinking is generally relatively small, and most are struggling at the stage of how to survive. Moreover, in terms of building their own corporate brand, constructing operational systems, and cultivating and educating consumers, they almost have no time to attend to these, yet these are all related to whether they can survive better and longer. The core means to solve this is professionalism.
How to transform from a small-scale comprehensive model within the regional market to precise professional marketing? Regional distributors must first learn to do subtraction, in two aspects: First, focus on the layout of one channel format. With the development of channel formats to date, supermarkets, catering, circulation, and special channels are no longer in the stage where you can do them if you want. Without professional operational thinking and technical teams, it will not be enough to support long-term development. Nowadays, the implication of regional distributors' full-channel coverage in the market is: flashy but not solid! Second, focus on the refinement of one product series. Baijiu, beer, red wine, yellow wine, and other alcoholic beverages have significant differences in essence, not just similarities in channel pathways. The cultural backgrounds, consumption and drinking habits, operational characteristics, and consumer positioning contained in different alcoholic beverages cannot be generalized. Concentrating on doing one alcoholic beverage well and becoming an expert in that industry will give a very obvious advantage in future competition.
The core of doing subtraction is to establish relatively advantageous professionalism—division of labor. How to do addition is the creation of a horizontal value chain—cooperation. Distributors doing addition also has two aspects: First, focus on inclusive cooperation of multiple product series in one channel. The premise is professional precision in a single channel, and only then can the product series be enriched—not just your own main products. Through horizontal cooperation among distributors on products, products professionally operated by others share your professional channel. Second, focus on multi-channel radiation operation of one product series. The premise is professional operation of a single product series, and only then can there be radiation to other channel terminals—not just your own professional channel terminals. Through mutual radiation of channels among distributors, their respective professional strengths will merge to produce greater economic benefits.
Order Over Boss
What is order? Vaguely speaking, it is the general trend, which cannot be defied; accept and adapt to it. Concretely speaking, it is the synthesis of the enterprise's operational strategies, rules and regulations, team building, and so on. A common feature of regional distributors is that the enterprise carries the boss's personal character traits; the boss is the order. But usually such enterprises are unstable, prone to mistakes, and difficult to attract talent. Because it is oriented toward the boss's personal interests, the enterprise's ability to resist risks is very weak.
Therefore, it is very urgent for regional distributors to establish their own corporate order. If a distributor's annual sales are still more than 60% completed by the boss personally, strictly speaking, how can such a distributor grow stronger? What is to be said here is how the boss can build a relatively complete operational system and team building within the enterprise. Thus, the boss must obey this order and transform from the protagonist to a supporting role. Similarly, when establishing external horizontal cooperation order, how to move from a single-profit model to a win-win profit model, where every participating party gains benefits, the boss's personal mentality must give way to the cooperation order. Learning to be a supporting role sometimes seems more important than being the protagonist.
While regional distributors are committed to horizontal cooperation, we cannot deny or erase the importance of vertical cooperation, and on this basis, we should more effectively plan efficient and pragmatic horizontal alliances. "Horizontal expansion" can certainly lead to "market dominance," but if you can combine vertical and horizontal alliances, what you may harvest is the true "kingly way"—cooperation and win-win.
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