As a distributor, surely no one only represents just a few products. Some distributors believe that the more products they represent, the better. Why? Because they think, "If this one doesn't sell, I have that one; if that one doesn't sell, I have the next one." Others believe that the more products they carry, the more they attract customers, as customers can enjoy one-stop shopping. Is this really true? I recall a conversation with a distributor friend who told me his warehouse was full, he sold many categories, and he represented numerous products. Whether it was frozen foods or ice cream, his store's freezers were always packed, and he wanted to make more room for additional freezers. So I asked him, "Since you carry such a wide range of categories and have ample stock, you must be making a lot of money." He replied, "Making money? My profits are shrinking the more I sell, and it's tying up my capital." So where is the problem?

We know that distributors take on each product with profit in mind. They feel their gross margins are not low, but this is because they lack focus. Too many products tie up capital, occupy warehouse space, turn employees into movers, and while it seems like everything sells, nothing moves in volume. When you finally encounter a bestseller, you find you have no cash on hand. So, distributors, it's time to "lighten the load" of your products. In fact, the number of products a distributor represents is not directly proportional to the size of their business or their profits. More products do not necessarily mean higher sales or profits. So, how should distributors "lighten the load" of their products?

Look at Brand Awareness If you represent two brands in the same category, keep the leading brand and drop the second- and third-tier brands. If you represent two leading brands, keep the one with better trends, higher profits, and better service. The benefits of keeping branded products are: Brand products are managed with standards; by following a well-managed company, distributors can grow faster. Brand products are easier to distribute, creating stickiness and loyalty among channel customers. They can drive the distribution and sales of other products, especially those with good margins.

Look at Product Characteristics As mentioned in a previous article, distributors must have a "golden single product"—a product that consumers choose first, either as "the first" or "the only one." "The first" could be a brand or habitual purchase; "the only one" is a unique feature. The first may not last, but the only one will inevitably last because it is irreplaceable, and its appeal far exceeds that of the first. No matter how poor the market environment, new categories with unique features are still seeing sales growth.

Is this feature unique? Do I have something others don't, like exclusive technology or patents? Can you make customers think of you first within the same category? One feature is enough; if a product has many features, it's as good as having none. Features should be simple, easy to remember, and easy to associate. The selling point must be the most essential aspect of the product. The more essential, the simpler, and the easier for consumers to remember.

Look at Product Life Cycle Any product or category has four stages: introduction, growth, maturity, and decline. No matter how strong the brand, if a product enters maturity or decline, even the distributor's exceptional management skills and network cannot reverse the downward sales trend.

For example, with growing health awareness, the number of carbonated beverage consumers is decreasing worldwide, and the category has entered decline. Similarly, instant noodles are seeing a decline in repeat consumers, while frozen food consumption is growing. For instance, 50-cent ice cream is fading as consumption levels and purchasing power rise, pushing the mainstream price band upward, and ice cream in that price range will inevitably exit the stage. In summary, distributors should keep products in the sunrise phase and cut those in decline.

Look at Product Gross Margin The purpose of business is to generate reasonable profits. Distributors should evaluate the gross margins of all products they represent and calculate all operating expenses. If a product sells well but its gross margin can't even cover costs, what reason do you have to keep it? So, when deciding which products to keep, adhere to this principle: the gross margin of retained products must be higher than the average gross margin.

It's important to note that even if the retained products meet the above criteria, distributors must also consider product mix, complementarity, and compatibility, especially the impact of peak and off-peak seasons, volume products, and image products. Otherwise, you might end up with all leading brands but low profit margins, or be busy half the year and idle the other half, wasting resources.

The ultimate goal of product integration is to go from many to few, from few to refined, and from refined to specialized. Products should be few but refined, refined and specialized, and the retained products should complement each other. This maximizes resource utilization and minimizes costs. It also encourages second-tier distributors and retail terminals to source as many of their needs as possible from you, fostering loyalty among them.

What are your thoughts on whether distributors should have many or few products? Feel free to share your views in the comments section.

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