---
title: "Distributors Who Only Chase Sales Volume: The Busier They Are, the More They Lose!"
description: "The first step to breaking the deadlock is not learning more methods, but making operations 'visible' first. So we condensed the most complex operational issues into two charts: the Product Quadrant Chart and the Customer Quadrant Chart. This article explains the Product Quadrant Chart in depth: why your scale is growing but you're not making money, how to use the quadrant chart, and how to use structural adjustments to recover profits."
author: "杨博帆"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-12-27"
categories: "Dealer Operations"
language: "en"
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markdown: "https://xinjignxiao.com/en/articles/distributors-who-only-chase-sales-volume-the-busier-they-are-the-more-th-59d87702.md"
original_source: "https://mp.weixin.qq.com/s/AAmPxdr16auwMjETM7kRww"
translation: "https://xinjignxiao.com/zh/articles/%E5%8F%AA%E4%BC%9A%E5%86%B2%E9%94%80%E9%87%8F%E7%9A%84%E7%BB%8F%E9%94%80%E5%95%86-%E8%B6%8A%E5%BF%99%E8%B6%8A%E4%BA%8F-59d87702.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/distributors-who-only-chase-sales-volume-the-busier-they-are-the-more-th-59d87702/"
citation: "杨博帆. “Distributors Who Only Chase Sales Volume: The Busier They Are, the More They Lose!.” New Distribution, 2025-12-27. https://xinjignxiao.com/en/articles/distributors-who-only-chase-sales-volume-the-busier-they-are-the-more-th-59d87702/"
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---

# Distributors Who Only Chase Sales Volume: The Busier They Are, the More They Lose!

> The first step to breaking the deadlock is not learning more methods, but making operations 'visible' first. So we condensed the most complex operational issues into two charts: the Product Quadrant Chart and the Customer Quadrant Chart. This article explains the Product Quadrant Chart in depth: why your scale is growing but you're not making money, how to use the quadrant chart, and how to use structural adjustments to recover profits.

The first step to breaking the deadlock is not learning more methods, but making operations 'visible' first. So we condensed the most complex operational issues into two charts: the Product Quadrant Chart and the Customer Quadrant Chart.
This article explains the Product Quadrant Chart in depth: why your scale is growing but you're not making money, how to use the quadrant chart, and how to use structural adjustments to recover profits.
Why is scale growing but you're not making money?
When meeting many bosses for the first time, they often confidently say: "Our company values data; we have ERP and WMS, and I can see sales, gross profit, and inventory on my phone every day. We have all kinds of reports!"
Whenever I hear this, I have to pour cold water on it: That's not data analysis; at best, it's 'data presentation.'
But tools can't solve operational problems. You use Software A, and he uses Software A. Why can some make money while others lose money?
The core function of ERP/WMS is to solve technical and efficiency problems, recording the operational status quo as is. That's called data presentation.
But with the data in hand, can you precisely identify problems from that dense pile of numbers?
Most distributors look at reports and often focus on averages that look comfortable at first glance.
"This month's sales are 10 million, 90% of the target."
"Comprehensive gross margin is 5.69%."
"Average SKU sales are 9,000 yuan."
In fact, averages often mask the truth. They mix good and bad together, giving you the illusion that 'things are okay.'
For example, you think the 5.69% gross margin is low and want to raise it to 8 points. But how? You don't know.
If you don't break down these numbers, you can't know which product is dragging down the margin. You only know 'the overall is not good,' and subsequent measures are likely to push salespeople: 'You must improve the gross margin!'
Salespeople don't know which product to focus on, so they end up grabbing everything, turning it into a messy account.
So, we need a scalpel to cut open this vague operational data and see where the problem is and how to optimize. This scalpel is the 'Four-Quadrant Analysis' I'm going to talk about today.
**Using 'Four-Quadrant Analysis'**
**to Identify the 'Cancer Cells' of the Enterprise**
Assume there are 1,399 active SKUs in the warehouse, with monthly sales of 12 million and a gross margin of 5.69%.
Many bosses, seeing this data, first react that the overall gross margin is a bit low and they need to work hard to improve it. But how? Who to target? Unclear.
In other words, this data is meaningless for problem-solving. We must thoroughly dissect this batch of goods.
Step 1: Data Extraction
Open the ERP system and export an Excel sheet containing all active products. Extract three key fields: product quantity, sales amount, and gross profit amount.
Step 2: Establish Baseline (Build Coordinate Axes)
This is the most critical step. You can't divide good and bad by feeling; you must use data to draw the lifeline and calculate two core averages:
Horizontal axis baseline (average sales): Average sales = Total sales ÷ Total active SKUs × 100%
Vertical axis baseline (average gross margin): Average gross margin = Total gross profit ÷ Total sales × 100%
**Step 3: Positioning Diagnosis**
Using these two values as the cross point, establish a coordinate system and project all products into it.
First quadrant: High sales, high gross margin
Second quadrant: High sales, low gross margin
Third quadrant: Low sales, high gross margin
Fourth quadrant: Low sales, low gross margin
At this step, distributors will clearly see that among the goods the team is busy with every day, some are the main profit contributors, some are volume movers that look lively but don't make much money, and a large number are silent SKUs that don't sell and don't make money.
To help everyone understand more intuitively, let me give a real case.
We once deeply diagnosed a distributor whose company had 1,911 active SKUs that month. Through four-quadrant analysis, we found a shocking profit structure:
The star products in the first quadrant were only 173 SKUs, accounting for 9.05%, but they contributed 47.49% of the gross profit. In other words, nearly half of this company's profit was supported by less than 10% of its products.
Looking at the second quadrant, 311 SKUs, accounting for 16.27%, contributed 55% of sales, but gross profit accounted for only 16.83%.
This is also where many distributors are confused: 'Sales are rising, but why aren't we making money?'
Because the majority of that growth is likely running naked in low margins, or even negative after accounting for warehousing, distribution, and labor efficiency.
The third quadrant, as a potential stock with a high gross margin contribution of 30.44%, only contributed 15.13% of sales, almost stuck in the warehouse and not selling. If not activated, it will slowly become dead inventory.
There are also nearly 30% of fourth-quadrant products that neither move volume nor make money. The 5% gross profit they generate cannot cover management costs.
**How to Use Structural Adjustments**
**to Double Profits Without Spending a Penny?**
When we draw the 'Four-Quadrant Chart,' the problem becomes clear. The typical ailments of distributors are: first quadrant out-of-stock, second quadrant bleeding, fourth quadrant bloated.
Facing these problems, you don't need large-scale advertising or promotions; structural adjustments can solve them.
Step 1: Sort out the star products in the first quadrant to ensure stable supply.
Many purchasers dare not stock up on good-selling items but instead stock up on poor-selling ones to fill orders, calling it balancing inventory structure. This is a big mistake. If you're going to stock up, stock up on the good sellers.
During a coaching engagement with a company, we found that their first-quadrant products had an out-of-stock rate as high as 41.3%.
Imagine a customer with money in hand asking for goods, and you look at your inventory and spread your hands saying 'We don't have it.' This is tantamount to pushing real money into the arms of competitors.
Therefore, the first step of adjustment is to sort out first-quadrant SKUs and ensure supply.
If you can reduce the out-of-stock rate of good-selling products from 40% to 17%, sales and profits will naturally rise because you're catching the business that was originally yours.
At the same time, increase the distribution rate of these products. In stores with high repurchase rates, maximize distribution—this is the most stable growth point.
Step 2: Products with huge sales but losing money (second quadrant) must be adjusted immediately.
  * Plan A: Raise prices.
Don't be afraid of losing customers. If selling at 43 yuan loses money, raising to 44 yuan may still not make money, but at least you lose 1 yuan less. Raising to 44.5 yuan might break even.
Often, small price changes don't affect sales volume but have a huge impact on profit.
  * Plan B: Substitute.
Find products with similar sales but higher gross margin in the first quadrant to replace them. Use high-margin products to replace those that 'lose money for applause.'
The core goal is to reduce the proportion of second-quadrant products and convert them into first-quadrant products as much as possible, thereby enhancing store profitability and company profitability.
If a company sells 100 yuan of goods and 55 yuan of that is not profitable, no god can save that company.
Step 3: Fourth quadrant (both low) products—don't hesitate, cut them!
Many bosses think 'a fly's leg is still meat.' But managing these 500 unprofitable SKUs requires how much storage space? How many stock clerks? How much capital interest? Plus future return losses?
Cutting these SKUs that make no effective contribution may reduce sales by only 5%, but profits and cash flow will become significantly healthier.
For third-quadrant (high profit, low sales) products, it's recommended to adopt a last-place elimination system, gradually filling the gaps with products that have better sales and higher gross margins to improve turnover.
In a previous coaching case, we strictly implemented this 'four-quadrant' adjustment in just 3 months, reducing a company's out-of-stock rate for good-selling products from 41.3% to 17.27%.
Through adjustments, the sales share of good-selling products increased by 13%, and the inventory structure became more reasonable. A large number of ineffective fourth-quadrant SKUs were cut.
The results in the fourth month shocked everyone: sales increased from 6.08 million to 8.56 million (a 40% increase).
Gross margin increased from 5.4% to 6.1%. Although it only increased by 0.7 percentage points, gross profit increased from 320,000 to 520,000, a 60% increase, and net profit increased by 118%.
No crazy new customer acquisition, no big promotions, no increased operating costs. We just picked up the profits that were being eaten by the 'second-quadrant bloodsuckers' and 'fourth-quadrant tumors.' At the same time, salespeople's income increased by an average of 40%.
The company makes money, employees earn more, and the boss earns more—this is a virtuous cycle.
Due to space limitations, I can't elaborate on everything. On January 10, 2026, at the Tower Alliance Annual Conference, the author of this article, Mr. Yang Bofan, founder of Bofan Consulting, will bring a themed training session: 'Practical Cases and Methodology for Increasing Net Profit by 118% Through Data Analysis.'
Interested friends, don't miss it!


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## Citation metadata

- Publisher: New Distribution
- Author: 杨博帆
- Published: 2025-12-27
- Canonical: https://xinjignxiao.com/en/articles/distributors-who-only-chase-sales-volume-the-busier-they-are-the-more-th-59d87702/
- Original source: https://mp.weixin.qq.com/s/AAmPxdr16auwMjETM7kRww

## Copyright and AI use

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Contact: zhaobo258@gmail.com · +86 158 5481 7671