Introduction: More attention brings more harvest. After three years of the pandemic, we have finally achieved victory in the fight against the epidemic. It is believed that distributors have generally had a tough time during these three years. Economic recovery is inevitable, but it takes time. Below, I provide eight key words that distributors should pay attention to in 2023, hoping to be helpful to their businesses.

Keyword 1: Product Structure The starting point for distributors to make money is products, and product structure determines the business structure. So how can we adjust product structure to achieve optimal operation? Here are some suggestions, but the premise is that distributors should not bite off more than they can chew; more products are not necessarily better, and brands that should be abandoned must be decisively let go. FMCG products can be broadly divided into three categories: first-tier brands, second-tier brands, and third-tier brands.

  1. First-tier brands have three major functions: first, they bear the basic operating costs to ensure the normal survival of the enterprise; second, they serve as channel leverage, facilitating channel negotiations and helping other products enter the market, while also assisting other brands in quickly covering the sales network; third, they help spread overall distribution costs, wages, and management expenses.
  2. Second-tier brands also have three major functions: first, they become the main contributors to profits; second, they ensure the normal survival of the enterprise and strengthen the distributor's ability to resist risks; third, they can provide terminal market maintenance teams.
  3. Third-tier brands have only one purpose: stable and sustained profit contribution.
  4. How should distributors match their product structure? Generally speaking: for regional leading distributors, the optimal sales weight for first-, second-, and third-tier brands is 30%, 50%, and 20%, respectively, aiming for channel profits and stable operation; for regional mid-tier distributors, the optimal sales weight is 50%, 30%, and 20%, aiming for channel coverage and profit balance; for distributors below the regional mid-tier, the optimal sales weight is 20%, 60%, and 20%, because it is difficult to obtain agency for first-tier brands, so focusing on second-tier brands is the way to seek development.
  5. Product structure should also consider complementary factors such as off-season and peak-season products, holiday and regular products, and channel complementarity, which should be determined based on one's own operating conditions.

Keyword 2: Profit Model Profit is the purpose of operation, and the business process is also a process of creating profits while meeting the needs of all levels. So how should distributors adjust their profit models? Here are some suggestions: 1. Profit through product structure: This has been analyzed in detail above. 2. Profit through scale: This relies on large-scale product distribution, where distributors reduce operating costs through scale and earn substantial cash flow. Key points to note: first, market share: expand marketing areas and deepen distribution, making the market finer, stronger, and larger to ensure status; second, sales volume: increase product lines and channel numbers; the larger the sales volume, the more say you have; third, sales revenue: increase promotional intensity and methods; the larger the sales revenue, the more opportunities for profit. The most effective way for distributors to make money is to expand business scale; naturally, larger scale brings more profit. It is worth emphasizing that after scale increases, management must keep up; otherwise, the larger the scale, the lower the profit! 3. Profit through channelization: Profit by controlling channels and terminals. Rely on channel advantages to create barriers that others cannot break, thereby gaining benefits! Common methods include controlling terminals to form channel barriers, establishing self-operated networks, partnership operations, building brand image, and relying on the distributor's personal charm, strength, and influence. 4. Profit through OEM: This has become popular in recent years. By leveraging deep understanding of the market and strong control, distributors create their own brands through OEM. This approach generally exists for products with low technical requirements and high profits, where distributors register their own trademarks and build their own brands. It is worth emphasizing: if distributors lack strong brand support, mature networks, and operational methods, and lack quality control and management over OEM manufacturers, rashly operating their own brands can easily lead to serious quality issues and may cast a shadow over already strained manufacturer-distributor relationships. 5. Profit through manufacturer-distributor alliances or equity participation: Some brand owners below the mid-tier have development potential. Distributors can join forces with brand owners to form sales companies, operating and developing together.

Keyword 3: Channel Structure Channels can also be understood as the pathways for distributors to profit. A reasonable channel structure is also one of the core guarantees for operation. Here are some suggestions:

  1. First, emphasize two points: First, channels are not necessarily better when more comprehensive, provided that you are good at operating these channels; Second, let professionals do professional work, do not rashly develop channels, such as community group buying, B2B, and other online channels. If you do not understand them, you must hire professionals to help; otherwise, losses are inevitable.
  2. Shorten the channel chain as much as possible: Through a flattened supply chain system, change the drawbacks of too many channel levels, where profits are divided layer by layer, losses occur at each level, and the main entity serving consumers is unclear.
  3. Omnichannel integration and development: The trend of online-offline integration and circle interpenetration is becoming increasingly obvious. Omnichannel integration and whole-network marketing have become essential topics for distributors.
  4. Media-channel integration: In the past, communication and sales were separate; consumers obtained product information through media and purchased products at retail terminals. The emergence of e-commerce, product stratification, and the community-based retail terminals have made the connection between channels and media increasingly direct and close, until they become one. Distributors should cooperate with enterprises to do related work and adjust their channel structures accordingly.

Keyword 4: Team Structure Distributors' team structure should pay attention to three aspects: the organizational structure of the team, the exclusive rights of team members, and the matching of finance and coverage with team size. 1. Team organizational structure: In regional market service organizations, the most common roles include: salespeople, supervisors, warehouse and inventory keepers, finance, vehicles and drivers, and clerks. These personnel form the market service team; missing any one directly leads to an incomplete service chain. Regional organizational structures should have standards and not be makeshift. 2. Exclusive rights of team members: There are generally three situations for exclusive rights of business teams: first, the distributor pays all wages, and the team belongs entirely to the distributor; second, the brand owner pays the base salary or performance, and the team belongs to both the manufacturer and the distributor; third, the brand owner provides personnel subsidies in the form of goods or sales assessment, and the team belongs to the distributor. Different exclusive rights lead to different core management approaches, which distributors need to experience and refine themselves. 3. Matching finance and coverage with team size: a. From a financial perspective: Based on the distributor's product profit structure and cost input dimensions, calculate per capita productivity costs, then make staffing calculations based on regional annual sales, and finally the marketing team makes fine adjustments according to needs. A common practice is to configure one salesperson for every certain amount of per capita productivity. b. From the perspective of market service coverage: First, conduct outlet calculations. Distributors calculate the average outlet demand to complete sales based on their current situation, then determine the relationship between population and outlet numbers in each region based on per capita annual consumption, and finally make staffing calculations. For example: a region has a population of 1 million, with an estimated outlet density of 1,000 people per outlet, resulting in 1,000 outlets. If one person visits and the maximum service capacity is 150 outlets based on frequency requirements, then 1,000/150 = 6-7 positions are needed. It should be emphasized here that different regions have different outlet coverage requirements, different visit frequencies, and different numbers of outlets served per person, all of which require research before making conclusions; decisions cannot be made arbitrarily.

Keyword 5: Manufacturer-Distributor Cooperation Today's market landscape no longer allows for "giant baby" distributors. Therefore, distributors must sincerely establish a determination to be self-reliant and not fully rely on brand owners; otherwise, once eliminated by manufacturers, the outcome would be miserable. 1. Clarify your responsibilities: Strive to complete the various indicators assigned by brand owners and strive to achieve the various assessment rewards given by brand owners. This is the foundation for long-term cooperation between manufacturers and distributors, unless you make the brand owner highly dependent on you. In current market operations, distributors are increasingly favoring agency rights for products from mid-sized enterprises, and this trend will become more obvious. The manufacturer's role is to produce high-quality, stable products and provide as much cost support as possible. The work of going down to the market for distribution, conducting activities, and interacting with consumers will increasingly be done by distributors. Manufacturers provide ammunition and weapons, and distributors fight the market. Therefore, distributors need to: build their own teams, firmly control channels, and rely on manufacturers without being dependent on them. 2. Seek self in cooperation: Distributors should not be mere followers of brand owners; they must have their own core competitiveness, that is, their own unique advantages. With such advantages, their substitutability decreases, their value to brand owners increases, and cooperation becomes more long-term. 3. Mutual transmission of confidence: Currently, manufacturers often talk more to distributors, promote more, encourage distributors to do more publicity, and have confidence to promote distributor development. Distributors should reciprocate by giving confidence to manufacturer personnel, telling them about the huge market potential, analyzing market operation plans, and prompting manufacturers to have confidence in your market, provide support, costs, and materials. Confidence and information should be transmitted mutually, and good communication arises from this.

Keyword 6: Online and Offline Returning to the offline base is a very hot term in the FMCG industry this year. Previously, 2C e-commerce optimized the supply chain from brand owners directly to consumers; later, B2B optimized the supply chain from brand owners directly to terminal outlets; in the past two years, community group buying optimized the supply chain from distributors directly to consumers. Throughout the entire supply chain system F2B2b2C, with the coercion of capital and the support of internet tools, continuous innovation and breakthroughs have been sought, ultimately seizing nearly 30% of market sales. As a result, everyone has once again focused on offline operations, which account for 70% of the market. Online has its value, and offline has its benefits. Distributors skilled in offline should start exploring online operations, and those skilled in online should start exploring offline layout. It is believed that in the near future, only distributors who integrate offline and online will be the kings of the market. It is best to define offline and online as different channels and develop key markets based on your own channel advantages. After all, one more channel brings one more harvest.

Keyword 7: Learning First Management guru Peter Drucker said: "In a world that is highly competitive and rapidly changing, only learning organizations can survive and develop." The continuous learning ability of talent is the core competitiveness for sustainable enterprise development. An enterprise without a learning atmosphere is difficult to develop, and an enterprise with executives who lack learning ability to manage regional marketing teams is a disaster. Business is diverse, and team members' understanding of business is also diverse. How can we improve the team's combat effectiveness through a learning organization? I summarize these common methods: 1. Establish a mentoring mechanism: Every position should have a direct "teacher," who can be a superior, peer, or even subordinate. "When three people walk together, there must be one who can be my teacher." Learning from each other's strengths is the first principle of learning. 2. Use market cases for discussion: All our abilities and cognition are based on business development. Case study seminars based on business scenarios bring what needs to be learned in actual work into the classroom, discuss with everyone, and learn through a combination of training and practice. 3. Organize study tours: Hearing ten times is not as good as seeing once, and seeing ten times is not as good as doing once. Going on study tours to excellent markets is one of the most efficient ways to build a learning organization. 4. Establish a mobile learning platform: The Pepsi 5G New Distributor Platform, jointly created by PepsiCo Foods and New Distribution, is a good example. Using distributors to teach distributors and replicating successful distributor cases in weak regions has been very effective. 5. Job rotation system: Establishing a job rotation system can efficiently improve the organization's comprehensive capabilities. 6. Necessary examinations: Training without examinations loses more than half its value. A learning organization must have a scientific examination system.

Keyword 8: Rebuilding Confidence The term "rebuilding confidence" is highly likely to become a hot topic for FMCG manufacturers and distributors in 2023. Indeed, we desperately need confidence. The three-year pandemic has almost exhausted the energy and financial resources of ordinary distributors. The first step to restart growth is inevitably to establish confidence. Referring to the experience of other overseas countries, the accelerated recovery of offline consumption mostly occurs in the second quarter after the optimization of prevention and control policies. From the adjustment of control policies to the basic recovery of consumption, it also takes a period of 2-4 quarters. Domestically, it is expected that by the second quarter of next year, with the practical stabilization of various aspects, the comprehensive recovery of the consumer market will also be expected to be realized. The above is a photo I took at an ordinary shopping mall during the New Year's Day holiday. I briefly chatted with several merchants, who frankly said that during the three-year pandemic, business was indeed very, very difficult, and they barely maintained it. However, judging from the foot traffic at Jinyi City in the past two days, the economy is continuously recovering, which has given merchants hope and confidence. So, with consumption and foot traffic, there is hope, and this hope may be more optimistic than expected. What distributors need to do is to build confidence, have everything ready, and wait for the east wind. When the economy fully rises, maximize profit creation.

Extended Reading: Hai You: Special author of New Distribution, senior researcher, practitioner of offline channel marketing, designer of enterprise channel coverage models. He has provided channel consulting for more than ten first-tier brands and has gained a good reputation.