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Zhang, the general agent for a Northeast liquor brand in Hebei, was an active, dedicated, and diligent distributor who refused to fail. When his product distribution was in full swing, the distillery launched a heavily promoted product, and Zhang bet on it. Following the manufacturer's advice, he advanced the prize redemption costs for scratch cards, unaware that it was a gentle trap. In the end, he could not redeem the prizes, the manufacturer's representatives disappeared, and even the manufacturer itself could not be found, causing Zhang heavy losses. Although Zhang learned a "bloody" lesson and later chose to represent a local brand, the shadow it cast would likely linger for some time.
In this case, perhaps because Zhang had been in business for a short time and lacked keen insight, he fell into the manufacturer's trap and found it hard to extricate himself. In fact, when representing a manufacturer's products and operating in the market, distributors must keep their eyes open, maintain a clear head, and remember the following five types of cheap deals that must never be taken:
1. Unusually large promotions. The purpose of promotion is to boost sales, and its fundamental meaning is to drive terminals and consumers. However, some manufacturers, in order to quickly enter the market, often "sell at a loss for publicity." When the market rebounds and sales rise rapidly in the short term, due to differences in corporate strength and motives, stockouts and shortages may occur. At this time, influenced by the market's "hot sales" trend (which may be an illusion), many distributors often lose themselves and become confused in the whirlpool. They are easily swayed by the manufacturer's words and controlled by them, ultimately falling into a trap and suffering losses. Therefore, when faced with large-scale promotional activities, distributors must carefully and cautiously examine the manufacturer, observe its strength, understand its background, and be wary of some manufacturers' "desperate" actions to avoid being dazzled by the flowers. They should learn to calculate, understand that "no one does business at a loss," and thus be cautious in investing and stocking up, reducing market operation risks caused by being misled. In the case, Zhang fell into this category.
2. Advancing expenses for subsidies. Many manufacturers, especially liquor companies, often launch activities such as scratch card prizes and bottle cap cash redemptions during product sales. Some manufacturers, to encourage distributors to actively redeem prizes, even issue redemption rules, clearly stating that prizes are temporarily advanced by distributors, and the manufacturer will later pay redemption subsidies at a ratio of 110-120%. For such redemptions, distributors should try to settle with the manufacturer as soon as possible, preferably once a month, to avoid large losses due to unexpected events. For manufacturers who renege, distributors should decisively stop selling some redemption products and renegotiate prize payment matters with the manufacturer to avoid sinking deeper. In addition, for some promotional expenses, such as advance payments for ordering meetings, promotional activities, and advertising costs that distributors pay first and wait for the manufacturer to inspect and accept (e.g., TV ads, storefront ads, lightbox ads), distributors should have an agreement with the manufacturer. When signing the agreement, it is best to have the manufacturer pay a portion first, such as 50%, to avoid the manufacturer denying recognition or deliberately using excuses like failed acceptance to refuse payment, ultimately hurting the distributor.
3. Seemingly attractive distribution policies. Many liquor manufacturers, in order to develop the market or achieve ulterior motives of "raising money," often set tempting distribution policies. They sell products originally worth a few yuan at ten or even dozens of yuan, then offer 30-50% of that as a distribution policy for distributors. Some manufacturers even offer rewards like a delivery truck or van for payments of 500,000 yuan, in addition to the distribution policy, making some distributors who "covet" cheap deals excited and unconsciously fall into the manufacturer's trap. Such bait thrown by manufacturers can make some distributors infatuated. However, because the price of such products deviates from their value, after a period of vigorous operation, the market response is generally lukewarm. When distributors realize the products are unsalable and overstocked and request returns, the manufacturers often "slip away," leaving products piled up, funds tied up, and even forcing distributors to sell at a loss, leaving them crying without tears. But who can they blame?
4. Excessive returns on advance payments. Some liquor manufacturers, to attract distributors to join, often launch rewards for paying a certain amount of payment, offering great returns. For example, some manufacturers offer a 12% reward for a one-time payment of 500,000 yuan, making many distributors flock to it. But once the money falls into the manufacturer's pocket, it is often out of the distributor's control. For instance, a small beer manufacturer relied on absorbing large amounts of customer funds and offering high rebates to raise capital for market operations and heavy advertising. When customers wanted products, they used funds from one source to pay another, robbing Peter to pay Paul. When the enterprise could no longer operate and distributors demanded payment, the enterprise was already insolvent and beyond redemption. Distributors cried out to heaven and earth but got no response. Such cheap deals must never be taken.
5. Large inventory subsidies. Many manufacturers, during the peak sales season, to prevent distributors from running out of stock, often introduce inventory pressure policies, such as advising distributors to rent warehouses and offering warehouse subsidies, thereby "luring" some distributors to stock up heavily. Once the peak season passes, if products become unsalable or sell poorly for various reasons and pile up, going to the manufacturer to discuss exchanging or returning goods is often like "asking a tiger for its skin." It is very difficult to persuade or move the manufacturer to accept returns, and distributors can only watch their funds being heavily tied up and unable to circulate effectively. Therefore, when encountering such subsidies, distributors must accurately judge based on their own strength, sales volume, and safety stock to avoid being trapped.
In short, for distributors to maintain independence and flexibility, they must firmly believe that "there is no such thing as a free lunch." Those distributors who want to take small advantages may ultimately suffer big losses. Therefore, they must stay away from cheap deals that should not be taken. Only by keeping a cool head can distributors be true to themselves, stay away from risks and losses, and develop steadily, sustainably, and rapidly.
Read the original and report.