As the saying goes, "No one gets up early without profit." In today's trade and distribution channels, what are the various ways for profit-driven distributors to make more money?

As we all know, distributors' main profit comes from the price difference between purchase and sale, with buying low and selling high being the primary model. However, in the information age, the space for buying low and selling high is shrinking, so distributors will sooner or later return to the reality that "excessive profit is abnormal, and thin profit is the norm."

With product price differences getting thinner, how can distributors, as an independent group, maintain sufficient profit margins? Where should they turn to make money to live as comfortably as before? Before diving into this topic, let's clarify two concepts.

First, profit margin. We will discuss feasible methods from two perspectives: reducing capital loss and increasing capital returns, to ensure a more comfortable capital chain and higher capital efficiency for distributors. This naturally excludes illegal activities such as reselling VAT invoices to earn tax points or cooking the books to defraud manufacturer subsidies. Although some distributors still live well through such tricks, business must return to business itself; cutting corners may eventually backfire.

Second, the distributors we discuss are mainly channel players with wholesale functions. Retail-focused stores, which mostly don't involve large capital flows, should derive their income primarily from store efficiency management.

Money always seems insufficient. As a distributor, how can you make your money go further than it actually does?

1. Make Good Use of Manufacturer Credit Lines

With current bank loan annual interest rates at 5.6%, if you can obtain a certain credit line from the manufacturer, it represents a significant potential gain.

Although in a sluggish market, more and more companies are reducing or even closing credit lines, and some seem never to offer them at all. In reality, for strategic customers, special periods, and key channels, companies always have special market support policies, including credit lines for special customers. Sometimes these terms aren't written into policy documents.

Whether you can apply for it depends on whether you are that strategic customer, whether it's currently a special period, and whether the business you're about to take on is the company's current key channel. So, some distributors who fail to secure credit lines and conclude that the company's focus isn't on the business they're about to take over, and eventually give up cooperation, are half right.

Why only half right? Because it's possible that the business you're about to take over is the company's focus, but you're not the irreplaceable strategic customer.

2. Master the Use of Acceptance Bills

Many manufacturers' salespeople, especially those from big brands, tell distributors that the company only accepts cash payments or bank transfers. In fact, not all acceptance bills are rejected by manufacturers, including big brands. Bank acceptance bills are quite welcome, although commercial acceptance bills are less reassuring. There was an Anhui provincial customer who used a 2.5 million yuan deposit to issue 5 million yuan in six-month bank acceptance bills, which was more than enough as operating capital for a 60 million yuan annual business of the brand they distributed.

3. Learn to Bring in Partners

Market development and promotion costs are increasingly shared between manufacturers and distributors. Many distributors are hesitant to invest in market expenses because they worry about the return on investment. In fact, for cost sharing, distributors can also consider "cross-industry joint development," which means coordinating with manufacturers of complementary brands they distribute, or finding distributors in the same regional market who handle complementary products, to jointly develop the market and share costs.

Years ago, when I was developing a new lighting brand in a regional market, the Shenzhen distributor always felt the designer promotion meeting costs were too high, even though the company provided some subsidies. So, we helped the distributor contact Philips, and through a proposal, convinced Philips to conduct joint designer promotions with a three-way cost-sharing plan. Using the lighting design solution as a platform, we sold lamps, Philips promoted light sources, and the distributor earned the price difference by distributing both our lamps and Philips light sources, achieving a win-win-win and expanding the platform.

4. Build a Cash Collection and Financing Platform

One of the key roles distributors play for manufacturers is as a financing and advance-payment platform. As a distributor with wholesale functions, to some extent, you should also view your downstream customers as financing and advance-payment platforms. Regularly holding product or new product ordering meetings and collecting deposits or payments in advance from downstream customers is one way to reduce capital pressure.

Secondly, all promotions and policies should aim to collect cash as the basic goal: if you can't collect full payment, can you offer cash discounts? If discounts don't work, can you ask for a deposit? Believe that only a distributor who receives cash can be a dignified distributor.

Of course, some distributors will say that in our industry, distribution on credit and monthly settlement have become industry practices; without them, business can't go on. There's another way to collect cash: through negotiation, get a credit card for mature downstream customers with the customer as the cardholder and your company as the guarantor. Keep the card in your company's finance office, and each month, swipe the customer's payment directly from the credit card. Your finance staff just needs to remind the customer to repay on time the next month. This resolves the contradiction between downstream customers needing monthly settlement and your need to receive cash. I had a Hunan provincial distributor with annual sales exceeding 100 million yuan who gradually implemented this method for over three years, and now basically has no outstanding debts from downstream customers.

5. Value Volume Rebates from Manufacturers

In addition to market expenses, there are also rebates at various stages. Some distributors don't pay much attention to these, lacking the awareness to push volume at critical moments, resulting in failing to meet targets and missing out on rebates, even thinking it doesn't matter. In fact, rebates during promotional periods are a major expense for companies and are also a relatively standardized part of their spending. As long as distributors have the capability, they should try every means to secure this portion of the funds.

Some distributors say that if it's purely about volume rebates, my warehouse will accumulate a lot of slow-moving inventory, and the money earned will be tied up in the warehouse. Actually, there are techniques for volume rebates. Here's what I suggest: 1. Ensure sufficient funds in the company account; 2. Place orders yourself, not through the manufacturer's salespeople, especially for well-known brands. And only order your best-selling products, ordering enough to meet the sales rebate target, rather than ordering whatever is in the company's warehouse; 3. Generally, your best-sellers are also best-sellers in other regions, and the company may be in short supply. In such cases, if you fail to meet sales targets because the company can't ship goods, you can ask the regional salesperson to help you apply for a special rebate. Reasonably and fairly, the company will approve the normal rebate. Even if the company eventually ships you the full order, you'll still get the region's best-selling products, so there shouldn't be major issues with product digestion.

For distributors to truly make more money, mastering just one of the five methods I've mentioned to the extreme will yield astonishing results.

Source: Golden Distributor

Reply with the following keywords to search and read related professional articles: Sales Supervisor, Second-tier Management, Regional Manager, Distributor Management, New Channels, City Manager, Competition, 2015, Manufacturer-Dealer Game, Product Slow-moving, Terminal Visit Management, Route Management, Deep Distribution, Internal Management, Sales Skills, Profit Improvement, Recruitment, Distribution, Daily Management, Team Motivation, Trade Promotion, Sales Misconceptions, New Product Launch, Township Market, New Product Pricing, Sales Target Achievement, Closing Orders, Market Visit Inspection, Baijiu, Beer, Sales Increase, Agency Products, Cross-region Sales, KA, Terminal Merchandising, New Market, Market Operation, Learning, Book Recommendations, Inventory Management, New Salespeople, Consumer Promotion, Execution, Old Products, Expired Product Handling, Model Market, Investment Attraction, New Media, Distributor Development, Performance Appraisal, Assessment, Annual Planning, Shopping Guide, Morning Meeting, Display, Transformation, Stock Pressure, Holidays, Distributor Cost Control, Channel Operation, Marketing Theory and Laws, Brand Truth, Order Meeting, Team Management, Training, Debriefing, Work Report.