Hello friends. I'm Yuan Lai from New Distribution. Recently, I've been conducting market research in the frontline. At the same time, I gave two sharing sessions to offline distributor partners of Kimberly-Clark (China) and C&S Paper, and had in-depth discussions with several distributor friends about business. It's evident that offline FMCG distributors are finding it increasingly difficult to do business! The main reason for the difficulty lies in the downstream retail end. Due to the overall environment, store foot traffic has declined, and sales have dropped. When stores perform poorly, they naturally pass some pressure onto the middle suppliers. Accounts receivable have increased; what used to be two months can now drag to four months or even half a year. Capital turnover is less than three times a year. Besides the capital tied up in accounts receivable, there are also increases in various store fees, and the risk of some single supermarkets closing or running away. Therefore, the external market environment facing offline FMCG distributors today is unprecedentedly severe. Distributors cannot change the challenges of the external environment. If they don't want to give up, they have to grit their teeth, continue to deeply cultivate channels, and stabilize and grow their business. Based on the content of discussions with distributor friends, I've summarized the 8 most core thoughts and suggestions for current FMCG distributors, hoping to bring thinking and inspiration to distributor bosses. The era of just distributing products to stores is over Today's FMCG distributors, to continue to seek development and growth in the current market environment, must extend their management perspective to the store's category shelves and surroundings. In the past, the business perspective basically ended at the store; once the goods were placed in the warehouse or on the shelves, the job was done, and no extra actions were needed. But now, that's not enough. At least a few more actions are needed, such as grabbing more shelf space, doing product assortment, and intercepting consumers. The best business is a monopoly business Regarding grabbing more shelf space: a category has 15 sections of shelves. In the past, you had 5, competitor A had 5, and competitor B had 5. In one store, three competitors each had 5 sections, fair competition. Sorry, but that's not possible now. External business is declining. If you want development, growth, and profit, under the current context of extended payment terms, you must grab 10 sections, ideally all 15, making it 100% yours. The best business is a monopoly business; no need to question it. Only monopoly brings profit. Even if today it's 100% yours (as a full-line distributor), if you don't understand product assortment or study consumer demand, it's still hard to have good profits like in the past. But grabbing more shelf space is the first step. Selling only top-selling first-tier products gives volume but no profit Regarding product assortment, today selling only first-tier bestsellers gives volume but definitely no profit, even if you have full-line distribution; all the profit is eaten by the store. If you only sell second- and third-tier products, you have gross margin but no gross profit amount, which also doesn't work. FMCG distributors must learn to do product assortment, with three major logics:
First, first-tier products at low prices bring traffic, attract customers, and expand category capacity. Second- and third-tier products with high aesthetics and internet-famous appeal bring gross profit, converting immediately for profit. Second, the past logic for full-line distributors was that second- and third-tier products were regional brands, local brands, or low-quality goods, focusing only on gross margin. But the second- and third-tier products mentioned above are high-aesthetic, internet-famous products that have appeared on Douyin rankings and been recommended on Xiaohongshu. Third, past product assortment was based on price bands, but current and future assortments must be based on consumption scenarios and functions, starting from consumer needs. Build a sales guide system to intercept consumers The share of FMCG categories in offline store business is declining, and category capacity is shrinking. Today, to do business and grow in stores, you must learn to grab and intercept consumers. During weekends and promotional periods, use sales guides to achieve immediate in-store purchases. The "sales guide system" here doesn't just refer to full-time guides, as the cost of hiring one per store is too high. It refers to: brand-specific full-time guides, comprehensive guides, peak-hour temporary promoters, weekend temporary promoters, and promotional event temporary promoters. Distributors must extend their internal management reach into the sales guide system. Facing declining foot traffic, they should proactively go outside the store to find traffic, gather traffic, and convert it. A single brand can hardly make large investments anymore In the past, the keywords for distributor business were orders, negotiation, policies, and payment terms. Now that's not enough; you also need to add shelves, displays, guides, product selection, promotional materials, image and atmosphere, and special offers. Distributors must not think this is the manufacturer's job. Careful distributors will notice that in the past, a single brand could do it, but now it can't. The return on investment for a single brand doing these actions is getting lower and lower, with high costs and unaffordability. The total store capacity is declining, making it even harder to support a single brand doing these things. Only when FMCG distributors combine multiple brands under their umbrella can they do these well. Whoever can do these well will be sought after by future brand owners! Take store POS as the main assessment criterion In today's market environment, simply doing distribution coverage actions makes it hard to get relatively good profits. Over 90% of distributors should focus on sell-through as the core of business management. Reduce the business share of best-selling mature products to below 30%, and continuously increase sales of non-best-selling items. At the same time, adjust store POS to be the main assessment direction for frontline salespeople. The purpose of assessing store POS is to focus on whether products are sold out, not just whether the store buys in. By adjusting the compensation assessment items for frontline salespeople, improve distributors' understanding of "sell-through." Learning is the fastest path to business growth Learning is the fastest path for distributors to grow their business. I've visited hundreds of distributors with over 100 million in sales and found that those who grow their business are those who love to go out and learn, looking here and there. Every distributor does business in their own city. Learning from benchmark excellent distributors in other cities, with the same business logic, same business model, and even the same distribution categories, you can directly apply comparisons and references to your own market. Even if you don't copy exactly, the inspiration gained from going out to learn and exchange far exceeds racking your brain alone. Don't cross categories to do agency business If an FMCG distributor achieves absolute TOP1 in the local FMCG category, for example, reaching 70-80 million in a prefecture-level city, then it's time to switch tracks (note: not to leave trading), rather than cross into snacks, grain and oil, or milk agency business. Based on your advantages in the FMCG category and industry development trends, develop multi-category, one-stop product distribution coverage around local small and medium stores — this is a relatively feasible path. The FMCG trading business is the basic business, and the supply chain business for small and medium stores in FMCG is the second growth curve. Finally, I want to emphasize that the basic business should achieve absolute TOP1 in FMCG. Don't try to build a supply chain platform for small and medium stores when your business is only 20-30 million; it's very, very difficult!