Recently, the author has noticed many media outlets are pessimistic about big brands, with articles like 'Big brand distributors quit without hesitation' and 'Big brands will gradually be abandoned by distributors.' However, in the author's view, it is still the big brands that will truly bring profits to distributors in the future! The industry is currently in an adjustment period, and it is expected that improvements may come as early as 2018. Let the author explain in detail:
Currently, distributors want to eliminate big brands because these brands have high industry visibility and transparent profits, coupled with high sales targets set by manufacturers. Although distributors bear great pressure, they do not receive corresponding returns, resulting in low profits.
However, as sales of big brands have been declining over the past two years, the 2018 sales targets are set based on last year's sales data. That is, if the 2017 sales base is low, it means the 2018 target will not be too high. Since 2013, some big brands have seen sales decline for four consecutive years. If they want to see sales rise in the future, they themselves don't believe performance will grow without some real actions.
If sales performance remains stable and pressure on distributors is reduced, it is estimated that behaviors like cross-region selling (channel stuffing) will be curbed. In recent years, manufacturers' indulgence in cross-region selling and high expense subsidies have become unbearable for distributors, because solving the high expense subsidies requires controlling cross-region selling. Only by controlling cross-region selling and allowing distributors to create their own profits can manufacturers stop their expense subsidies.
Another reason why the author says that distributors of top big brands will develop faster and have guaranteed profits in the future is as follows. Here are several aspects:
- Top brand enterprises, due to their huge market sales and obvious scale advantages, are better able to obtain support from partners in raw materials, packaging, production equipment, advertising, etc. This comprehensive advantage is incomparable for small and medium-sized enterprises. Product cost control, transportation, talent, and other costs will be superior to competitors. It is not difficult to understand why some industry-leading products are priced lower than second-brand products; this is the result of comprehensive strength.
If distributors want to rapidly expand their scale, they still need to represent these top big brands. Based on the author's understanding, for big brands like Wahaha, Master Kong, Daliyuan, Haitian, Jinlongyu, Shuanghui, Yili, Mengniu, Moutai, Wuliangye, Luzhou Laojiao, P&G, Unilever, etc., it is easy for a distributor to achieve tens of millions or even over a hundred million in annual sales with a single brand. Some super agents in certain regions even exceed one billion yuan in annual sales. If you were to represent second- or third-tier brands, how many brands would you need to represent? You would probably be too busy just receiving manufacturers' visits.
Top brand enterprises have market personnel for maintenance, while some small manufacturers have very little after-sales service. Large brand enterprises generally have relatively complete market sales personnel and are more willing to work with distributors to break down and complete monthly tasks. Some small manufacturers have no market personnel at all, or their personnel manage such large areas that they cannot manage each market well. Every time they visit a distributor, setting a promotion, placing an order, and chasing payment is basically all the salesperson does, and they may not come more than a few times a year.
Nowadays, due to advanced network information and logistics, cross-region selling occurs for products from any manufacturer. In today's world where everyone is media, there are no industry secrets. There is basically no information asymmetry between us and customers. Everyone has experienced the power of WeChat; it can make you famous in a day or ruin your reputation overnight. Uncle Bi's WeChat post got him fired—this is a vivid example.
Now, not only for famous brand products, but also for any product that sells slightly well in the market, cross-region selling occurs, which was unimaginable before. The reason people sell some second- and third-tier products is to make more money, as profits are definitely higher than first-tier brands. Once your market promotion succeeds, cross-region selling immediately follows. Unless your product doesn't sell well, or there are no customers around doing it. Logistics is so developed now that a single item can be shipped far away for just one or two yuan extra.
But for these second-, third-, and fourth-tier products, there is basically no control over cross-region selling. At most, it's just verbal. Because for some brands, it's already difficult to develop a customer, so how can they cut off customers who have volume but are not very obedient?
Top big brand manufacturers provide strong market support. Some industry-leading enterprises, in order to maintain their industry position, spend huge amounts on supporting distributors' displays, advertising, personnel, vehicles, etc. Some first-tier brands' market expenses alone exceed the sales volume of second brands. How can second brands compete with that? No wonder the industry talks about the '28 principle' (Pareto principle).
In the future, due to environmental pressures in China, small brand enterprises face some uncertainties. They are not like large brand enterprises that receive government support and assistance. Since the beginning of this winter, many small enterprises have experienced production restrictions or shutdowns. These small factories often can't sell out their products, and then face stockouts during the Spring Festival, which really breaks distributors' hearts. The smog in the north has brought uncertainties to small enterprises' production, and their future development will be somewhat restricted.
As Chinese people's consumption levels continue to rise, brand awareness is also increasing. The future of China is the era of brands. Whoever can occupy the first place in consumers' minds will be the winner.
Source: Distributor's Home -END-