In every industry, there are always dividends rising and falling; just because you don't see them doesn't mean they don't exist. This logic also applies to the field of trade and distribution. The impact of online channels is significant, offline requirements are high, and manufacturers' tasks are heavy. The distribution business is indeed becoming more difficult—this is an objective reality. But does difficulty mean there are no dividends at all? I don't think so. Market dividends have simply decreased, not disappeared. The market has shifted from incremental to existing volume; whoever captures more existing volume will have the dividend. There will always be a small number of distributors who, in the "difficult" business, not only remain unaffected but grow their business and see profits rise steadily. Bajie Trading, located in Nanchang, Jiangxi, is one such "small" distributor specializing in seasoning products. Founded in 2014, it achieved sales exceeding 100 million yuan by 2020, just six years after its inception. It represents over 80 seasoning brands, covers more than 5,000 offline BC stores, and has continued to grow steadily in recent years. Recently, I had a discussion with Mr. Leng Wenjun, General Manager of Bajie Trading. In an overall challenging distribution environment, how did Bajie Trading rise rapidly in just eight years and maintain high growth in sales and profits? How did he do it? From Zero to 100 Million in Six Years Bajie Trading was established in 2014, which is relatively late for a trading company. Most distributors emerged around the 2000s, when the market was still in the stage of grabbing a share of the cake. Basically, if you had money, you could do it; if you worked hard, your business would grow. Before starting his own business, Leng Wenjun was the KA manager of a seasoning trading company. With the development of the internet, online channels increasingly impacted physical stores, and KA store costs surged, making store business difficult. At the end of 2013, Leng Wenjun decided to resign and start his own business. Because he was familiar with the seasoning distribution business, he chose to continue in seasonings. Based on his market insights, Leng Wenjun decided to focus on the circulation channel and analyzed its characteristics in detail. First, the circulation channel must have first-tier brands to increase customer stickiness and relevance. To this end, Leng Wenjun proactively approached brands like Lee Kum Kee, Hengshun, and Totole to discuss cooperation. Second, in addition to first-tier brands, it is essential to have second- and third-tier brands to increase profits and customer satisfaction. For example, some specific customers need functional seasonings such as yeast, distiller's yeast, and rice flour. The quantities are small, but customers need them. Third, for each sub-category, only the leading brand is chosen, avoiding overlap as much as possible. Through this product selection approach, Bajie Trading now represents over 80 seasoning brands, with nearly 900 SKUs. At the same time, due to his experience in the KA channel, Leng Wenjun deeply understands the importance of online channels. In 2018, when community group buying was just emerging, he decisively seized the trend and entered the community group buying market. After careful consideration, he positioned Bajie Trading as a high-quality supplier for community group buying. The high share of seasonings in circulation channel outlets and the community group buying trend allowed Bajie Trading to transform from zero to 100 million in just eight years, maintaining an annual growth rate of over 30%. Leng Wenjun told New Distribution that the core reason for the rapid business growth lies in the refinement of internal organizational management. Different Compensation Models at Different Stages Leng Wenjun enjoys reading books by Kazuo Inamori, so his company's organizational management resembles the Amoeba model, fully leveraging employees' initiative—everyone is an operator. Although he has been in the trading business for only six years, Leng Wenjun has his own way of thinking. At different stages of company development, he has different thoughts on compensation design. In the early stage of the company, Bajie Trading adopted a profit-sharing system. The compensation plan was: base salary (4,000 yuan) + profit share - business expenses. The core part of a salesperson's salary is the profit share. The company sets a base profit amount, which is determined based on the usual sales in the region. For example, if the base profit for the region is 40,000 yuan, after the salesperson achieves that profit, the excess profit is split equally between the salesperson and the company. It is important to note that business expenses include two parts: one is the in-store actions required by the manufacturer, such as display fees and end-cap fees, which are covered by the manufacturer and later reimbursed to the salesperson. The other part is the cost of discounts and freebies given by the salesperson, which is borne by the salesperson themselves. Using resources incurs costs, and this part is controlled by the salesperson. Since they know their income includes these costs, they won't use them excessively. The key to the profit-sharing system is price transparency; the boss must be open about purchase prices. As a boss, you must earn employees' trust. If data is not transparent, salespeople will feel uncertain and won't work hard. The advantage of this compensation method is that profit sharing fully stimulates salespeople's initiative, encouraging them to actively sell high-margin second- and third-tier products, because doing only first-tier brands yields little profit. This not only allows salespeople to earn higher wages but also maximizes the company's returns, achieving a balance between profit and sales. Through this compensation plan, Bajie Trading's net profit in 2019 far exceeded that of typical trading companies, and the average salary of salespeople was more than twice that of local peers. Of course, this compensation method also has obvious drawbacks. With a monthly sales threshold of 5 million yuan, below 5 million, both the company and salespeople benefit, with business costs controlled at around 4 percentage points. Once sales exceed 5 million, business costs rise to 5-6 percentage points and continue to increase with sales, which is unreasonable. Given this background, Leng Wenjun decided to adjust the compensation plan: no base salary + 2.5% sales commission + gross profit difference bonus + additional rewards. The most obvious change is that salespeople have no base salary; their main income comes from sales commissions. Gross profit difference bonus formula: (current gross margin - last year's gross margin) * sales * 20% Additional rewards are based on task targets set by the company. Completing corresponding tasks yields corresponding rewards. For example, if the task is 300,000 yuan in sales, achieving 300,000 yields a reward of 1,000; achieving 350,000 yields 2,000, and so on. In this way, additional rewards are fixed, variable costs decrease, the company's business expenses become stable, and sales continue to rise steadily. The biggest resistance to compensation reform is certainly from salespeople, as this change may reduce their compensation. Leng Wenjun told New Distribution that the core of a distributor is efficiency; higher efficiency leads to higher returns. Efficiency is also reflected in operating costs. If operating costs are too high, the company cannot sustain itself in the long run. After explaining the reasons, the salespeople eventually agreed. Of course, Leng Wenjun is very confident about the company's development. After the compensation reform, the average monthly salary of salespeople still reaches over 12,000 yuan, far higher than peers, so their motivation has not decreased. Summary When discussing the future development of distributors, Leng Wenjun shared his views: distributors will evolve into service providers, offering one-stop supply of all categories, reducing intermediate links, and lowering supply chain costs. Leng Wenjun emphasized that no matter which direction distributors take, one thing is certain: they must continuously improve operational efficiency, reduce costs, and increase efficiency. In today's market environment, incremental growth is limited, and everyone is competing for existing market share. Only by honing internal skills, improving operational efficiency, and squeezing competitors' existing share can distributors continue to grow and strengthen in the market. Due to space limitations, it is impossible to elaborate on all aspects of Bajie Trading's management. To this end, New Distribution will organize an in-depth study tour on September 8-9, visiting Jiangxi Bajie Trading, where General Manager Leng Wenjun will deeply discuss Bajie Trading's business model, development path, and current latest business strategies. The general manager will share everything, providing a model and practical cases for seasoning distributors covering small and medium BC stores, and how to achieve 900 SKUs covering 5,000 stores. Interested friends, scan the QR code to add my WeChat for details.