Scan the QR code in the image to register Recently, I visited some distributors in Shandong with sales of around 10-30 million RMB, which is the main body of China's FMCG distributors. These distributors typically have the following characteristics: years of business, some accumulation; single category, multi-brand operation; brand owners support sales staff and market expenses; they bear capital, warehousing, and logistics functions, as well as some wholesale sales. From an operational data perspective, gross margins are basically 7-8% to 12-13%, with some good categories reaching 15-16%. At the same time, operating costs are also around 7%-8%. Many distributors are at the break-even line; once there is any change in the external environment or brand owners, it's not uncommon to work for a month for nothing. This may be the general status of gross profit for distributors with 10-30 million in sales in China! -01- A large part of the reason is: the result of manufacturers overstepping their authority Why is this? Besides the distributors' own reasons, a large part is the result of manufacturers overstepping their authority. Why do I say that? China's market is large, with about 13 million outlets in first to sixth-tier markets. With so many sales points, it is necessary to rely on distributors for distribution to achieve effective coverage. This is also the reason why distributors can exist widely in China. But relying solely on distributors for distribution is unrealistic. On one hand, distributors' operational levels vary; on the other hand, the market is vast, and manufacturers need to manage the market finely. Manufacturers and distributors divide work and jointly do the market. For example, brand owners like Yili, Mengniu, and Shuanghui mainly rely on distributors for distribution; Beverage brands represented by Coca-Cola, Master Kong, Uni-President, and Want Want often have manufacturers' sales representatives directly manage terminals, with distributors providing warehousing and delivery, and in lower-tier markets, distributors may do some auxiliary work. This is a very effective market management method and one of the important reasons why these well-known beverage companies have been able to succeed in the Chinese market. But this model also has drawbacks: manufacturers do everything themselves, while distributors become a group of giant baby distributors who only have hands and feet, no brains, only responsible for delivery, and do not do market work. Sales are high, but they only pay and ship, lacking basic management capabilities, and cannot independently operate the market. When manufacturers come to seek cooperation, distributors often first ask: "What support do you give?" It's understandable; as long as manufacturers can pay expenses and provide people, the market can be done. Distributors only need to pay and ship, waiting for settlement. Who wouldn't be happy to see that? Ten years ago, Liu Xinhua, general manager of Uni-President China, once said: "The nanny-style and strong channel model of first-line FMCG manufacturers will definitely fall into a huge crisis in ten years." Looking at it today, it has indeed come true. In the past, labor costs could be absorbed by increasing sales. But now, food and beverage categories have entered a stagnation and decline channel, and the efficiency of sales staff is very low. Many salespeople sell goods for a month and may not even earn back their own salary. The demographic dividend is declining, and intensified competition leads to declining marginal profits. If the channel model is not changed and individual combat skills are not improved, individual output cannot be increased, and in the end, all brand owners who do this will fall into the cost trap of a sea of people. Not raising salaries leads to serious outflow of FMCG talent. Although brand owners have good management and training systems and good employee promotion mechanisms, if they cannot give grassroots sales representatives good compensation and benefits, and employee promotion is slow, once there are better external treatments, they will prioritize external job opportunities. For example, doing express delivery, food delivery, or driving for Didi. -02- Give the function of market distribution back to distributors The current market can no longer use inefficient and labor-intensive models for marketing! Many companies' channel structures and organizational models have not changed significantly for more than ten years, or even over a decade. The only change may be the addition of an e-commerce department or a new retail department. Mainstream channels, or traditional trade departments, have hardly changed. When the market is no longer the market of 20 years ago, and companies have not changed with the market, how terrible is that! Market changes:
1. Demand is changing from mass to segmented and niche;
2. Channels are changing from a single dimension to a three-dimensional channel of heaven, earth, and people;
3. The ways of cognition, transaction, and delivery have fundamentally changed;
4. Consumers are changing their preferences faster, and product life cycles are getting shorter;
5. The logic of traffic has changed, and the way of communication has been completely reconstructed. Market constants: 1. Consumer loyalty is still very low; random and impulsive consumption are still the mainstream consumption methods;
2. Mainstream consumers still need to buy pre-packaged food and beverages from traditional sales points;
3. Traditional sales points have not disappeared;
4. The competitive landscape of mainstream brands and categories will not change significantly. Based on change and constancy, four basic consensuses: 1. Brand owners continuously innovate to meet consumers' increasingly picky taste needs;
2. Reach different consumption scenarios and add more sales models;
3. New tricks, new plays, new promotions, and new tools must all be applied;
4. New information tools and highly integrated systems improve the efficiency of the distribution system. Based on the above four points, companies cannot solve problems by relying solely on the deep distribution model. Overly dispersed and fragmented channels lead to scattered resources and difficulty in coordination. This requires companies to carry out a series of innovations and reconstructions in organization to support the new market environment changes. How to innovate and reconstruct? Give the function of market distribution back to distributors, empower and arm distributors with digital tools; by improving distributors' operational capabilities and efficiency, let manufacturers free up energy to focus on new traffic logic and rebuild new distribution organizations and marketing systems. This is the core of brand owners returning the market to distributors. Whether it's P&G or Nongfu Spring, they have been adjusting in the past two years. Recently, the operation of the middle platform has also been put on the agenda by many companies. To adapt to diverse channels and changing consumers, companies have redesigned their organizational structures. Regarding the business middle platform, there are three prerequisites to note: 1. Channels need three-dimensional coverage, and business and supply chain need strong support from the middle platform;
2. The front-end multi-business units need cross-business joint operations (online and offline integrated marketing);
3. Business units need to be special forces; the resources mobilized by a single business unit need the assistance of the middle platform. Only when these three business logics are established within the enterprise does the middle platform make sense. To sum up: 1. Labor costs are too high;
2. The traditional human wave tactic is too inefficient, and individual output is too low;
3. The market still needs people to do it;
4. Companies need to have more important things to do;
5. Distributors may do better than brand owners;
6. We need to rebuild an organizational management system based on future marketing. The essence of competition is the confrontation between technology and productivity, not the issue of who has more people or tactics. Next, let's see which companies take this step first.