---
title: "Going Offline: The Urgent Task for Brand Owners is Dealer Sorting"
description: "In late 2013, Nongfu Spring's annual sales had just exceeded 10 billion yuan, but growth hit a bottleneck, prompting the company to reform its dealer network. As an assistant to the operations director, I developed five evaluation indicators for dealers—supply chain capability, financial strength, channel coverage, operational efficiency, and organizational strength—and successfully adjusted several dealers. This reform proved crucial for future growth. The article emphasizes that brand-dealer cooperation success depends on matching, and provides frameworks for evaluating dealers, including six key capability indicators and three critical points for adjustment."
author: "高级研究员 海游"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-04-24"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/9-BbJ7jPQR-mBIyQ54oKuQ"
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# Going Offline: The Urgent Task for Brand Owners is Dealer Sorting

> In late 2013, Nongfu Spring's annual sales had just exceeded 10 billion yuan, but growth hit a bottleneck, prompting the company to reform its dealer network. As an assistant to the operations director, I developed five evaluation indicators for dealers—supply chain capability, financial strength, channel coverage, operational efficiency, and organizational strength—and successfully adjusted several dealers. This reform proved crucial for future growth. The article emphasizes that brand-dealer cooperation success depends on matching, and provides frameworks for evaluating dealers, including six key capability indicators and three critical points for adjustment.

In late 2013, Nongfu Spring's annual sales had just exceeded 10 billion yuan, and performance growth entered a bottleneck period. The company began to adjust and reform its dealers. During that time, I was the assistant to the operations director, responsible for on-the-ground understanding and implementation of dealer restructuring in some offices.

At that time, I developed five evaluation indicators: dealer's supply chain capability (warehouse area & logistics vehicles), financial capability (capital strength & capital utilization), channel coverage capability (quantity and quality of outlets), operational efficiency (operating capability and efficiency), and organizational strength (team size & management capability & cohesion).

For those failing three or more indicators, we suggested the office manager replace them. Later, we successfully adjusted dealers in several offices. Facts proved that this stage of reform was correct and necessary, laying a solid foundation for future sales exceeding 20 billion and 30 billion yuan.

It should be clarified in advance: **In the process of manufacturer-dealer cooperation, there are no good or bad brand owners, nor good or bad dealers. The success or failure of cooperation is due to the matching degree between the two.**

We can compare a brand owner to a well, and a dealer to a bucket for fetching water. The well's diameter is fixed. If the bucket's diameter is too large, it cannot fetch water; if too small, it cannot fetch enough. Matching is most important.

For example: A dealer who worked with Master Kong switched to Nongfu Spring and achieved good results; a dealer who worked with Baixiang switched to Master Kong and also achieved good results; a dealer of a certain brand switched to Baixiang and also achieved good results.

Dealers move among brand owners to find the most suitable brand, and brand owners also select the most suitable dealers in the market. The best state of manufacturer-dealer cooperation is high matching. Today, we stand from the perspective of brand owners to see the matching degree of their dealers.

**Brand owners should have a basic positioning of dealers**

**1. Dealer owner type**: The owner is the soul of the dealer team. If you don't understand the owner's situation, cooperation will not go smoothly. The following chart can help sort out:

**2. Dealer business analysis**: Sales and profits determine the dealer's mindset, which determines their market operation approach. The following chart can help sort out:

**3. Focus points of regional head dealers**: Big dealers are not necessarily the best match for you, but if you want to recruit big dealers, you must understand them. The following chart can help sort out:

**4. Dealer's "hardware" configuration**: Basic conditions cannot be flexible.

**5. Dealer's "software" configuration**: Basic conditions cannot be flexible.

_ **Summary:** The above five charts can help brand owners sort out basic dealer information. Of course, they may not be comprehensive, but they serve as a starting point._

_It is worth reminding: In 2022, B2B voices gradually faded, community group buying suffered a major retreat under capital coercion, and the internet saw massive layoffs. **The main tone for FMCG should be returning to offline and the basic market. The first step in offline layout is the screening of core dealers. Systematically understanding dealer basic information is of utmost importance and deserves more attention from enterprise management.**_

**Six Capability Indicators for Dealer Evaluation**

**1. Dealer's supply chain capability (warehouse area & logistics vehicles)**

Warehousing is not about being as large as possible; it's about being sufficient. Logistics is not about being as fast as possible; next-day delivery is enough. "Sufficient" and "next-day delivery" also have standards, determined by the brand owner's product attributes, peak and off-peak sales, safety stock, order volume, and service radius.

Of course, I have seen some dealers with excellent supply chain capabilities: intelligent warehouse management, accurate knowledge of each SKU's quantity and freshness, and use of automated or semi-automated systems for storage management to improve warehouse efficiency.

**2. Financial capability (capital strength & capital utilization)**

Capital strength is hard power, and here capital refers to self-owned funds. Several dealers I served would repay debts at the end of each year, and capital shortage caused severe sales losses. Secondly, capital utilization capability: capital turnover rate is the standard for measuring profitability. Inefficient capital turnover leads to profit loss. If dealers don't make money, cooperation cannot continue.

**3. Channel coverage capability (quantity and quality of outlets)**

Each dealer has their own unique channel coverage model: some directly serve outlets, some serve through distributors, and some use third-party services. These are all service processes. From the result indicators, the dealer's outlet coverage rate must meet standards, and outlet quality (in-store SKU count, merchandising layout) must also meet standards.

Excellent dealers, in terms of channel coverage strategy, not only have fixed result and process indicators but also set additional phased task indicators, such as new product distribution, product display, high-profit single-item sharing, and set corresponding reward amounts.

**4. Operational efficiency (operating capability and efficiency)**

This needs to be treated differently. If the brand owner defines the dealer as a logistics and service provider, then the dealer's operational efficiency is mainly reflected in the quality of distribution services. If defined as a business partner, then the dealer must have their own operational efficiency to complete various indicators assigned by the brand owner with quality, quantity, and timeliness.

**5. Organizational strength (team size & management capability & cohesion)**

FMCG offline cannot escape the human-wave tactic in the short term. The dealer's core value is also in this area. Team building, management capability, etc., are important indicators for measuring dealer value.

**6. Digital capability**

Brand owners should objectively view the importance of digital transformation, especially senior executives with traditional backgrounds. They must first ensure an open mindset, not rely on past empiricism and departmentalism, and embrace digitalization. Only then can they see and evaluate the dealer's digital capability.

Currently, ordinary dealers already have financial SAP and inventory management systems. Better dealers have complete ERP systems, independent order management, inventory management, sales visit systems (SFA). High-quality dealers even have management systems for serving stores and customers, such as CRM systems, various B2B platform apps, WeChat ordering mini-programs, etc.

_ **Summary:** The six capability indicators are a microcosm of brand owner evaluation of dealers. They need to be set one by one according to their own operating conditions. It must be emphasized: **Dealer evaluation should match their own channel coverage model. More often, choice is more important than effort, rather than simply setting indicators and doing assessments to change the status quo.**_

**Three Key Points for Adjustment**

**1. Dealer adjustment must align with the brand owner's strategic intent**

First, what is strategic intent? What is the strategic significance of dealers to the brand owner?

Take Nongfu Spring as an example: the dealer's value is market contract operation. The enterprise fully authorizes dealers and provides timely assistance and services. Dealers are required to have excellent operational efficiency. When adjusting dealers, it is not about replacing one distributor with a larger distributor, but adjusting from a distributor to a regional contractor. This adjustment is a fundamental change.

Therefore, brand owners must clarify their strategic intent and communicate it to the most basic sales team.

**2. Cooperation in digital transformation**

(Image source: Teacher Liu's Digital New Marketing)

Enterprise digital transformation is an inevitable trend. I often say that the first stop for brand owners' digital transformation is dealers. If the closest partners are unwilling to cooperate, then weak-relationship outlets and even weaker-related consumers can only be handled by spending more money, with no better way.

However, through my market visits in the past few months, I found that many dealers are unwilling to use even the most basic digital tools, thinking it wastes salespeople's time. For such dealers, enterprises should pay special attention. If they cannot be persuaded, they should be eliminated as soon as possible. Therefore, dealers who do not cooperate with the enterprise's digital transformation can be subject to a one-vote veto.

**3. Fully respect dealers' ideas**

The following content comes from a dealer's WeChat Moments:

_"Salespeople are severely degrading; 99 out of 100 dealers feel the same! Regarding pressing goods on dealers, the enterprise marketing team believes that as long as they press goods on dealers and drain their funds, dealers will have to find ways to digest inventory, while avoiding competitors' pressure on dealers to stock up."_

_"Although enterprise executives talk about brand, innovation, and strategy, their actual work still focuses on promotions, sales, and expenses. They only consider hard indicators like sales volume, and rarely consider soft indicators like dealer satisfaction. Lower-level situations cannot reach the top, and cooperation friction increases, eventually leading to breakdown."_

In fact, there are many such situations, and many high-quality dealers are "wrongly killed." Therefore, it is suggested that enterprises have a communication platform directly to the boss, so that even if dealers are adjusted, it is justified and well-founded. This is also an important step to ensure harmonious manufacturer-dealer relations.

**The Three Most Common Disputes in Dealer Adjustment**

**1. When manufacturers and dealers do not match, the most wrong decision is to use assessment as a temporary remedy.**

For example, forcing a service provider to transform into an operator. The dealer's operation type is determined by the dealer's genes. Do not try to change the dealer's genes through assessment. If the enterprise plans to transform, then cut the Gordian knot quickly. If you hesitate, you will suffer.

**2. Dealer assessment indicators are ambiguous, leading to disputes during adjustment.** For example, a company's assessment of dealers:

* Those with low achievement in the current year (below 80%);
* Those whose growth rate in the past three years is lower than the regional overall growth rate;
* Those who have received three or more warning letters within a year.

Dealers are not afraid of assessment; they are most afraid of unclear and muddled assessments.

**3. Not giving dealers sufficient and clear requirements and guarantees.** For example:

* According to regional task volume and regional sales team evaluation, configure vehicles, personnel, warehouses, and office environment as required, with dual evaluation and acceptance by the regional management department and headquarters (quantified to specific values);
* Specific deposit requirements must be paid to the company account within the specified time;
* Only one dealer per county, no additional unless special circumstances, and additional requires application;
* Company personnel support: configure personnel according to annual task indicators. Ambiguous areas must be clarified, such as whether 3.8 people means three or four. All uncertainties are hidden dangers for future manufacturer-dealer cooperation.


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