It is currently the most important festival for Chinese people - the Spring Festival. In normal times, everyone would carry various gifts to visit relatives and friends, supermarkets would be decorated with lanterns and colorful decorations, shelves would be piled high with festive New Year goods, and even small street-side shops would have convenient gift boxes stacked from inside to outside, filling the entire storefront. Shop owners would also need to be ready to call distributors at any time to restock.
This Spring Festival is highly unusual. The novel coronavirus has struck fiercely, confining everyone to their homes. In Hubei, where I am located and which is affected by the epidemic, the usually bustling streets are now deserted, and even supermarket entrances are plastered with notices saying "Temporarily Closed," making it look like a ghost town.
During the Spring Festival, some supermarkets in certain areas are closed.
Not only in Hubei, but during this Spring Festival, people across the country have stayed indoors, making the holiday consumption even more sluggish than usual. Before the festival even ended, the atmosphere suddenly changed. In the New Distribution distributor community, emotions have begun to be filled with tension, anxiety, and helplessness.
New Year gift boxes are piled up in supermarkets, ignored by shoppers.
To this end, I have spoken with several distributors from different regions and product categories. On one hand, I wanted to understand the current state of their business; on the other hand, I have also summarized some good viewpoints and suggestions, hoping to provide valuable reference for distributors across the country who are currently in deep trouble.
-01- Which types of distributors are most affected by the epidemic?
What should we do with all the New Year goods we stocked? How do we handle them if no one buys them? Just thinking about it makes FMCG wholesale and retail bosses break out in a cold sweat. In previous years, they worked hard during the Spring Festival, stocking up more goods to earn some extra money. Now, distributors may lose the fruits of a year's hard work, earning nothing or even losing money.
The distributors most affected by this epidemic are, first and foremost, those dealing in gift products.
1. Beverages: Representative products - Six Walnut, JDB, Wanglaoji
These products are the highlight of the Spring Festival season, with sales during this period typically accounting for 30%-40% of annual sales. Before the festival, distributors had stocked up heavily. The first major problem is: how to handle these goods?
Fortunately, these products have a shelf life of about one year, giving distributors some breathing room. However, the normal sell-through of Spring Festival stock takes at least three months. For distributors who only deal in gifts, this means no new sales during these three months, only service, personnel costs, warehouse costs...
Another issue is that the goods stocked by small shop owners before the festival cannot be sold, and their stores certainly cannot hold them. After the festival, they need to make room for other products, so shop owners will definitely demand returns. Should distributors accept returns? This is the first point of contention. If they don't, they lose customer goodwill. If they do, their own warehouse pressure increases.
2. Ham sausages: Representative products - Shuanghui, Jinluo
For these products with a short shelf life of only six months, the loss for distributors is fatal. After the epidemic stabilizes, it will probably be March, and most distributors will still have products from December last year. By March, there will only be two months of shelf life left. With millions of yuan worth of goods about to expire, distributors might feel like jumping off a building.
3. Milk: Representative products - Yili, Mengniu
For example, a distributor of Yili and Mengniu in a certain county can achieve sales of 15 million yuan during the Spring Festival. Compared to the normal monthly sales of 3 million yuan, the current stock would last for five months. But if they can't sell it within five months, they will watch the products expire. Unlike ham sausages, ambient milk also has a six-month shelf life, but it is an immediate consumption product and a daily necessity for families. If they stop treating it as a gift and increase promotions to sell quickly, the loss may not be as severe.
4. Snack foods: Representative products - Want Want, Daliyuan
The biggest problem for distributors of these products is that the Spring Festival gift box packaging has added value. Once the gift-giving season passes, ordinary consumers won't pay a high price for gift box packaging. How to handle these products? If they don't sell quickly, with a six-month shelf life, they will end up stuck in their hands!
-02- How to withstand the impact of the epidemic and minimize losses?
Many distributor bosses are now not considering whether they make money, but how much they lose, and whether they can hold on. According to my understanding, many distributors are sitting at home on pins and needles, unable to sleep from worry, and getting mouth ulcers from anxiety.
Facing sudden disasters, worrying is not the solution. We cannot sit and wait for death. The most important thing now is to find ways to salvage losses as soon as possible before the epidemic ends. Looking at the current situation, I have received many opinions and suggestions from distributors and have summarized some feasible solutions, hoping to provide inspiration for distributors who are still at a loss.
1. Appeal for manufacturer support to overcome difficulties together
Currently, some manufacturers have already started to introduce response plans, but some national big brands have not yet made specific moves. First, because of the Spring Festival holiday and the sudden incident, there are too many urgent matters to handle, so they can't attend to this yet. Second, large companies have too many approval steps and long decision cycles, so response plans won't come out quickly. It is expected that specific measures will be available around the 15th day of the first lunar month.
A statement issued by a food manufacturer.
However, judging from the current donations by manufacturers in response to the epidemic, many manufacturers have directly donated goods. This is actually a good approach: it reduces distributor inventory, and the company also contributes to society. Of course, goods donated in the name of the company should be borne by the company and not transferred to distributors.
Here, I also appeal to major manufacturers to pay attention to this issue and do their best to provide some profit subsidies to the channel. At this time, whoever acts first, calms the downstream fastest, and unites distributor strength will be the first to sell through their products.
The total market capacity is unchanged. If your goods go out, others' goods may be stuck in their hands. The later you act, the more your goods accumulate, and the greater the loss you may face.
2. Prepare quickly and formulate an all-staff battle plan
Distributors cannot completely rely on manufacturers to solve the problem, as manufacturers are also facing the same dilemma. In this case, manufacturers may only provide partial support, not bear everything. Distributors should plan quickly on their own to sell goods fast, as time waits for no one.
(1) Grab positions and display space
The urgent task now is to contact all terminals as soon as possible to secure a good position. Whether through promotions or concessions, you must find a way to seize the first opportunity. Selling Spring Festival gifts as daily consumer goods - the earlier you occupy the position, the better; the earlier you give consumers benefits, the better!
(2) Deliver directly to consumers
Mobilize the entire company's strength, even relatives and friends, to help sell goods. If you can organize a delivery team, with everyone staying indoors, you can take orders via WeChat and deliver directly to doorsteps, which should help sell some products.
If you have online channels, contact the platform as soon as possible to arrange sales, give up some profits, run promotions, and get products out quickly.
(3) Handling gift boxes
Since the gift market is under the most pressure this time, many distributors suggest selling gift boxes in pieces. In fact, many distributors have already started doing this. As long as you can sell them, issues like product premium discounts and reduced profits are not problems; it's better than having them stuck in your hands.
After all, waiting for the next gift-giving occasion is not realistic, especially for products with weaker brand power. If big brands later launch heavy promotions and price cuts, you will have no chance. You must act early.
Because each distributor operates different products, these solutions are not exhaustive and may not suit all distributors. Therefore, New Distribution has collected opinions from many distributors in the community. We see that many distributors have already taken action and achieved some results. Some classic cases are shown in the images below for your reference.
The above viewpoints come from the New Distribution distributor exchange group.
-03- Speculation on the development of the situation
Predictably, after the epidemic stabilizes, the whole country will face a "big promotion." Distributors will face the most brutal competition in history.
Take the milk industry as an example. Currently, it will take at least three months to consume the existing inventory. Will manufacturers stop production during these three months? What about the production workers? What about the milk sources in the rear?
Like the butterfly effect, one thing triggers another. Manufacturers will not stop production, and market promotions will only become more intense. Milk originally priced at 50 yuan per box may end up at 10 yuan. If it's a small brand, it might even be dragged to death by big brands. Think about it: if Yili and Mengniu sell at 10 yuan, won't other brands have to sell at 5 yuan and still have no buyers?
Then think again: if consumers all buy milk, won't sales of black tea and green tea decrease? Won't other beverages also face difficulties?
A distributor gave me a vivid analogy, which I'd like to share. For example, a person normally eats three steamed buns a day. Now, due to promotions, ten buns come at once. But no matter the promotion, this person can only eat at most five buns a day. So, whoever's buns are most convenient to buy and have the biggest promotions will be chosen. In the end, five buns will be left over. What we distributors need to do is not to be the last five buns left behind.
For now, losses are inevitable for distributors. The most unacceptable thing is to harbor illusions and do nothing. Take it seriously, take action, face the difficulties, and minimize losses as much as possible!
Here, I also appeal to manufacturers to come up with a reasonable solution as soon as possible and fight alongside distributors! At the same time, I appeal to downstream partners of distributors, supermarket managers, and terminal store owners: if a distributor near you asks for help, please do not easily refuse. Help as much as you can, and let's work together to overcome this difficulty!
Finally, this article especially thanks Mr. He Zhou, the boss of Suiping County Tongyue Trading Company, for his contribution to the viewpoints in this article. I hope all distributor friends across the country can survive this crisis. You are also welcome to share good ideas and opinions with distributors nationwide. Interested friends can scan the QR code below to add WeChat and join the group for discussion.
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