Click to read the original text for details With the development of the internet, various online selling platforms have sprung up like mushrooms, squeezing the living space of distributors step by step. In this environment, how to do this business well is a question all distributors should consider. From the 1990s to now, distributors have gone through three stages: "official merchants," "sitting merchants," and "traveling merchants." In my view, opportunities exist at every stage; the key is how to seize them. The same applies now: although the overall environment is not good, the micro-environment is good. What is the micro-environment? The micro-environment corresponds to a small market. For distributors, your own turf is your "micro-environment." Although online platforms have taken away some offline business, can you take away business from other wholesale markets and distributors within your "micro-environment"? Do refined distribution, provide good service, and ensure efficient delivery. If you do these well, your "micro-environment" will get better and better. Every industry has a structure, essentially an ecosystem. When the overall situation of this ecosystem deteriorates, it means your competitors are weaker, and your "micro-environment" makes your foundation more solid. When a big wave comes, those weaker than you will be washed away, and their market share becomes an opportunity for you. Nanjing Aiyou Trading Co., Ltd., located in Jiangsu, is a daily chemical distributor skilled in operating its "micro-environment." From a small stall to a formal trading company, it manages 1,000 retail outlets, represents dozens of daily chemical brands including Unilever, Shanghai Jahwa, Shanghai SC Johnson, Yunnan Baiyao, Colgate, and Darlie, with over 4,000 SKUs and annual sales of 150 million yuan. Recently, New Distribution interviewed Mr. Sun Jianyong, General Manager of Nanjing Aiyou Trading Co., Ltd., to see how he used digital management to build his "micro-environment" and grow his business. We hope his thoughts on the distribution business can inspire other distributors.
-01- Break traditional thinking, implement digital management In 1998, Sun Jianyong took over the distribution business from his father. Although it was called a distribution business, it was just a stall at the time, without proactive development, with daily sales of only 500 or 1,000 yuan. With changes in the distribution industry and the rise of online shopping platforms, Sun realized he had to reform his business. Only by improving operational efficiency could he gain an advantage in future development. Around 2008, digital management tools had just emerged. Although he had never used them before, Sun, with his keen insight, believed that digital management tools would be a great aid to the distribution business. So, he proactively contacted and learned from distributors using digital tools. After learning, he became more determined to use digital tools. Initially, he only used a business management system. After some exploration, Sun gained a deeper understanding of digital management tools and gradually applied them to all aspects of the distribution business, including warehouse management and logistics management. Sun told New Distribution that through the use of digital tools, Aiyou Trading significantly improved operational efficiency. This is most evident in two aspects: business management and warehouse management. First, it reduced intermediate steps in business management, making salesmen's work more efficient and accurate. Previously, the order process was cumbersome: salesmen got orders at the terminal, returned to the office to have clerks create orders, then the warehouse prepared goods, and delivery was made the next day. Now, salesmen directly enter orders into the system, data is uploaded in real time, the backend processes orders promptly, and feedback is sent to the warehouse, allowing same-day delivery to small terminal stores. Second, warehouse management was upgraded with real-time inventory monitoring, making inventory safer and more accurate. Before warehouse management was implemented, there were frequent issues with inaccurate shipments or salesmen placing orders for out-of-stock items. For example, two shampoos of the same brand, one for smoothing and one for dandruff, look almost identical except for two characters. Employees might ship randomly, or if one was insufficient, they would substitute the other, causing inventory imbalances at stores. After cooperating with Chengpu Henghe on a warehouse and distribution management system, warehouse inventory can be monitored in real time, and the accuracy and efficiency of order picking have improved qualitatively, with accuracy reaching 99%. In Sun's view, management digitalization is reflected in three aspects: First, mechanization, saving labor; second, informatization, improving efficiency; third, de-experientialization, not relying on individuals. Mechanization and informatization are easy to understand. What does de-experientialization mean? Many distributors have a pain point: old employees, relying on their familiarity with routes and customers, don't work hard, and the boss dares not complain. But now all data and routes are in the system, so the boss's pain lasts only 24 hours; the next day, a replacement can be brought in and start working immediately. Digital tools should not be treated merely as tools but applied to actual business scenarios. Through the use of system tools, achieve refined management, enable existing staff to do more, make the entire distribution process traceable, and establish a system for formulating strategies based on market data feedback.
-02- Select quality customers, provide quality service In fact, the entry barrier for the daily chemical industry is low, and customers can easily be lost to new entrants. However, Aiyou Trading has never experienced business being taken away. Sun told New Distribution that Aiyou Trading only loses customers in two cases: one is when the customer stops doing store business, and the other is when the customer does not align with the company's development strategy and is voluntarily given up. When the market environment is bad, it's not just one person; everyone is affected. Competition is fierce, not just for one person; it's fierce for everyone. The same goes for customers: eliminate bad ones, and good ones will increase. All customers must be screened and precisely matched; those with poor quality or disproportionate input-output should be eliminated promptly. Spend more time developing new customers, then screen them to accumulate more quality customers. It should be emphasized that eliminating customers does not mean completely abandoning them; rather, it means downgrading their service level and placing them on Aiyou's self-built B2B platform. Through periodic moderate low-price promotions and platform activities, try to keep them on the platform. For quality customers, use advanced management and efficient, high-quality service to make them sticky and dependent on you. In terms of visits, maintain a weekly visit, and even visit 20% of core customers every three days. In terms of delivery, provide precise, efficient, and fast logistics services. First, ensure accurate order picking; if there are issues, the store bears no loss, 100% covered by the company. Second, ensure efficient and fast delivery, with delivery to stores within 12 hours. This is based on accurate order picking; customers trust us, so when the driver arrives, goods are placed in the store without counting. This way, delivery efficiency is greatly improved, achieving 12-hour delivery. In terms of orders, there is no minimum order quantity. Regardless of order size, even a 100-yuan order, it is delivered to the store. Through this approach, Nanjing Aiyou Trading has accumulated not only quality customers but also strong customer stickiness and high dependence on the company.
-03- Anticipate brand owners' needs, take preemptive action Returning to FMCG distribution, the most critical aspects are distribution and sell-through. How to get more products into stores is distribution; how to sell more products is sell-through. On this issue, Sun has his own logic. It's not about having as many products in stores as possible, but rather the more refined, the better. From 2018 to 2019, Nanjing Aiyou Trading spent a year on large-scale category expansion, putting many products into stores. But now some risks have emerged: many products are not selling well, causing inventory buildup. Therefore, in distribution, Nanjing Aiyou Trading does not pursue large-scale product entry; instead, it is doing subtraction, gradually eliminating categories that have no output, are not bestsellers, or occupy inventory. The products entering stores should be as refined as possible. At the same time, establish a sound new product introduction system. Before introducing new products, the marketing department conducts market research. For new daily chemical products, brand owners typically test-sell in hypermarkets. It's simple: the marketing department goes directly to hypermarkets to check if the dates are the freshest. If the dates are fresh, it indicates the product is selling well, and the marketing department will consider introducing it. After evaluating new products, anticipate brand owners' needs and proactively take promotional actions before the manufacturer's policies are announced. For example, OMO launched a dishwashing liquid at a very affordable price, cheaper than Liby and Diao Pai, with good packaging. In such cases, Aiyou Trading will proactively distribute and carry out activities like cut-case displays and floor displays. Regarding promoting new products, many traditional distributors think that if the manufacturer's resources haven't come down, they won't act in advance, fearing that if they do the market work, the manufacturer won't reimburse expenses. But in Sun's view, this depends on the situation. As long as the manufacturer is "reliable," policies will definitely come down, and they won't withhold expenses just because you acted proactively or in advance. Sometimes, by acting proactively, the manufacturer sees you are doing well and will invest continuously. Even based on trust and recognition of your professionalism, the manufacturer may proactively tilt resources toward you, forming a virtuous cycle. In the product sell-through stage, based on the portfolio of leading daily chemical brands, Nanjing Aiyou Trading has more bargaining power when cooperating with stores and can obtain store promotions at lower costs. For example, when investing expenses, through multi-brand combinations, offer preferential prices, invest in promotional staff, and reduce expense investment. Many single-brand daily chemical distributors cannot achieve this; they cannot do deep distribution and find it difficult to gain bargaining power in stores. This is also the advantage of Nanjing Aiyou Trading's multi-brand strategy: through multi-brand combined scale distribution, while not reducing product promotion, it can save more costs.
Final thoughts: Talking about the company's development direction, Sun believes the FMCG market is divided into two types: one is immediate consumption, and the other is planned consumption. Immediate consumption means consumers suddenly need something and buy it at a nearby store. This is the channel Nanjing Aiyou Trading currently focuses on: B, C, and D class stores, small convenience stores. Planned consumption means consumers buy with a plan. This consumption pattern has gradually shifted from offline to online and is a channel Nanjing Aiyou will gradually develop in the future. Based on strong warehouse and distribution management and business management capabilities, expand business into new retail, community e-commerce, private domain live streaming, and other fields. At the same time, in terms of business direction, not only sell daily chemical products but also sell across all categories and all channels. Today's market cannot be said to be definitely a stock market, because the market is always open, with no absolute stock or increment. Distributors should dare to try new concepts and break traditional fixed thinking to find growth opportunities in an increasingly difficult business environment.