Negotiation Position Determines Everything This is an era where position determines everything. Between manufacturers and distributors, whoever holds the higher position has the say. When a small manufacturer comes knocking, a distributor may choose to ignore them; but for a large manufacturer, the distributor may have to go to them and accept being ignored or not. Generally, distributors are smaller and less powerful than manufacturers, but "a mighty dragon cannot crush a local snake." If a distributor fails to become a local power, even a manufacturer that is merely a worm can dominate them. Some manufacturers stipulate that distributors cannot handle competing products. That is only because they haven't encountered a truly powerful distributor; otherwise, they would have to make exceptions. I know a distributor who simultaneously represents two brands of instant noodles, which are exclusively distributed in all other markets, but the manufacturers make an exception for this distributor. Both manufacturers recognize that only this distributor can do the best job in the region. Without this distributor, all other options are second-best. What Are the Distributor's Bargaining Chips? To bargain with manufacturers, distributors must hold bargaining chips. In different periods, the chips differ. In earlier years, if a distributor had a prime shop in a wholesale market in a central city (or regional goods distribution hub) and some capital, they could attract manufacturers. Because the "purchase system" was common then, as long as goods were displayed in the wholesale market, they could be sold. In those days, the prime shop was the distributor's chip. How many people still miss the easy money of those years? They say: let's hold off now, and when times get better in a few years, we'll do big business. They don't realize that such good times are gone forever. A few years ago, whoever had more second-tier wholesalers was more popular with distributors. Of course, by then, distributors had generally adopted the "delivery system," and truly powerful second-tier wholesalers no longer came to wholesale markets. In those years, second-tier wholesalers were the distributor's chip. Now, except for township second-tier wholesalers, those in other markets have largely disappeared. Distributors face end-markets directly, and whoever controls more end-markets has a better life. Now, end-markets are the distributor's chip. Although many manufacturers have been shouting about "winning at the end-market," reality has taught them that they still rely on distributors to do the end-market work. Distributors have bargaining chips and can "hint" at them when needed, or clearly show them. But distributors must remember: do not use your chips to threaten manufacturers. Do What You Are Capable Of Like dating, the manufacturer-distributor relationship is a two-way selection based on one's own conditions. It must be a match of equals, and you must act according to your abilities and negotiate terms accordingly. In the past, most distributors were full-service and all-capable; manufacturers handed everything to distributors except mass advertising. Now, manufacturers generally implement "embedded" management with distributors, and they no longer need all-capable distributors. What they need now are distributors with limited service functions. Some manufacturers only use the distributor's capital to complete purchases; in this case, the distributor assumes limited service functions. Some manufacturers only use the distributor's distribution capability; in this case, the distributor only serves as a distribution center with limited service functions, or as a third-party logistics service provider. Some manufacturers (such as baijiu companies) adopt a "borrowed shell" approach, using only the distributor's brand name while the manufacturer independently operates the market, to reduce various taxes and fees. Some manufacturers only want distributors to do end-market work. Some manufacturers only want distributors to do convenience store work. Some manufacturers only want distributors to do small wholesale. The emergence of limited-service distributors provides countless new options for distributors with different conditions. Distributors who talk only about exclusive rights and policy conditions are becoming fewer, unless the other party is a small manufacturer. How to Bargain with Manufacturers Successful bargaining requires knowing both yourself and the other party. Distributors should at least know the following about manufacturers: First, the authority of sales managers and salespeople at various levels. Generally, the higher the level, the greater the authority. Do not propose conditions to a salesperson that they cannot promise. Second, find out the terms manufacturers give to other distributors, then demand "national treatment"—enjoy the same terms. If your terms are the best, keep your mouth shut. Salespeople hate distributors who "take advantage and act innocent." Third, find out the manufacturer's "bottom line" and "maximum requirements" for distributors. Never propose conditions beyond the bottom line or do things beyond it, as that means the breakdown of cooperation; also, try not to meet the manufacturer's "maximum requirements," as that means you lose out. Of course, when dealing with manufacturers, you must also have your own "bottom line" and "maximum requirements." Strategy: Draw a Pie to Satisfy Hunger Strategic chips are the most important. Strategy is not everything, but it is the key to everything. When the substantive chips in a distributor's hand are insufficient to attract manufacturers, they must learn to "draw a pie to satisfy hunger." Some people prove themselves with historical performance, others with future plans. If a distributor can present a feasible plan and convince the manufacturer that they can indeed achieve it, that is the distributor's most important chip. However, most distributors are not good at talking, only at doing. They like to say: don't worry about the specifics; just rest assured. If you were the manufacturer, would you be assured? If things go wrong, wouldn't there be no chance to remedy it? Sometimes, drawing a pie to satisfy hunger is useful and effective. -------------------------------------- Like this article? Feel free to click the top right corner to share it on your Moments; About us: WeChat Name: FMCG Distributor Professional Consulting Management Account Intro: 20 years of FMCG distributor operation and management experience, professionally addressing distributor internal issues: Click the "Read Original" below to enter our micro-community for interactive communication and questions. Learning and Exchange QQ Group: 344257092 Reply 1 to enter the micro-official website to view historical messages. -----------------------------------------