Click 'Read Original' for details. The distributor business is not dead; rather, the market environment has changed. Distributors must adapt, upgrade, or transform. Among these strategies, merging several distributors is one way to respond. Simply put, several local distributors (mainly in third- and fourth-tier cities and below) merge to form a new company. This can be seen as resource integration or as joining forces to weather the storm. The benefits are obvious:

  1. Merging warehouses, vehicles, and offices directly reduces costs;
  2. Merging customers directly lowers delivery costs and increases bargaining power at the terminal;
  3. The newly established large distributor company has advantages in dealing with upstream manufacturers, recruiting personnel, and purchasing equipment;
  4. The combined personnel scale and business volume of several companies qualify them to communicate with government functional departments and seek relevant policy support;
  5. Costs for software introduction, training, and promotion can be effectively shared. Although the benefits of merging are clear, the problems it brings must also be understood, such as:
  6. How to calculate equity and divide profits among the companies?
  7. How to define the positions and rights of shareholders?
  8. How to allocate responsibilities and losses for historical issues of the original companies when they appear in the new company?
  9. How to value the social resources brought in by each company?
  10. When management styles and team execution capabilities differ, whose standard prevails in conflicts? If each business operates independently, profits are kept, problems are handled, and losses are borne individually, with no disputes. But now, when merging, everything must be shared and accounted for. Everyone has different ideas and methods. If new problems or even serious conflicts arise after the merger, and the partnership dissolves, it would be a major loss for every participant. Therefore, for safety, before planning a partnership, some foundational work should be done: On one hand, conduct tests to see if everyone can do business together; on the other hand, start cleanup work in advance, establish quantitative standards, handle certain issues early, and lay a good foundation to reduce the probability of disputes after the merger. What are these foundational tasks? As follows:
  11. Handle historical issues Whether they are internal management issues (e.g., compensation settlement for departing employees) or external operational issues (e.g., fulfillment of display fees for downstream customers), each company should proactively audit and resolve its own issues, bearing the costs. The principle is not to bring old problems into the new company.
  12. Create organizational structure and job descriptions Plan the new company's organizational structure in advance, including new departments (for distributor companies with revenue over 100 million, typically add HR, administration, marketing, and supervision departments). The structure clarifies management lines and reporting relationships. It also leads to department and position settings. Each position requires a job description, clarifying the scope of work, responsibilities and authority, key performance indicators, corresponding professional and technical standards, reporting relationships, and development space.
  13. Basic rules and regulations These are the minimum management policies, such as codes of conduct, professional ethics, attendance, onboarding, probation, promotion, rotation, resignation, and rewards and penalties, with quantitative standards.
  14. Development plan The new company naturally needs a future development plan, which should be prepared in advance. The plan should be time-based, listing specific targets such as market positioning, industry ranking goals, sales targets, gross profit targets, net profit margin targets, product portfolio goals, and company brand influence goals.
  15. Customer cleanup Distributors rely on downstream customers. Merging means combining all customers. Therefore, in the early stage, each company must clean up its customer resources, including summarizing customer information, verifying one by one, classifying and grading, establishing detailed files, and clearing historical issues.
  16. Register website and WeChat official account As basic promotional and information platforms, the website and WeChat official account should be registered in advance. Content can be left empty and filled in after the new company is established.
  17. On-site management Company operations mainly involve people, matters, and things. Among these, managing things is the simplest. 'Things' refers to specific items and their environment, mainly offices, warehouses, and vehicles. This involves comprehensive cleaning and organization of office equipment, documents, goods, and vehicles. Managing things is the simplest and a direct reflection of execution capability. If even the management of items cannot be achieved, then the more complex management of personnel and customers is out of the question. After completing these foundational tasks, everyone's actual execution capability and determination to rectify and merge will be relatively clear. At that point, everyone can sit down and evaluate whether to merge or continue independently. Author: Pan Wenfu Originally a private business owner, he managed a family distributor company for many years, during which he also served as a business manager and trainer in several manufacturing companies. His research focuses on internal management of small and medium-sized private enterprises, with main topics including personnel management, cost control, management backend setup, and the integration of retired military personnel into private enterprises. He has continuously broken down over 400 topics related to internal management of private enterprises and keeps updating his material collection and solution updates. From August 22-24, the '2018 China FMCG Digital Innovation Conference (2018FDIC)', hosted by the China FMCG Industry Association and organized by New Distribution, with the theme 'Finding New Engines for Growth', will be held in Shanghai! The conference lasts 3 days and will focus on two main themes: marketing and supply chain, with six parallel forums on brands, channels, communication, B2B, intra-city logistics, and innovative retail. We will invite industry leaders, CEOs, and senior brand executives to deeply interpret the trends and drivers of digital transformation in the FMCG industry. We will invite over 500 executives from FMCG companies, 200+ CEOs from B2B industries, and 1000+ major FMCG distributors to gather and discuss how the FMCG industry can use digital tools to achieve rapid growth again in the digital era. This conference will build a bridge for brand owners, distributors, retail enterprises, and marketing agencies, helping FMCG manufacturers obtain the latest information, understand best practices, and master more transformation skills. Invited Companies (tentative) Conference Time: August 22-24, 2018 Conference Venue: Shanghai Baohua Marriott Hotel Conference Content: August 22: Full-day registration Afternoon 14:00-17:30: Distributor intra-city logistics parallel forum Evening 18:30-21:00: New Distribution Night Gala Dinner August 23: Theme: Marketing Digital Innovation Morning 9:00-12:00: Marketing Digital Innovation Main Forum Afternoon 14:00-17:30: Brand, Channel, Communication Parallel Forums August 24: Theme: FMCG Supply Chain Digital Upgrade All day: FMCG Supply Chain Conference Registration Method: Registration is now open. Long press the QR code below or click 'Read Original' to register. Limited-time group purchase discounts are available! Registration Consultation: Ticket inquiries: Media cooperation inquiries: Highlights of New Distribution's Previous Conferences: Click the links below to review the highlights of the 1st, 2nd, 3rd, and 4th FMCG + Internet Conferences: -END-