In recent years, digitalization has been one of the most frequently mentioned topics in the FMCG industry. Previously, only brand owners emphasized digital transformation, focusing on channel and transaction digitalization. Now, under new market conditions, traditional distribution methods are gradually losing their advantages, making digital transformation a topic distributors are 'forced' to confront. Why 'forced'? In the past, industry changes were slow, and many distributors used the same distribution model for over a decade and still performed well. Now, influenced by the internet, the industry undergoes varying degrees of change each year, such as O2O, community group buying, and livestream e-commerce, which have seen explosive growth in just a few years. Essentially, these changes are all competing for distributors' profits. Under such changes, if distributors continue to operate in the old way, they have no competitive advantage.
Recently, I exchanged ideas with a product manager from Zhoupu Cloud Manager, who mentioned a viewpoint: the change and constancy of distributors. What remains constant is that no matter how upstream and downstream change, distributors always play a service role, serving brand owners and retail stores. What changes is that as the industry evolves and the needs of brands and stores shift, distributors' service methods must also adapt, moving towards lower costs, higher efficiency, and better experiences. The key to achieving this is to shift from human-driven to data-driven operations. Therefore, digital transformation for distributors is urgent! So, what specific improvements can digitalization bring to distributors?
-01- Cost Reduction: Costs are not 'saved' but 'reduced' Traditional distribution essentially earns the price difference, which is profit, and profit is the sole criterion for measuring whether a distributor is excellent. We all know that profit = sales revenue - sales cost. When market share stabilizes, distributors' goals focus on costs. However, at this point, they often fall into a misconception: reducing costs by cutting personnel, vehicles, warehouses, and other software and hardware expenditures. Costs are 'reduced', not 'saved', by optimizing every link in product entry, product sales, and product recommendation to maximize efficiency and 'reduce' costs. After market research, it was found that most distributors have unreasonable costs in two areas: account verification and expense accounting. In the past, the verification process was complex: salespeople filled out account verification forms, distributors approved them, and finance recorded them. The process was cumbersome, prone to errors, and incurred personnel costs. Expense accounting was even more problematic: how to confirm whether salespeople operated according to standards? Were rebates verified in a timely manner? Did store displays meet standards? Were expenses paid promptly? Many distributors had significant issues in expense accounting, paying expenses without achieving corresponding standards, which is a waste of resources.
These problems can be solved with digital tools. Taking Zhoupu Cloud Manager as an example, verification is fully online, and finance doesn't even need to verify. After the salesperson or driver confirms delivery at the terminal, the account is automatically verified in the background, and finance only needs to review, reducing cumbersome intermediate steps and personnel costs. For expense allocation, distributors can customize expense categories, such as store rebates and display expenses. For store ordering and payment, for example, a rebate of 500 yuan for orders over 10,000 yuan, or 1,500 yuan for orders over 20,000 yuan, can be set by the distributor. Once the store agrees, a contract is automatically signed, and when the target is met, the expense can be automatically verified against receivables. For display expenses, distributors can set their own standards, and the system automatically reviews orders, signs contracts, and allocates expenses; salespeople only need to take photos and upload them. This effectively reduces unnecessary disputes and extra expenses later.
This is the first change brought by digitalization: replacing manual processes with digital tools, allowing people to do more valuable work, maximizing efficiency, and achieving the goal of 'reducing' costs.
-02- Efficiency Improvement: Business Integration and Multi-party Collaboration New Distribution once mentioned that traditional distributors are traditional because of rigid models and low efficiency. Traditional distributors' operating model is human-driven, and relying solely on human drive makes fine management difficult, which in turn hampers efficiency improvement, creating a vicious cycle. In my exchange with the product manager from Zhoupu Cloud Manager, he told me that efficiency improvement for traditional distributors can be approached from three aspects.
1. Efficiency of product outbound In the product outbound process, it's more about standardization than efficiency. In this process, many distributors print the order form when placing the order and then deduct it from inventory. This operation has many uncertainties. If the order form is printed but the goods are not delivered, the warehouse data shows the deduction, and when these issues are combined, problems arise during reconciliation, making simple things complicated. Now, with digital tools, these problems can be avoided, making the outbound process more transparent and standardized. Zhoupu Cloud Manager divides warehouse inventory into physical inventory, sellable inventory, occupied inventory, inbound in-transit inventory, and outbound in-transit inventory. This fine-grained distinction makes the outbound process procedural and node-based, enabling real-time inventory synchronization, ensuring information timeliness, and effectively avoiding data irregularities.
2. Efficiency of capital utilization Customer transactions often involve credit periods, especially for core customers with larger scale, who typically have credit terms. Distributors can use the system to classify accounts receivable into cash and credit. For credit customers, Zhoupu Cloud Manager can set up an alert mechanism, with overdue payment time set for each order. Upon receiving alerts, distributors can handle them promptly, reducing the risk of extended credit periods and increasing capital turnover.
This is one dimension of credit periods; another is KA settlement. Distributors dealing with KA (key accounts) often encounter this problem: during cooperation, a supply price is agreed upon, say 10 yuan per unit, but at final settlement, the supermarket deducts some money under a certain fee, making the settlement 9.5 yuan per unit. Previously, finance would simply change the amount on the document without recording the process. Now, settlement can adjust the unit price in the system, and the difference can be clearly seen in reports, making it easier to handle various supermarket charges.
3. Efficiency of order fulfillment First, understand a concept: the process from order placement to final delivery to the customer is called order fulfillment. The entire process is a series of time segments, and it's difficult for distributors to manage each segment. For example, if you ask a distributor how long order fulfillment takes, most can only answer 24 hours or 48 hours, without specific numbers. Digital upgrade integrates business management into a complete system loop, helping distributors develop rapidly. Taking Zhoupu Cloud Manager as an example, by streamlining the order fulfillment process, from order placement to customer receipt, the system records each step. These records are visible not only to distributors but also to salespeople, warehouse staff, drivers, and finance, allowing timely handling of any issues. For instance, if a store reports a product discrepancy, you can find the corresponding time node and identify which step had the problem. This greatly improves the efficiency of order fulfillment.
-03- Decision Making: No Data, No Decision! "No data, no decision; with data, good decisions." In the past, distributors made decisions based on information, relying on their own market feedback, which was often subjective and one-sided, leading to deviations and errors. Currently, decision-making is gradually shifting from information-based to data-based, managing the company with precision, standardization, and systematization based on data. Simply put, distributors need to use data to understand their business: how much money they earn, how many customers they have, which are core customers, how much contribution salespeople make, which products sell well, which specifications sell well, etc.
Today, let's discuss the specific application of data in three dimensions: business management, customer management, and product structure.
1. Data-driven business management Distributors achieve profitability by selling goods, and two points are most important: first, who to sell to, i.e., customer management; second, who sells, so the importance of business management is self-evident. Previously, distributors could only know how much goods salespeople sold, but rarely analyzed data to see which stores salespeople performed well in or which products sold well. They didn't use digital tools to drill down to each point to assist decision-making. For example, a beverage distributor in Suzhou had a normal receipt rate of about 95%, meaning out of 100 units shipped, 95 were received. But at a certain period, the receipt rate dropped to 85%, indicating a problem. In the past, they knew there was a problem but didn't know where it occurred. Now, with Zhoupu Cloud Manager, data can be broken down to each salesperson: how much they sold, how much was received, which stores didn't receive, and who is responsible for those stores. By assigning each store to each salesperson, problems can be clearly identified and resolved promptly.
2. Data-driven customer management A distributor's sales and profits come from customers, and the core asset of a distributor is actually the number of customers. Brand owners value distributors based on the number of terminals they control, which for brand owners represents the value of product distribution. In the process of product entry, traditional distributors often differentiate customers by single-store sales, which is incorrect. Zhoupu Cloud Manager uses data to refine customer management, classifying customers by category sales and brand sales. Simply put, distributors can generate a two-dimensional table through the system, clearly showing which categories, brands, and even specifications sell well in each store. With these precise data analyses, such as the sales cycle of a brand in a store and the quantity sold in each cycle, salespeople can make precise visits and predict store demand. From a sales perspective, data can be used to find new sales opportunities.
3. Data-driven product structure Most distributors now deal in multiple brands and categories, with a large number of SKUs. However, many distributors are unclear about their product structure and often don't know where to start when adjusting. Adjusting the product structure should first be based on product classification, using data analysis to determine the sales proportion and profit proportion of each product line, and identify product categories that need adjustment. Zhoupu Cloud Manager has established data analysis from different dimensions such as product + business, product + customer, product + warehouse, and product + department. For example, some distributors rely purely on gross profit for products, so they can filter high-margin brands and then cultivate sales. By ranking data across different dimensions, distributors can clearly see problems in their product structure and make timely adjustments.
In conclusion: Digital distribution is definitely the mainstream direction for distributor development. To survive or grow larger in the future, distributors must leverage digital tools to optimize the entire process of product handling, product entry, and product recommendation.