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Case: Xiao Xu is a regional distributor for a well-known domestic FMCG company. Recently, he has been troubled because the contract renewed at the beginning of the year clearly stipulates that this year's sales target has increased significantly compared to last year—quite a substantial increase. Meanwhile, there are no signs of increased market expense investment; in fact, there is a trend toward reduction. On one hand, the manufacturer demands higher sales; on the other hand, it clearly states that market expenses will be used more precisely. This has left Xiao Xu, who is accustomed to extensive development, feeling anxious. Adding to this, industry competition has intensified this year, and sales have recently encountered considerable resistance. When the manufacturer's sales representative, Xiao Wang, came to discuss the latest promotional policies, a familiar scene unfolded: “The target is too high, it's hard to do, sales rebates are hard to get, policy support is too weak...” the distributor complained, while Xiao Wang remained silent.
This is a common frustration for many distributors facing annual sales growth demands from manufacturers. The reasons are mainly a few: First, they completely rely on the manufacturer's market expenses to stimulate sales, but the question is how long such a stimulant can last. Second, they hope the manufacturer will not increase the sales target and will provide more shipping policy support. However, the manufacturer is also a business entity; cooperation should be win-win. Distributors cannot enrich themselves by squeezing the manufacturer's profits; they should work together with the manufacturer to earn from the market.
To cope with the manufacturer's annually increasing sales targets, distributors must cultivate solid internal capabilities to maintain a favorable position. As the saying goes, “Development is the absolute principle.” As the manufacturer grows and matures in the market, distributors must also make corresponding adjustments to adapt and grow with the brand. When traditional channel sales hit the ceiling, distributors should promptly expand sales channels, utilizing all possible channels to move products, such as developing special channels and exploring hidden channels to build self-operated channels, rather than relying entirely on the manufacturer's sales staff. Building self-operated channels is particularly important for distributors to mitigate business risks, avoiding situations like the manufacturer withdrawing support or reducing expenses, or sales encountering obstacles. Self-operated channels themselves are an advantage for distributors that the manufacturer cannot replace, possessing all the characteristics of favorable timing, location, and people. Self-operated channels also benefit the manufacturer; wise manufacturers will highly value the structure of a distributor's self-operated channels.
While striving to build self-operated channels, distributors should also work on developing their own distribution and delivery networks. As the saying goes, “One trick is enough to make a living.” With a strong distribution network, no manufacturer will underestimate you. For example, a certain trading company has nearly 20,000 sales outlets across Central China, northern Henan, southern Henan, and Wuhan, enabling any manufacturer's products to be delivered and shelved within 24 hours. Such a distributor would have a greater advantage in cooperation with manufacturers. In other words, wouldn't they be able to negotiate for more?
Once these two key aspects are implemented, distributors will have basically solved the sales and expense problems. The remaining step is the cooperation between the manufacturer and distributor in market development: terminal layout, visual merchandising, display, and sales rotation... until the next round of orders. Thus, the market enters a new cycle.
Finally, I forgot to mention that after a while, the manufacturer will come with new requirements for negotiation, and the distributor will feel a bit troubled again... But don't forget, “Development is the absolute principle.”
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