On the fourth day of the Chinese New Year, I saw this message in a distributor group: "Distributor friends, how should we deal with the upcoming return wave? It could be a terrifying amount. What should we do?" Indeed, the 2020 Spring Festival was affected by the novel coronavirus. In the days before the festival, in response to the national call, families reduced gatherings and visits to relatives and friends. On January 23, Wuhan was officially put under lockdown, followed by several key prefecture-level cities in Hubei Province. Then the whole country entered a state of alert, with people voluntarily staying indoors as much as possible. First, let's be clear: this is the right thing to do; life is above all. Everyone knows that the Spring Festival travel rush is the largest human migration. The Spring Festival is the most important festival for Chinese people, and everyone overcomes great difficulties to return home for the New Year. Before this, products related to Spring Festival visits and gift exchanges were already being prepared by brands and distributors before the twelfth lunar month. Brands ensured production capacity, distributors ensured inventory, and they began collecting payments and pushing inventory to channel partners. Everything was ready, but the unexpected event disrupted the routine. Take the distributors I know who mainly handle products like Six Walnuts and Wanglaoji: their Spring Festival sales can account for more than 60% of annual sales. To win this Spring Festival battle, some distributors even borrowed money to ship goods and sold on credit to stock stores. Now they are in a very passive situation. Brands require payment before shipment, while some quality terminal stores pay after delivery. The unexpected event has caused gift products to stagnate. After the Spring Festival, there will be a massive return wave, and distributors are caught in the middle like a pancake. How can they minimize losses? Let's discuss this. -01- Don't rely on luck, don't harbor illusions, face the problem directly The image above is a joke from netizens, now widely shared in groups. It's funny but also tells us a truth: the current epidemic situation won't be resolved in a few days. The Lantern Festival on the 15th day of the first lunar month marks the traditional end of the New Year, after which migrant workers will gradually return to work. This means that a large number of people with spending power and plans to spend will leave home, so the purchasing power of those remaining (those staying in their hometowns, seeing each other often, and not in a hurry to visit) will be discounted. So now, for distributors, it's time to think of solutions. Gift products have a shelf life. Those who act first can escape, while those who delay will be trapped. This principle must be clear. -02- Find ways to rely on brand companies, but don't just depend on them The situation in 2020 is unprecedented in at least 30 years. Many brand companies are facing this for the first time during the Spring Festival sales period, with no historical experience to draw on and no good countermeasures yet. So distributors cannot bet everything on brand companies. However, brand companies must have reserved market promotion budgets for the Spring Festival sales period. Although not much, if focused, they can solve the urgent needs of some customers. After all, the early bird catches the worm. It depends on how you communicate (suggestion: apply with a feasible product movement plan). That's why it's called finding ways to rely on brand companies. As for how to apply for funds from regional managers and how to use them once approved, there are various methods, so I won't go into detail. -03- Self-reliance is always the key focus 1. Follow up with key customers Market sales follow the 80/20 rule. Check the historical distribution data before the Spring Festival, list the top 20% key customers by volume in the region. If conditions allow, the distributor owner should visit them by car; if not, call them personally to understand the following: (1) The inventory quantity and delivery date of key customers, to estimate product movement and whether the remaining inventory can be sold out within the first month. What are the store owners' thoughts? Do they have confidence to clear the products? (2) Seek win-win solutions, identify customers with faster movement, understand the reasons, and see if it can be replicated quickly. For example: a friend runs a small supermarket in a county town. Before the New Year, he stocked over 100 boxes of eight-treasure porridge, over 200 boxes of walnut milk, and other New Year goods, all sitting in the store. He came up with an idea: some mid-to-high-end residential communities are now closed, and entering and exiting requires checks, which is inconvenient. So he used his connections with the property management to set up a special sale at the community entrance. With reasonable profit sharing, the property company assisted residents in purchasing, and also notified in the resident group: "To meet residents' needs and reduce outings, we have some eight-treasure porridge, walnut milk, etc., at the security booth. They are fresh and priced below market. Please come and buy." Soon all products were sold out. (3) Act as a bridge for terminal stores. As the saying goes, competitors are enemies. Generally, terminal stores don't communicate much about a specific product. Some customers have less stock, some have more. As the upstream distributor, you can balance market inventory among customers, offer incentives, and supervise inventory transfer. This can be done via phone guidance and self-pickup between store owners. (4) For some fortress customers confident in clearing inventory, provide funds and get a commitment via WeChat that they will handle any unsold products themselves. Distributors should calculate: the cost of taking products back to the warehouse and reselling them is significant. Invest that cost upfront to avoid future problems. 2. Recall products as soon as possible and handle centrally After the above methods, if many customers still cannot move products, recall them as soon as possible. Since it's already come to this, earlier is better than later (advice to distributor friends: the market is yours; avoid losses from unsold products and damage to customer relationships). Estimate the movement of each terminal store during the first month, and take back excess products to the warehouse in one go. Then sell them in fresh food areas of supermarkets, vegetable markets, and other places related to people's livelihoods. These places never lack consumers. The image below shows the foot traffic in a supermarket's vegetable section recently. With improved living standards, many families no longer stock up on fresh products; they buy as they eat. Every market has such distribution centers. Think of ways; where there are people, there is a market and sales. 3. Street clearance sales to attract group buying
The image above is a screenshot from my WeChat Moments. Many distributors have their own storefronts. It's suggested to use extraordinary measures in extraordinary times: set up a ground display on the street outside the store (though there are few people, there are some). This builds the brand and generates sales. With luck, you might get some group buying orders (during the epidemic, there is a demand for consolation gifts; it's suggested to sell at zero profit).
4. Break bulk and bundle sales Many New Year products come in bulk boxes from factories, and distributors pack them into gift boxes. Now it's time to rework: as long as gift boxes are stored properly, they can be used next year. Break the boxes and sell bottles individually, put them on shelves, make displays, bundle two or more for special prices, or bundle with fast-moving products to change sales thinking and seek new opportunities. 5. Online sales and community group buying Distributors with the means can consider this. Good communities have pickup points like Hive Box or Cainiao stations, which reduce person-to-person contact while facilitating transactions. 6. Use relationships to implement group buying Transform New Year gifts into welfare items. China values human touch. With the establishment of trade unions and other organizations, awareness of labor protection and welfare is growing. The Lantern Festival is coming. Special work units like medical workers, environmental workers, and transportation workers will give frontline staff some consolation gifts. At this time, organize relationships—not just your own network, but also the networks of your downstream fortress customers. As long as profit distribution is reasonable, New Year goods can directly enter consumption channels, making it the most convenient way to clear inventory. 7. Cross-industry combination and joint promotions That is, cooperate with non-competing companies to use New Year goods as their "promotional items" on a win-win basis, ultimately clearing inventory. An example from my side: every first month, our community property company runs a promotion: pay the full year's property fee within a specified time and get a barrel of salad oil, a carton of milk, a box of pastries, etc. 8. Annual planning and product exchange Many barter companies use this approach: for example, exchange New Year goods for advertising fees with media; exchange with other companies' products for welfare distribution; exchange with private gas stations for fuel cards; or even use them to offset corporate debts. This is an effective way to handle New Year inventory. -04- Prepare for the best, plan for the worst Distributor friends, this Spring Festival is very special, and many things are unpredictable. Although the government is actively responding to the disaster and we believe it will pass soon, the Spring Festival waits for no one, and the "New Year atmosphere" is already fading. Prepare for the best: no single method can clear inventory at once, so use multiple approaches. Plan for the worst: if inventory cannot be cleared and piles up in the warehouse, how to ensure cash flow remains normal and business after the festival is not affected? Plan early to avoid being caught off guard. Final words: The above sharing is not comprehensive. I hope everyone can exchange ideas and leave comments. I believe that through our joint efforts, we will find more ways to help all distributors start lightly after the 2020 Spring Festival. Extended reading:
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