"Why do the products I take on that sell well not make money, and the ones that make money don't sell well?" "All the good products fall into the hands of competitors." "Where can I find products with potential?" "What should I sell in 2016?" "Why do I have more sales but less profit?" Well, I've compiled the recent concerns of our distributor friends. Today, let's discuss: How can distributors get products that are both easy to sell and profitable?

First, let's analyze what products sell well but don't make money.

  1. Hard commodities: When too many people sell popular commodities, prices bottom out. Earning one or two yuan per piece doesn't even cover freezing and handling costs. Some even sell at a loss, so naturally there's no profit.

  2. Continuous promotions: Especially in 2014, due to intense competition, heavy tasks, high inventory, overcapacity, and brutal industry reshuffling, manufacturers launched one promotion after another. Goods bought at one price would arrive at the warehouse, and before they even started selling, the manufacturer would announce a lower price. Prices kept diving, and if you had too much inventory, you were stuck with it. 80% of the inquiries we received were from those in the meatball and hot pot ingredients business; this was almost their common experience in 2014. Many who primarily dealt in low-priced meatballs, along with their upstream manufacturers, were on the brink of life and death during last year's brutal industry shakeout. Several who couldn't hold on claimed they had "died gloriously."

  3. Homogenization: The Chinese people's ability to imitate is unparalleled. Whenever a new product sells well in the market, within three months, the whole market is flooded with it. Manufacturers of all kinds, with varying quality and prices, take turns launching products, engaging in a price war that hasn't changed in twenty years. Once profits are wiped out, the product is killed.

  4. Cross-regional dumping: Some manufacturers turn a blind eye to malicious cross-regional dumping for short-term sales; a small number of regional managers even secretly support distributors in malicious dumping. Salespeople do this to get their task bonuses, and distributors do it to get year-end rebates, achieving a so-called "win-win." Such short-sighted behavior, like drinking poison to quench thirst, wins the present but loses the future.

  5. E-commerce impact: Manufacturers' direct online sales or special prices for the same products on major e-commerce platforms will become killers of offline profits. This impact will become even more pronounced in the next decade.

  6. Lifecycle: Products at the end of their lifecycle are declining, getting worse year by year.

Next, what kind of products don't make money or even lose money?

  1. Mismatched channels: Most products have specific channel attributes and target consumer groups. If you take on a product that doesn't match your channels, it's hard to promote, and if you don't promote it, it rots in the warehouse. Taking on mismatched products wastes both your time and the manufacturer's, and if they don't sell well, returns and exchanges cause losses for both parties.

  2. Taking on "three-no" products: Products without QS certification are risky. If law enforcement seizes them, you suffer significant losses in interests, reputation, and prestige.

  3. Poor product promotion: You take on a product but don't have the energy to distribute it or have salespeople promote it. Especially many traditional large distributors in the market, who have accumulated over a decade, have all well-known brands under their belt. Despite sales exceeding 100 million or even several hundred million, they still maintain traditional "sit-down" sales models: waiting for customers to come, phone sales, and relying on manufacturer salespeople for distribution. Many potential products end up in these distributors' hands and either don't sell well or die, and they don't even know why. I've seen such a traditional big distributor at year-end clearance, with mountains of expired goods piled up. They couldn't even give them away for free; some had to pay for landfill disposal. It was heartbreaking to see the losses. The era when new products could sell themselves just by being placed in a freezer is basically over. Such big distributors are only suitable for selling mature products that don't need promotion; with capital and distribution, they can do it.

  4. Entering from another industry: Among all the inquiries, nearly 5% are outsiders entering the frozen food industry. Their reasons are varied: seeing others get rich in frozen food; having nothing to do and casually trying frozen food; partners who knew the business splitting up... A large portion of these new bosses from other industries, after spending six or seven figures on tuition, are lost. If they continue, they keep losing money; if they stop, their initial investment is wasted. Just thinking about it is painful.

So, what kind of products can bring you both sales and profit growth?

Products that sell well and make money come from the following:

  1. Products that align with future consumption trends: Safety, health, simplicity, convenience, speed, and standardization will be future consumption trends. When considering a product, first ask three questions: Can this product make money? Can it make more money? Can it make money in the long run? Only products that align with future consumption trends have the potential to answer yes to all three.

China introduces new food safety regulations almost every year, and consumers have zero tolerance for food safety issues. This means any food company that violates national food safety laws will be quickly eliminated.

  1. Products that fit your company's plan: What is your plan for your company?
  • To be first in regional scale or first in category agency?
  • To be in the top three in the market, or just to be comfortably well-off?
  • To stay in one corner, or to expand into chains?
  • To broaden horizontally, or to extend upstream to production or downstream to terminals? Your vision, planning, and positioning for the company determine its direction and the standards for the products you take on. Products that fit your overall plan can better help you build core competitiveness.

  1. Channel matching: Channel matching is the primary condition for a good fit. Products that don't match your channels will either rot in the warehouse or be very hard to sell, unless you plan to enter new channels or strengthen weak channels, and the product has the role of pioneering new territory. Otherwise, you may end up losing more than you gain, or it might just be small-scale selling without volume.

  2. Supply advantages: Especially for bulk frozen food raw materials, this is particularly important. Supply advantages, under the same quality, refer to price advantages and sufficient supply.

  3. Featured products: Products with obvious regional geographical indications, superior quality, creativity, exclusive market presence, first-to-market, few similar competitors, not yet touched by industry giants, or with high technical barriers. Supply advantages and featured products are two important sources of higher sales profits.

  4. Manufacturer guarantees: The manufacturer has a strict regional agency protection system, a stable and reasonably allocated price system, is responsible, and has service levels that can immediately handle issues like cross-regional dumping and price chaos.

  5. Products in the rising phase of their lifecycle.

  6. Products that meet mass consumption: Mass consumption is the mainstream. Although high-end products have high profits, the market outlook for now and the next few years is generally not optimistic. There is still a small demand from wealthy consumers, but unless you already have high-end customer resources, it's best not to touch them; they look good but don't taste good. Products that ordinary people like and can afford are the mainstream.

  7. Manufacturer promotion support: A distributor's strong distribution capability, combined with timely market promotion from the manufacturer, can often quickly open up the market for a new product and seize the first-mover advantage. If either is lacking, the effect will be greatly reduced (there are manufacturers that can do everything from sales to promotion well, but they are few).

  8. Keep a low profile: If it sells well, it dies fast. If you can't wait to show off a new product that sells well on your social media, it's easy to arouse "envy, jealousy, and hatred" from competitors, especially neighbors. Then the six issues analyzed above—imitation, cross-regional dumping, price cutting—will come one after another, and your good times will end. If it sells well and makes money, keep a low profile, count your money at home, and laugh secretly. There are many low-key, hardworking distributors in the market who make a fortune without many people knowing.

  9. Good at promoting new products: Whether relying on yourself or leveraging others, distributors who are good at selling and promoting new products can always stay on a track of sustainable and healthy development, achieving dual growth in sales and profit.

-END-

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