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How to Solve the Problem of Unsold Products at the Terminal?
In FMCG sales, a common phenomenon exists: products often quickly gain distribution and shelf placement through promotions, but after a period, they become unsold and are delisted from key accounts (KA). Many manufacturers are puzzled and have to increase promotions or implement secondary distribution, but often with little effect.
Why do products fail to sell after being placed on shelves? Facing this dilemma, what should manufacturers, wholesalers, and terminal stores do? The author will dissect this predicament from a practical perspective, hoping to offer some insights to industry peers.
Understanding the Real Reasons for Unsold Products
When facing a situation where products aren't selling or are about to be delisted, the first reaction of sales personnel is: "Our product lacks competitiveness in this store; we need to apply for company support and run promotions." The last resort is to offer special prices or direct price cuts. However, the deep-rooted reasons for poor sales are often ignored.
1. Inadequate visual merchandising at the terminal. During a business trip to Nanjing in April, I found a beverage brand in a Suguo supermarket that was produced in August 2013. The display boxes had yellow stains. When asked, the salesperson said they had new stock, but the old ones were just for display. How would such product display and visual merchandising affect consumers? Would they buy? The consumer reaction is predictable.
2. Impact of competitor promotions. In August, several large supermarkets in Jinan saw a "war among dairy brands." Promotions were like a revolving door: Mengniu launched "buy one get two free" (buy a case, get two bottles), and Yili quickly followed with "buy one get four free," leaving Mengniu and Guangming unable to respond. Junyao, a regional brand, directly offered "buy one case, get one case free," which was effective. If you don't run promotions, your product will be delisted or left to die.
3. KA profit issues: Even if the product is on the shelf, it doesn't mean the retailer truly wants to sell it. When a new baijiu brand entered a large supermarket chain in Zhengzhou, the supermarket exploited the information asymmetry between merchants and consumers, "treating the product like a drug," pricing an 8-yuan bottle at 62 yuan. The result was poor sales. Therefore, controlling KA profit margins appropriately is crucial for product success.
4. Insufficient incentives for promotional staff. Even if the product is on the shelf, the commission rates for promotional staff vary by product.
Case: At a three-star hotel in Jinshui District, Zhengzhou, I intentionally asked the beverage promoter about ordering Songhe baijiu. They said, "Sorry, it's out of stock these days. Sir, you might prefer Gujing; it tastes better than Songhe!" I said I was from the Songhe factory and insisted on Songhe Liquid. Reluctantly, the promoter brought it. This phenomenon is common in alcohol terminal marketing. Why claim out of stock when it's clearly at the bar? Insufficient incentives for promoters—perhaps commissions or bottle-opening fees are lower than competitors—mean that even if the product is in the store and on the shelf, promoters are unwilling to push it, hindering the final step of the sale. This deserves corporate attention.
5. Impact of stockouts. "Stockouts are worse than tigers!" This is most felt by frontline marketing personnel! Stockouts lead to the following:
- Consumers may think the out-of-stock product isn't a bestseller. In supermarkets, we rarely see Coca-Cola or P&G products out of stock. Stockouts are irresponsible to consumers, causing disappointment and resentment. They also create the illusion that the company might be clearing inventory or discontinuing production.
- Stockouts affect the display and sales of KA store products. Even if inventory is empty, the store must allocate space for the product, impacting the display and sales of other products. Retailers will consider repositioning or delisting the product, let alone selling more.
Solutions to Turn Unsold Terminal Products into Bestsellers
Since the product is on the shelf, we've solved the shelf space problem. To achieve actual purchases, the key is to win consumers' mind space—to capture their hearts and minds. In fact, products aren't on the shelf; they're in consumers' minds. Here are my thoughts on driving consumer purchases:
1. Strengthen brand visual communication to solve the "willing to buy" problem. In an era of abundant goods and a buyer's market, consumer purchase desire is low. To stimulate desire and prompt purchases, enhancing visual communication is key. Besides POP displays and proper stack placement, three points need emphasis:
- Reasonable product placement. The basics: consumers should easily find the product, then enhance visual appeal. In June, I passed a supermarket in Wuhan and wanted to buy two cans of beer. After searching, I found them behind cosmetics. Would such placement lead to sales? How can a product sell if consumers can't find it?
- Product structure matching. In KA stores, consumers often want to buy a specific brand but find only one SKU, lacking choice, so they reluctantly give up. To stimulate purchases, product assortment must match consumer needs.
- Point-of-sale visual appeal. Too plain displays don't leave a lasting impression, similar to keeping goods in a warehouse. We should learn from Coca-Cola and Pepsi, making displays visually appealing to arouse purchase desire.
2. Concentrate resources on single-SKU promotions. Promotions have three goals: attack competitors, boost sales, and enhance brand loyalty. Our promotions must achieve all three. Any company can run a promotion that just increases sales. But attacking competitors shouldn't harm ourselves. This requires strategy: "concentrate resources, promote single SKUs." When Jinxing Beer entered the Nanjing terminal market, they needed to build brand reputation and quickly open the market. In March 2005, they used the Guowei brand as a competitive weapon, offering "buy two get one free," quickly breaking through competitors' defenses. After achieving their mission, Guowei gradually exited the market. Jinxing's operation in Nanjing is a classic example.
3. Control product price balance: Prices too high or too low affect brand communication and sales. Wahaha has mastered profit balance. They can distribute products to third- and fourth-tier markets while stabilizing profits at all levels, leaving Coca-Cola and Pepsi helpless. Their strict terminal management, inspection, and reward/punishment systems ensure price system stability, giving distributors reasonable and sustained profits.
4. Strengthen performance evaluation of promotional staff. "People move when interests drive them." Strengthening performance evaluation is key to boosting sales. Focus on:
- Set reasonable tasks for promoters.
- Increase assessment weight on profitable products.
- Most importantly, establish a "loyalty award" for promoters who don't push competitor products in KA stores, increasing their commissions and wages.
5. Strengthen process control of merchandising. Doing the process well is the basic guarantee for selling products. In sales, do the following:
- Strengthen communication with warehouse staff to prevent stockouts.
- Keep in touch with merchandisers to ensure proper product arrangement.
- Pay attention to timeliness and visual appeal in merchandising.
6. Achieve deep communication between brand and consumers. Without efficient communication, product benefits and brand culture can't occupy consumers' minds, purchase desire won't be fully stimulated, and consumers won't buy actively or repeatedly. Therefore, terminal promotions and brand displays must center on consumer needs, achieving humanized, personalized, and vivid terminal promotions and brand communication.
The problem of products not selling after being placed on shelves has always troubled marketing policy makers and executors, but few truly think deeply, and even fewer conduct in-depth market research. In fact, we discover real problems in the market. Any company can do promotions and price cuts, but the result is often "killing a thousand enemies at the cost of eight hundred." The correct approach is to find the root cause and treat the "disease" accordingly.
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