---
title: "How to Strengthen Deep Distribution to Small Outlets"
description: "This article discusses strategies for FMCG companies, particularly in the Chinese baijiu market, to effectively cover, manage, and serve numerous small retail terminals. It proposes two main approaches: supporting second-tier distributors to conduct deep distribution, and adopting a multi-distributor channel model in the same regional market to enhance terminal coverage and management."
author: "朱志明"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2014-11-14"
language: "en"
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# How to Strengthen Deep Distribution to Small Outlets

> This article discusses strategies for FMCG companies, particularly in the Chinese baijiu market, to effectively cover, manage, and serve numerous small retail terminals. It proposes two main approaches: supporting second-tier distributors to conduct deep distribution, and adopting a multi-distributor channel model in the same regional market to enhance terminal coverage and management.

**Friendly reminder: Click the blue words “快消品经销商专业咨询” above to learn more about marketing and distributor internal management.**

Everyone has been talking about flattening and refinement, but how to actually do it remains superficial. In the Chinese baijiu market, there are numerous terminals, especially a large number of small ones that are scattered and widespread, making it difficult for companies to effectively cover, control, manage, and serve them.

If a company directly establishes a strong deep distribution team to effectively cover all small terminals, it requires long-term, large-scale investment of capital and manpower, resulting in high costs. Most companies, constrained by limited resources, feel powerless to comprehensively cover and effectively manage small terminals, and most products sell naturally in these outlets.

How can companies effectively cover, manage, and serve small terminals? How can marketing networks reach every small shop? How can they gain a sales advantage in small shops at a lower cost? These are headaches for most companies.

**1. Support and develop second-tier distributors to conduct deep distribution to small terminals**

Support and bind second-tier distributors, then establish a service platform for small terminals through them, to strengthen control and service over small retail terminals. Forming a second-tier distributor alliance can bind them, thereby controlling numerous small terminals, which not only controls the market and combats competing brands but also achieves sales growth.

Without strong service-oriented second-tier distributors following up, there will be a disconnect in management between the company and small terminals, or between distributors and small terminals. Loose management of small terminals can easily lead to price chaos and poor service, giving competitors an opportunity to enter the market.

Second-tier distributors differ from distributors. Generally, there is a cooperation agreement between distributors and the company, making them a community of interests in a sense. However, second-tier distributors are often independent retailers without long-term stable relationships with the company as a basis for cooperation.

Incorporating these fragmented second-tier distributors into the company's sales network management scope gives them a sense of belonging. Through agreements, constraints, and benefit sharing, an organized and planned sales alliance can initially be formed, making both parties a community of interests in a sense.

**2. Multi-distributor channel model in the same regional market**

Adopting an intensive distribution channel model with multiple distributors in the same regional market builds a vast and dense sales network system. Leveraging the channel capabilities of multiple distributors allows control over more small terminals and more refined service to small retail terminals.

Many companies in some regional markets choose only one large customer as a distributor. The exclusive general distribution channel model has significant limitations, as a single general distributor's coverage and management capabilities are limited, making it impossible to effectively cover and intensively cultivate numerous small terminals.

The exclusive distribution channel model obviously cannot simultaneously cover and manage numerous small terminals. This model can no longer meet the increasingly fierce market competition; if not reformed, companies may be eliminated from the market.

No matter how strong an exclusive distributor is, its role in the entire market is very limited, often unable to manage the vast number of terminals in the entire regional market. Thus, this channel model has significant limitations, specifically:

First, the sales network chain is too long. Even the strongest distributor has limited energy and cannot directly handle terminals, relying mainly on secondary or even tertiary networks to reach terminals. Many distributors lack the ability to manage county/town/township markets and must set up second-tier distributors to cover the market. This model easily leads to an overly long network chain, poor logistics, slow response, and difficulty in intensive market cultivation.

Second, the sales network width is limited. Due to limited capital and management capabilities, distributors can only cover some second-tier distributors and terminals, and the number of retail outlets controlled by a small number of second-tier distributors is limited, leaving more terminal outlets uncovered. Narrow network width inevitably loses a considerable portion of sales network members.

**Third, the sales network system has poor stability.**

Since distributors find it hard to invest enough energy in network management, the relationship between second-tier distributors and distributors is often loose, with low loyalty and high volatility. Once a competitor with obvious advantages appears, second-tier distributors can easily switch, making this channel network model less stable.

Currently, many companies are implementing channel flattening sales models in regional markets, adopting a multi-distributor system in the same regional market to enhance deep distribution capabilities to terminals.

1. Adopt channel segmentation, selecting different distributors for different channels.

Specialization of distributor channels allows them to concentrate their advantageous resources, have better customer relationships, be familiar with market operation processes, and intensively cultivate specific channels, improving their ability to serve terminal outlets. Each product may have several sales channels, and different channels target different consumer groups. Therefore, channels can be segmented, and different distributors can be selected for different channels, such as those for supermarket channels, catering channels, and special channels.

2. Adopt product segmentation, selecting different distributors for different products.

In the same regional market, choose different distributors based on product categories, implementing exclusive distribution by product variety. This is suitable for companies with many product varieties.

3. Reduce distribution areas and implement small-area agency systems.

The primary network members change from one to multiple, with each small area selecting one general distributor. This can be one distributor per county or even per town, with the company supplying directly. The distributor is responsible for product delivery and terminal services in that area, greatly enhancing deep distribution capabilities to small terminals. By compressing distributors' sales areas, companies hope distributors will shift from distributing in a large regional market to solidifying the market.

This reduction in sales areas will also force distributors to change traditional extensive management methods and shift to refined management and service of limited regional markets.

This encourages distributors to strive for intensive distribution, strengthen terminal management, and compete for terminal outlets. At the same time, it greatly expands network coverage, enhances the company's control over terminal markets, better protects the interests of second-tier distributors and terminal members, and boosts confidence in market development.

Having multiple primary distributors in the same regional market can easily lead to channel conflicts and cross-regional selling (dumping), making channel value unstable. So how can the multi-distributor channel model be effectively managed?

On one hand, each primary distributor should be assigned a clear sales area. For example, some companies explicitly stipulate which second-tier distributors and retail terminals each primary distributor manages, prohibiting cross-regional sales, with severe penalties for violations.

On the other hand, scientific pricing policies should be formulated, with personnel dispatched to patrol the market and strictly enforce them, preventing cross-regional selling due to pricing factors.

Companies should also strengthen communication and cooperation among primary distributors, frequently organizing meetings for regional market primary distributors to help them realize they are all customers of the same company, sharing prosperity and adversity, and that maintaining the market well is essential for lasting profitability.

Companies should also formulate detailed and strict market management systems and penalty regulations. Regional market managers and sales personnel must not only seriously implement them, but marketing department market managers should also regularly go deep into the market to comprehensively monitor frontline conditions, promptly identify problems, and handle them fairly. On one hand, this leaves no loopholes for distributors to violate regulations; on the other hand, it helps distributors develop a strong sense of overall situation and long-term vision, self-discipline, and honest operation.

Small terminals are still indispensable for baijiu companies. Companies should regard small terminals as important channels for further increasing sales and tapping market potential.

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