In recent years, during marketing digital transformation projects for brand owners, we have increasingly heard management teams from various brands express a common need: distributor inventory visualization. Why are more and more brand owners focusing on distributor inventory visualization? Why brand owners care about distributor inventory In the current economic environment, although the share of online channels is growing, offline channels remain the most important sales channel. For most companies, the offline channel is largely the distributor channel. Distributors, as financial and logistics platforms with local market capabilities, are indispensable partners for brand owners to expand their business. In a rapidly growing market with homogeneous consumer demand, brand owners adopting mass production, mass distribution, and mass sales did not cause problems. Brand owners did not need to worry much about distributor inventory because once products were sold to distributors, distributors always found ways to sell them to end consumers. However, when market growth slows or even enters a stock market, and consumers increasingly demand differentiated and customized products, continuing this mass production, mass distribution, and mass sales model may lead to distributor inventory buildup. Products cannot be sold to end consumers at a normal pace, leaving distributors unable to purchase more from brand owners, disrupting the brand owner's normal sales rhythm. For example, a home appliance company's sales in 2015 fell nearly 30% compared to 2014, with one of the most important reasons being excessive distributor inventory, leaving distributors unable to buy more products from the brand owner. But because the brand owner did not have visibility into distributor inventory, they did not sense the problem early and did not take preventive measures, leading to the eventual outbreak of the issue. Excessive distributor inventory not only affects the brand owner's normal sales rhythm but also severely impacts the survival of distributors. If the high inventory problem is not resolved promptly and effectively, distributors may go bankrupt or switch to competing brands. Therefore, distributor inventory visualization is crucial for brand owners. They hope to understand the turnover of distributor inventory and take necessary measures in advance to accelerate channel inventory turnover. How brand owners obtain distributor inventory Once we understand the necessity of obtaining distributor inventory, the next question is how brand owners can do so. Based on our years of experience serving brand owners, they use various methods to obtain distributor inventory. Below are some methods: 1. Requiring distributors to report inventory regularly; 2. Sales representatives collecting distributor inventory during visits; 3. Integrating distributor systems to obtain inventory; 4. For products requiring installation, requiring installation cards before settling installation fees, calculating distributor inventory via "purchases minus installations"; 5. Brand owners providing IT systems to distributors and requiring them to scan codes upon outbound shipment; etc. Among these methods, some are effective, some are not. For example: Requiring distributors to report inventory regularly: Distributors often do not cooperate. Even if they report, the data is delayed or processed before being given to the brand owner, not providing real data. Sales representatives collecting distributor inventory during visits: Distributors, for their own purposes, often do not show the real inventory to sales reps, and may even refuse to allow warehouse inspections. Some sales reps are also lazy about counting inventory at distributor warehouses and simply report the data provided by distributors. Integrating distributor systems: Not to mention the variety of distributor systems and integration difficulties, even if integrated, distributors may not provide real inventory data to the brand owner but rather provide processed data to the brand owner's system. Calculating distributor inventory via "purchases minus installations": This method works for products that require installation and where installation costs are covered by the brand owner. For example, air conditioners require installation, and if the installation fee is provided by the brand owner, only after the installation card is submitted to the brand owner does the brand owner settle the installation fee. Thus, distributor inventory can be calculated as "purchases minus installations." However, more products do not require installation, or installation costs are not covered by the brand owner, making this method inapplicable. Even for products like air conditioners where "purchases minus installations" can be used, there are delays and inaccuracies. Typically, the channel structure for air conditioner companies is: brand owner - distributor - sub-distributor - consumer. From the brand owner selling to the distributor to installation, it may take months or longer. During this period, the brand owner cannot determine whether the product is in the distributor's warehouse, the sub-distributor's warehouse, or already purchased by the consumer but not installed, or installed but not reported. This calculation method only roughly reflects channel inventory and does not provide real-time, accurate distributor inventory. Brand owners providing IT systems to distributors and requiring outbound scanning: This method works when the product's unit value is high, the brand owner has strong control over the channel, and the brand owner's products account for a high proportion of the distributor's purchases. Combined with policies such as rebates for outbound scanning, it can drive distributors to scan codes and obtain distributor inventory. For example, a well-known domestic air conditioner brand has strong control over its channel, and its distributors mostly represent only this brand or a few brands. The brand owner offers a rebate of 50-100 RMB per unit for outbound scanning. To earn the rebate, most distributors are willing to cooperate. However, for products with low unit value, or when the brand owner has weak channel control, or the brand owner's products account for a very low proportion of the distributor's purchases, even if the brand owner offers rebates, distributors may find the rebate insufficient to offset the effort of scanning. If other empowerment measures cannot attract distributors, they are often unwilling to cooperate. Therefore, obtaining distributor inventory is not only a technical implementation issue but, more importantly, a matter of restructuring the relationship and interests between brand owners and distributors. Why are distributors unwilling to provide inventory data to brand owners? There is only one fundamental reason: Distributors believe that providing inventory data to brand owners brings more harm than good. They spend significant manpower and resources to cooperate, yet gain little benefit. Or the benefits are very limited, and they even worry that the brand owner might use the data to take actions unfavorable to them, such as pushing more stock or restricting purchases of best-selling items. To solve this problem, it is necessary to address the alignment of responsibilities, rights, and interests for distributors. Brand owners need to consider that while distributors contribute, they should enjoy corresponding rights and benefits. To obtain inventory data, brand owners should provide rebate support. At the same time, after obtaining the data, brand owners should genuinely help distributors reduce inventory pressure and costs, or offer other empowerment measures in exchange. For example:

  1. A home appliance brand shifted from a channel stocking policy to a channel clearing policy, streamlining products, promoting bestsellers, and encouraging distributors to order in smaller quantities and more frequent batches, thereby improving distributor inventory turnover.
  2. Some brand owners provide warehousing and logistics services to distributors. After purchasing from the brand owner, the distributor owns the goods, but the brand owner's designated logistics provider manages them. When the distributor needs to ship, they send instructions, and the logistics provider executes outbound and delivery. Distributors can benefit from lower costs and better warehousing and distribution services than managing their own warehouses, allowing them to focus on market and customer operations. Meanwhile, the brand owner can obtain distributor inventory data through the logistics provider. Is distributor inventory visualization the only solution to accelerate inventory turnover? While obtaining distributor inventory is necessary, is it always feasible? We have worked with many low-value consumer goods companies, such as those selling cooking oil, condiments, beverages, and diapers. These companies also want to obtain distributor inventory. However, in reality, it is very difficult for them to obtain distributor inventory: On one hand, the unit value is low; on the other hand, their distributors represent many brands, and the share of a single brand in the distributor's purchases is very low, making it hard for distributors to cooperate with scanning or recording outbound orders. Even if the brand owner offers rebates, the rebates are not attractive due to low product value, and distributors are often unwilling to cooperate. Since the brand owner has no better empowerment measures to offer in exchange, the misalignment of responsibilities, rights, and interests leads to distributor non-cooperation. Let us revisit one of the main purposes of obtaining distributor inventory: accelerating channel inventory turnover. Is there an alternative solution that can accelerate channel inventory turnover even without obtaining distributor inventory? The answer is yes! For example: 1. A condiment company with a channel structure: brand owner - distributor - terminal - consumer. In the traditional model, the brand owner sells to distributors, distributors to terminals, and terminals to consumers. This is a typical push model. Since the brand owner has limited understanding of terminals and consumers, they may push the wrong products to unsuitable distributors, leading to distributor inventory buildup. After digital transformation, the brand owner uses big data analytics to directly promote products to suitable terminals, where terminal sell-through drives terminals to order from distributors, creating market pull. By combining push and pull, channel inventory turnover is accelerated. 2. A diaper company directly invests resources in terminals. Its channel structure is: brand owner - distributor - terminal stores, which are typically national large mother-and-baby chains, supermarkets, or local mother-and-baby chains and supermarkets. Its distributors carry many brands, and this brand's share in the distributor's purchases is generally no more than 5%-10%, making it very difficult to obtain distributor inventory. The brand owner invests resources in terminals, focusing on sales associate empowerment and membership operations. By improving terminal operational efficiency, they drive terminal sell-through, which in turn drives terminals to order from distributors, helping distributors accelerate inventory turnover. Finally, let us summarize: To accelerate channel inventory turnover, distributor inventory visualization is an effective solution. However, for many companies, distributor inventory visualization is difficult to achieve or comes at a high cost. To improve channel inventory turnover, there are many other approaches to consider; distributor inventory visualization is not the only option. We hope that when companies consider distributor inventory visualization, they first think not about how to implement it, but about the ultimate purpose of achieving it, and whether distributor inventory visualization is the only way to achieve that purpose. Are you "watching" me?