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Currently, most distributors in China with sales reaching tens of millions have years of business experience and capital accumulation, but their sales have stopped growing in the past two years. I have already analyzed too much about how distributors can improve performance through optimized management in previous articles, so I won't repeat that today. Today, let's talk with distributor friends: How can we reform and develop while ensuring our existing business model is not significantly impacted?
First, let's analyze the market environment that food and beverage distributors currently face:
- Manufacturers are increasingly intervening in distributor management, and market management is sinking: requirements for outlets, vehicles, services, etc., are increasing.
- In the past two years, the brands they represent have seen old products decline and new products underperform.
- Market competition is intensifying, and profit margins have noticeably declined in the past two years.
- Consumption is upgrading, making it increasingly difficult to earn small profits by selling counterfeit or low-quality products.
- The Internet's impact on their business will grow, and this trend is widely recognized as irreversible.
- Labor costs will continue to rise, and young people are difficult to manage.
The above issues are likely the current situation every distributor faces. If you plan to continue for a few more years and then switch industries, maintaining the status quo is fine. But if you want to develop, you definitely cannot rely on the original model to operate.
Additionally, everyone is talking about JD.com and Alibaba entering the FMCG field, bypassing distributors and second-tier wholesalers to revolutionize them. Here, I must first state a viewpoint: In the face of rapid integration of the Internet with traditional industries, consumption upgrades, rapid rise in human capital, and other drastic market and industry changes, no one is actually stealing your business; it's just that you are not adapting to the new era.
Distributors who overly rely on star products or earn small profits through high volume and low margins will definitely not be able to adapt to market competition in the coming years. The new competitive environment has placed new demands on distributor operations. Distributors must re-examine their business models and find the new model best suited for their own growth.
Distributors can transform according to their actual problems, resources, current development needs, and pain points, shifting to the following different marketing models:
Problem 1: Small-scale business, high labor costs, difficult to manage and retain people.
Response: Vehicle contracting, household responsibility system, breaking up the whole into parts, turning workers into partners, and stimulating individual potential.
Detailed explanation: First, the distributor's own capabilities and management level are limited, and they no longer want to expand to a larger scale or higher direction. Such distributors can adopt a contracting system:
The contracting system involves contracting vehicle zones to employees. The distributor is only responsible for warehousing and vehicle insurance, or part of the fuel costs. By stimulating employee enthusiasm through high income, small workers transform from being employees to entrepreneurs, shifting from an employment relationship to a partnership relationship.
Model 1: Small contract: base salary + per-product commission + self-paid fuel + sales reward Model 2: Medium contract: no base salary + per-product commission + self-paid fuel + sales rebate Model 3: Large contract: no base salary + per-product commission + self-provided vehicle + sales rebate
Note: The premise of contracting is that the distributor must have a certain level of market control, i.e., standardized management of outlet sales data, sales frequency, product sales structure, and business visit processes. Otherwise, a series of problems will arise after contracting.
Problem 2: Poor management, weak growth, management bottlenecks, and children unwilling to take over.
Response: Form a large company by grouping multiple companies with good relationships and similar resource channels to enhance market competitiveness and risk resistance, and introduce professional managers.
Detailed explanation: Distributors have accumulated some business experience and have the desire to develop, but their own professional level is insufficient, management has become the biggest shortcoming, children are unwilling to take over, and introducing external talent is costly. If there are distributors with similar willingness to cooperate, they can adopt the model of forming a large company through group operation, integrating resources, sharing costs, and improving management efficiency. This cooperation can take the following forms:
Model 1: Same warehouse, but different teams, logistics, and finance. Model 2: Same logistics, but different teams and finance. Model 3: Same warehouse, finance, and logistics, but different teams. Model 4: Same warehouse, finance, logistics, and teams.
Problem 3: Corporate operation, low per capita efficiency, high operating costs
Response: Change the operating model, separate people from vehicles, centralize purchasing and delivery, and evolve into professional marketing and logistics companies.
Detailed explanation: Low per capita efficiency, low output from vehicle sales, and high operating costs are inevitable results at a certain stage of a distributor's development. By dividing work, separating people from vehicles, centralizing order taking and delivery, logistics waste is reduced, and personnel efficiency is improved.
Model 1: Zone-based order taking, centralized delivery Model 2: Centralized zone order taking, centralized zone delivery Model 3: Block-based order taking, outsourced delivery Model 4: Block-based responsibility partners, outsourced delivery
Regardless of which centralized order-taking model mentioned above, without scientific route planning, the efficiency of centralized order taking and delivery cannot be maximized. Therefore, before doing this, distributors must scientifically plan and divide their route management. Generally, route visit division is divided into four stages:
Stage 1: Divide zones, open outlets Stage 2: Establish routes, regular visits Stage 3: According to routes, centralized visits in areas Stage 4: Separate people from vehicles; people visit centrally according to routes, and vehicles deliver centrally.
Problem: The Internet is beginning to intervene in local markets and business, and competitors have already started to lay out plans
Response: Form groups to build B2B platforms, transform business models, operate on platforms, and gradually move towards the Internet.
Detailed explanation: To build a B-end platform, distributors must first understand: "E-commerce is not just a sales channel for products, but also another way of thinking." Because e-commerce sales channels and traditional channels are intertwined, e-commerce has no territory; it does not fight for one city or one pool, but aims to meet customer needs more efficiently and conveniently. Competition for online products will only be more intense than offline competition. Compared to traditional sales channels, e-commerce is a higher-dimensional marketing.
Method 1: Find a suitable platform, take a stake, and jointly promote the development of the e-commerce platform locally. Method 2: Build your own platform, let other distributors co-invest, and adopt a centralized delivery model to improve efficiency. Method 3: Only sell on the platform to expand retail outlet channels.
The impact of the Internet on the supply and marketing field is absolutely not just about selling goods online; it is fundamental, conceptual, and systematic. From products, technology, communication, talent, capital, to organizational systems, all are fundamental changes. In the next five years, it is likely that a large portion of distributors will not be able to cross this major transformation. This will be a sweeping, forced elimination game. However, the Internet also presents a major opportunity for traditional distributors to be reborn. Whether distributors will join the new mainstream of the market or be gradually marginalized depends entirely on what you do now.
The suggestions above are all adjustments to help distributors adapt to current and future development from the distributor's perspective. However, regardless of the direction, distributors must solve several problems:
- The supporting information system must be improved.
- Market management must be further standardized.
- Sales staff should be relatively stable.
- All company information must be digitized.
Transform distributors from selling-oriented to service-oriented. The premise for transformation is that distributors must first have corresponding supporting infrastructure, rules and regulations, management processes, financial systems, sales management software, etc. Warehouse managers, financial personnel, managers, etc., all need to be gradually improved as the company formalizes, and these need to be improved step by step, filling in as the company develops.
What to do is not important for distributors; what is important is that distributors must take action rather than wait for death.
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