△2018 China (Luohe) Food Marketing Innovation Summit and the 3rd Precision Matchmaking Meeting for Leisure Food Manufacturers and Distributors Free registration is in full swing; scan the QR code for details. Everyone knows that “a rabbit doesn’t eat the grass near its own burrow,” but there is a second half: “a rabbit always returns by the same path.” From this perspective, wild rabbits die from experience. Pressure from manufacturers: “Half joy, half sorrow” Sales target pressure. Manufacturers always set targets for distributors. Let me give an example: one company requires its distributors to achieve an annual sales growth rate of no less than 30%; if they fall below, the company drops them. Many distributors are unwilling, but they have to comply because that’s how strong companies operate. Capital pressure. The biggest issue now is that manufacturers and distributors transact in cash, while distributors and terminal stores operate on credit, and wholesalers and secondary distributors also use credit. This creates trouble; many distributors are essentially “loan sharks,” nothing more. Burning bridges. What does “burning bridges” mean? After a distributor has developed the market for a manufacturer, the manufacturer’s sales staff say, “We’re not playing with you anymore,” because they’ve found someone better. This is infuriating. Such manufacturers are abundant in our industry, so you must be on guard. Channel sinking. Especially for wholesalers, you’ll find pressure from channel sinking and internal management—secondary distributors rebelling. What does secondary distributor rebellion mean? When we initially supported them, they had few people, and we hoped to help them grow. But once they become powerful, they start to “declare independence” and stop working with you, right? You can’t stop it! I recall a poem by the famous poet Wang Guozhen called “A Mother’s Heart,” which describes a mother’s feelings toward her daughter. It also fits the relationship between wholesalers and their secondary distributors: “Half joy, half sorrow; the hardest to express is a mother’s love; hoping the fruit will ripen, but once ripe, fearing it will fall.” As you can see, many distributors have similar feelings: we hope our secondary distributors will “grow up,” but once they do, we fear they’ll “marry someone else.” There’s no way around it. Note that channel sinking is a trend that no one can stop. What should you do? You should align with the trend, not resist it. Pressure from competitors: “Jump into the water and nearly drown” Promotional pressure. If you don’t run promotions, competitors will promote to your terminal stores, so you have no choice but to follow suit, or you might lose customers. Promotions targeting terminals are endless: travel, meeting promotions, product discounts. Travel goes from domestic to international, from Asia to Europe. Credit pressure. If you don’t offer credit to terminals, competitors will. Once competitors offer credit, you have to follow. So everyone “jumps into the water” and “nearly drowns,” or at least gets choked. Service capability. When our downstream becomes stronger and more specialized, our original service capabilities start to fall short. We can’t meet the higher demands from our downstream’s growth; we can’t cope. Product pressure. What does product pressure lead to? You’ll find that the better a product sells and the longer it’s sold, the more profits decline. If you don’t sell it, customers demand it; if you do sell it, there’s no profit. Under standardized trends, product pressure has two aspects: first, selling standardized products means transparent pricing and low profits; second, non-standardized products, so-called “special-effect drugs,” offer high profits but carry high risks. Pressure from terminals: “This year’s credit sales, but the terminal customers are gone” Service failure. Our simple services used to suffice, but now we find our services can no longer meet terminal needs. Terminal rebellion. Slightly “decent” supermarkets want to bypass distributors and deal directly with manufacturers. Capital risk. Credit sales are rampant, and if not managed well, funds may never be recovered. Also, profit squeeze. No need to elaborate. Pressure from within: “Ineffective effort or passive work” Distributor team building. Many distributors lack personnel and teams. Some want to hire but can’t find people; others don’t dare to hire. Occasionally, a few are trained, but they end up starting their own businesses. Profit distribution. I often say: training can hardly change attitudes. The effect of training on attitude change lasts no more than three days. Team change comes from profit distribution, not training. When profit distribution changes, employee attitudes change. Due to unreasonable profit distribution mechanisms, some employees put in effort without results, or simply slack off. Organizational efficiency. Organizational efficiency is achieved through division of labor and collaboration. Distributors, especially wholesalers, need to improve team efficiency through organizational division. No one is a jack-of-all-trades. Social progress and division of labor aim to let everyone do what they’re good at and leave the rest to others. That’s organizational division. People are driven by self-interest; you’ll find they get better at what they can do, and give up on what they can’t. Trying to make everyone a generalist is doomed to fail. When someone becomes a generalist, they’ll definitely change jobs or start their own business. Keep this in mind. Operating costs. Back in the day, hiring a salesperson ten years ago for a salary of over 1,000 yuan was considered high. Now, a decent salesperson who knows the market and sales won’t come for less than 70,000–80,000 yuan a year. If you pay less, you’ll likely get someone incompetent. In short, operating costs keep rising. Self-imposed obstacles: “Wild rabbits die from experience” Empiricism. I often tell the story of “trapping wild rabbits.” Wild rabbits don’t dig burrows; domestic rabbits do. So wild rabbits find a nest, usually under bushes or in hidden places, which isn’t easy. To keep predators from finding their nest, wild rabbits travel an average of two to three kilometers or more to eat grass. Their habit is to sleep during the day and go out at night to feed, hoping to avoid predators. But a key trait is that they always return to the nest by the same path they came. Clever humans discovered this trait. Especially in winter, after a light snow, we see a single set of tracks. If the rabbit hasn’t returned yet, we set a snare on the path, and the rabbit gets caught. That’s the basic principle of trapping wild rabbits. Everyone knows “a rabbit doesn’t eat the grass near its own burrow,” but there’s a second half: “a rabbit always returns by the same path.” From this perspective, wild rabbits die from experience. When they go out, the path is safe, and they think it’s safe to return the same way. But by the time they return, the environment has changed—humans have set a snare on the path, and the rabbit doesn’t know, so it’s doomed. Outdated knowledge. With the rapid development of the internet, our old knowledge can no longer cope with the current market. We used to rely on information asymmetry, but the future relies on knowledge asymmetry. I repeatedly emphasize that the internet has eliminated information asymmetry, making it increasingly difficult to make a living from it. Outdated mindset. Failing to see the industry’s future, not using the future to guide the present, but using past experience to guide the present. Herd mentality. What is herd mentality? Doing what others do. The most typical example: if we go to a tourist attraction and have lunch, with several restaurants to choose from, how do we decide? Don’t we pick the one with the most people? It’s that simple—that’s herd mentality. In fact, we don’t know if that restaurant is good, but we think “if it’s crowded, it must be good.” Speculative psychology. This is also a typical obstacle. Grabbing a product and monopolizing it, selling it aggressively, and making a killing in one go—such opportunities are disappearing. Earning reasonable profits, earning what you should, is the way to survive in the future. Ge Junzhen, founding partner and senior consultant of Zhenmou Junlue Enterprise Management Consulting; MBA from Guanghua School of Management, Peking University; expert in agricultural and animal husbandry marketing management. Source: Zhenmou Junlue (ID: gejunzhenygzt)