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In offline channel inventory management, whether to load inventory onto distributors has always been a topic that is not openly discussed. As business owners, on one hand, they hope distributors' channel inventory can be less, and even less, to avoid too many problems later; on the other hand, facing huge inventory pressure and the temptation of cash flow, they wish to transfer all the stale stock from their warehouses to distributors' warehouses, more and more. So we see that abnormal bosses often shout every day, "Don't load inventory, don't load inventory," but the next moment they point at your nose and roar: "Why are there still so many slow-moving items in the warehouse that haven't been sold? Are you planning to keep them in the warehouse for the New Year?" Ladies and乡亲们, these are slow-moving items. Even if you sell them at a discount, not necessarily any distributor will take them. Even if some distributor wants them, it doesn't mean they want them before the New Year. Even if they want them before the New Year, it doesn't mean they will take however many you have!? Many salespeople are used to this indirect coercion, and they usually turn around and walk away quickly, responding angrily: "Boss, just watch me!"
Bosses with multiple personality splits, do you have any truth to tell those poor salespeople who are on the verge of a breakdown?
Inventory, since it is a problem that enterprises can never fully solve or overcome internally, for salespeople, the only way is to start externally, that is, from distributors. To start with distributors, we must first tell a small story about a distributor to solve the question of why distributors need to be loaded with inventory.
In my early years, when I was serving a certain enterprise and responsible for a regional market, I personally developed a distributor, Old A. Due to historical relations, Old A and I have maintained close contact. Even after I left the company in 2010, our relationship remained very good. In 2013, I went to that region on business for other reasons and called Old A in advance. Old A was very happy and insisted on meeting me for dinner in the evening. After finishing other matters, I arrived as scheduled. At the dinner table, we chatted happily, talking about everything under the sun. After three rounds of wine and five dishes, with more than half a bottle of liquor consumed, as we were about to end this boasting session at its climax, Old A suddenly burst into tears, sobbing loudly on the table. I was very surprised. Although Old A and I were close, our friendship wasn't so deep that after years apart, we would hold hands and look at each other with tearful eyes!? I calmed my inner excitement and asked timidly: "What's wrong, brother?"
What Old A said next really opened my eyes: "Brother, I've been in business for 25 years. I started working as a laborer at 15, and at 19, I had my first store. Since then, life became stable, and days got better. Fifteen years ago, in this place, there were about five or six distributors doing 400,000 to 500,000 yuan a year. We used to drink tea, fish, and take photos together. At that time, product profits were high, and if you had goods, you could sell them. Life was quite comfortable. When your brand first came here, I knew the first customer you approached was not me, but those distributors I played with. They all refused, so you finally came to me. But once I took on your brand, my good days were over. I was only doing 400,000 to 500,000 a year. In the first month, while I was still confused, you sent me 100,000 yuan worth of goods, and said that if I didn't meet the three-month assessment, you would drop me. It's easy to get on a pirate ship but hard to get off. Looking at the pile of goods in the warehouse, I really wanted to cry but had no tears. Fortunately, after you loaded the inventory, you brought a group of promotion people to fool me: 'Old A, you can't just sit at home waiting for business. You need to go out, do distribution, do promotions, enter residential areas, and change from a sedentary merchant to a traveling salesperson.' I was also panicking looking at that pile of goods; it was real money! So I had no choice but to follow you to do distribution, promotions, and enter residential areas, feeling like I was back to the days when I first opened my store at 19. But by the end of the month, that 100,000 yuan worth of goods was almost sold out. Just as I wanted to catch my breath, another 200,000 yuan worth of goods was loaded into my warehouse. This is not letting people live! So I had to bury my head, steel my heart, and charge forward with my eyes closed, running to construction projects and decoration companies, thinking of ways to sell things bit by bit! After working day and night for a year, I looked back and, wow, I actually sold over 1.3 million that year. In the past, I wouldn't have dared to think about it! From then on, you took the initiative to load inventory, and I silently endured. I worked like this for 13 years, 13 years! Thirteen years later, now I can do 40 to 50 million a year, while those five or six friends who used to play with me, two of them still only do 400,000 to 500,000 a year, and the most do only 1 to 2 million. Because I chose you, because of that inventory that kept me awake at night, I inexplicably became the boss in this region."
This is a story that touched me deeply. At least inventory is not the root of all evil as some people say; at least inventory also pressed out a regional boss, although no distributor would actively accept inventory.
Why load inventory onto distributors? Actually, too much theory is useless. There is only one reason: Where the distributor's money is, there the distributor's heart is! That's why during corporate training, employees easily fall asleep, but bosses are all attentive! Many so-called free trainings will find ways to make you bleed a little. Moreover, if you don't load, others will. When distributors start circling around other brands, you'll be too late to cry!
If passive inventory loading is only the A side of the matter, then where is the B side of distributors actively loading inventory?
Let's talk a bit of theory. The core of channel design is to implement pragmatically. In China, with its developed administrative system from province, city, county, town, and village, and rare channel depth, it is very difficult to succeed without relying on developed vertical channels, especially in markets below the county level. This is also an important reason why many foreign brands cannot beat local Chinese brands. "Winning the county market wins the world" has become a curse that many international brands cannot cross.
It is precisely because international brands are good at quantification and are also skilled at quantification that they compare the empirical data accumulated from European and American markets with Chinese market operations. They find that a European country's geographical area is only the size of a Chinese province. In the past, when doing national markets, due to small urban-rural differences and limited geographical space, setting up distributors was just a waste of time, increasing the circulation time of goods. But in China, doing a national market, due to urban-rural differences, uneven logistics development, and especially China's vast territory, foreigners who are not good at channels are really "old professors encountering new problems." The channel efficiency here cannot be quantified by channel levels for two reasons:
First, Chinese channel operations emphasize warehousing function, also known as "inventory transfer," which makes many domestic distributors both hate and fear. It is precisely because the warehousing capacity of Chinese channels is prioritized that the product transfer function of channels takes a back seat. Therefore, domestic manufacturers, especially domestic brand manufacturers, often load inventory at the end of the month. Although we cannot applaud inventory loading, the actual result is that the goods filling the channels improve the response speed of channel goods circulation, and at the same time force merchants and manufacturers to pay more attention to market expansion, rather than sitting in the store waiting for customers. This has instead become a very important reason for improving channel efficiency.
Second, the important manifestation of channel efficiency is whether consumers can get the products they want at the first time. Multi-level channels increase consumer touchpoints and improve the convenience of consumer access. Since domestic channels focus on warehousing, even if the channels are deep, consumers can get the products they want at the first time. This is like power transmission: every wire is neatly arranged with free electrons. When the Southern Power Grid opens the switch, Heilongjiang, thousands of miles away, can enjoy the power resources from the Southern Power Grid. This is also the main reason why channels with more levels are more efficient.
Actually, to be realistic, if you can't even load inventory, then whether you have channels or not doesn't matter!
Of course, here we have only solved the objective role of distributor inventory loading. In actual operation, how a large amount of slow-moving inventory forms in distributors, how to load inventory reasonably, and how to continue loading after loading, these questions will be left to the next two articles on inventory loading.
[One of Huang Runlin's Three Articles on Inventory Loading]
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