Click 'Read Original' for details Over the past two to three years, New Distribution has visited over a hundred outstanding distributors across the country, discussing their business strategies and how they resist risks, achieve growth, and expand despite rapid market changes. The market continues to evolve, and distributors face increasing challenges. How to break through amid change? Perhaps this article, from the perspective of internal trading company management, can offer some inspiration and food for thought. The following 10 management lessons are distilled from the outstanding experiences of the hundred-plus distributors visited by New Distribution, and they are authentic and effective. Compensation for Frontline Sales Staff If the compensation for frontline sales staff is simply a basic salary plus commission, the market will not be well developed. A large part of all distributor market problems stems from people, and behind people is performance appraisal. Distributors who perform well typically structure frontline compensation in three parts: basic salary + sales/profit commission + market development/special rewards. Part 1: Basic Salary. This is straightforward; the amount is not critical, and some distributors even do not offer a basic salary. Part 2: Commission on Sales, Gross Profit, or Net Profit. Sales commission is most common but may lead to focusing only on bestsellers; gross profit commission effectively encourages new product promotion but may neglect market development and lead to irrational inventory pressure; net profit commission is more advanced, considering both sales and cost inputs, but requires high digital capabilities. Part 3: Market Development or Special Rewards. These are periodic process assessments, allowing distributors to adjust operational focus at different times and stages. They also ensure frontline staff pay attention to both goal achievement and process/market development. In summary, basic salary addresses basic needs, sales/profit commission addresses goal achievement, and market development or special rewards address the execution of key market actions. Compensation for Warehouse, Picking, and Delivery Staff Warehouse, picking, and delivery are headaches for many distributors. Salaries are limited, yet they expect efficiency and no slacking. The common practice among outstanding distributors is: more work, more pay, piece-rate or contract systems. Warehouse picking and checking staff are paid by piece, with basic salary reduced or eliminated; 60% of income comes from piece-rate work. Delivery drivers contract to deliver specific areas. Some distributors even sell vehicles to drivers at below-market prices, making drivers mini-bosses of delivery, reducing management burden and costs. Standardization and Normalization of Management Systems Standardization here goes beyond simple start/end times and daily/weekly meetings; it means standardizing and normalizing the entire business management process. For example, warehouse goods management, from receiving to storage to store delivery, and potential returns back to warehouse and then to store, clearly defines key tasks and responsible persons for each step. Take goods arrival: key tasks are transport, unloading, and storage, involving drivers, loaders, and warehouse keepers. For each key task, what is the standard for doing it right? Is there a quantifiable assessment system? What are the rewards and penalties for not doing it right? Similarly, in-store execution follows the same principle. With standards and norms, there is a yardstick to measure execution. Mid-level Business Partner Model Once a distributor grows, especially with cross-category operations, they face the issue of splitting business organizations. To boost the motivation of business heads, many distributors consider a partner model. But it must be emphasized that business partners solve not management issues but business operation issues. Partners focus on specific brands or categories, flexibly responding to distribution, sell-through, and competitive strategies. If the distributor operates consistent categories or brands with similar distribution, sell-through, and competitive strategies, setting up partners is not recommended. Instead, the owner should set terminal operation strategies, mid-level managers coordinate and check, and frontline staff execute. Adding Market and Procurement Departments When annual sales exceed 50-60 million yuan, to further expand brands or categories, distributors should strengthen the seemingly less important market and procurement departments, in addition to the sales department. The market department should design periodic activities based on upstream brand policies and market execution suggestions, combined with downstream terminal and consumer characteristics. Examples include displays, tastings, shopping guides, and various promotional materials. What type of stores to choose, what policies to invest, what incentives to design, what frequency to execute, and what standards to ultimately achieve. Once the trading company has stable brand agency, the procurement department should continuously introduce more brands, especially evident in the snack food sector. The procurement department's assessment must be directly linked to front-end sales gross profit and inventory shrinkage. Owner's Personal Learning and Exchange The owner's personal cognition determines the company's ceiling. One must not avoid the frontline market, nor stay immersed in it all day. Distributors should also become social activists. Here, social activist does not mean dining and drinking with manufacturers or building relationships with downstream customers, but traveling to learn from the excellent experiences of other outstanding distributors, and having tea with business owners from other industries. Attend industry conferences and downstream retail meetings. Retail formats are changing rapidly. Chat with local retail chain owners, exchange ideas with e-commerce live-streaming executives. This will broaden not only personal horizons but also potentially uncover business opportunities. Team PK Competition System For frontline teams, besides direct monetary rewards, there should be a culture of PK between individuals and teams. The core purpose of PK is to mobilize team enthusiasm and atmosphere, stimulating business potential. Of course, during PK, managers or owners should participate, paying attention and coaching participants. Distributors must understand that the goal of PK is not to eliminate a team but to enable both competing teams to surpass themselves. Office in a Separate Building from the Warehouse An office in a separate building from the warehouse serves the same purpose as the owner's learning and exchange. Distributors should step away from heavy basic work to think and communicate more. Focus on strategy, not on moving goods. Additionally, moving to an office building helps attract more young people. Especially for distributors with 100 million yuan in sales, when considering business diversification, the participation of young people is essential. And young people's requirements for the work environment are something distributors must consider. Data-Driven Management Rather Than People Management Data-driven management rather than people management—I think distributors all agree. But how to achieve data management? It is not simply about finance using data software or the owner seeing data; it is about enabling frontline sales staff to see and use data. We often talk about products online, customers online, personnel online, etc. How to achieve this? From warehousing and delivery to sales, the business loop should be completed within software data, not just entering orders and amounts into the system. Scale Consciousness: Big Pond Raises Big Fish A distributor's business is not high-tech, intelligent, or artistic. To continuously attract and retain talent, the only way is continuous growth. Growth brings scale, and scale attracts and retains higher-level talent. With larger scale, there are more positions for others to fill. With talent, new businesses can be expanded. For example, when the company has only five or six people, if community group buying emerges, the owner can only supply goods. But when the company has fifty or sixty people, community group buying can be addressed by assigning three or four people to research and connect, capturing the dividend and incremental opportunities. Summary: The above 10 management lessons are shared with distributor friends, hoping to inspire you. If you have additions, feel free to comment and interact with the author. -END- PS: The 2021 (4th) China FMCG Conference, hosted by New Distribution, is about to open in Shanghai. Focusing on industry trends + practical cases + growth connections, 3,000 FMCG practitioners will gather. 10 themed forums cover new retail O2O, community group buying, short video live e-commerce, distributor transformation, rise of new consumer brands, new beverage interpretation, distribution B2B supply chain, omni-channel marketing, B2B2C new technology applications, etc., with operators from various segments bringing the latest case studies. Confirmed heavyweight guests include: 1. Tao Shiquan, Founder of Jiangxiaobai; 2. Xu Hong, General Manager of Meiyijia Holdings; 3. Lu Xiuqiong, Global Expert Partner at Bain & Company, former VP of Marketing for Coca-Cola China; 4. Chen Xiaodong, Senior VP of Nestlé Greater China; 5. Zhang Fujun, President of Lee Kum Kee China; 6. Bi Chaojiao, General Manager of China Resources Snow Breweries Marketing Center; 7. Yang Hongbin, VP of Junlebao Dairy Group; 8. Yang Shun, COO of Lipton Greater China; 9. Zhang Yipeng, General Manager of Kuaishou E-commerce SKA Brand Operations Center; 10. Li De, E-commerce GM of Gold Hongye Paper Group... A grand gathering for FMCG professionals—you must be there! Are you "watching" me?