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For dairy distributors, the pressure is obvious. Sensitive quality issues, frequent returns and exchanges, and persistently high inventory levels seem to be the norm in the dairy distribution business. How should distributors solve these problems? Wu Lijun, a Mengniu distributor in Shangyu, Zhejiang, believes that whether dealing with low-temperature or ambient milk, controlling expiry dates is always the top priority. Only by doing so can product quality be guaranteed, distributors remain profitable, and the entire market advance steadily.
Since entering the industry in 2003, Wu Lijun has been dealing with dairy products. Initially, he was a city manager for Mengniu in Wuxi, Jiangsu. After a year of training and accumulation, he transitioned to become a distributor and successfully secured the agency rights for Yili low-temperature milk in Changshu and Kunshan. In 2009, he moved to Shangyu, Zhejiang, and established Maoxin Trading Co., Ltd., this time choosing Mengniu ambient milk. From low-temperature to ambient, although the product categories changed, Wu Lijun never relaxed his control over expiry dates, which became the key to Mengniu ambient milk gaining a foothold in the Shangyu market.
In Low-Temperature, Profits Come from Managing Expiry
Like many dairy distributors, Wu Lijun encountered numerous difficulties in the early stages of operating Yili low-temperature milk, with logistics being the most prominent. Wu Lijun explained that at that time, the Jiangsu region was supplied by Yili's Beijing plant, with deliveries arriving every two days. However, due to the long distance, orders had to be placed six days in advance, meaning two batches were always in transit. Additionally, due to capital and market constraints, initial order quantities were small and did not meet the manufacturer's delivery standards, so he had to pick up goods himself from the Wuxi distributor. This not only increased inventory management difficulty but also wasted a lot of time in transportation. Combined with unstable sales, it easily led to a large number of near-expiry products.
"As the saying goes, in low-temperature, distributors earn money from managing expiry. Since low-temperature milk has a short shelf life, generally less than half a month, transportation takes at least two days, and by the time it reaches the store, it's the third day. The shelf sales time is at most one week. If sales are slow, distributors must guarantee unconditional returns, and these returns often become near-expiry products that are destroyed, with all losses borne by the distributor. Conversely, if expiry is well controlled, distributors can achieve considerable profits," Wu Lijun told reporters. He noted that the expiry rate for low-temperature milk needs to be controlled within 5 points, meaning that for 100,000 yuan worth of goods, the resulting near-expiry products should be less than 5,000 yuan to be considered normal; otherwise, the distributor may incur losses.
Given this, Wu Lijun started from order planning, warehouse management, and terminal promotions to compress the expiry rate to a minimum. At the same time, sales of Yili low-temperature milk in Changshu and Kunshan steadily increased, and the manufacturer began direct supply. Two years later, Yili established a plant in Suzhou, further improving transportation conditions, which created favorable conditions for reducing expiry rates. Wu Lijun stated that at that time, the expiry rate for Yili low-temperature milk was only about 2 points, which not only protected product profits but also helped the company smoothly through its startup phase. Expiry control thus became the first consideration in Wu Lijun's operations.
Transition to Ambient: Expiry Control Starts from the Basics
In 2009, seeking better development, Wu Lijun came to Shangyu, Zhejiang, a more economically developed area, and specifically registered a trading company. This time, he chose Mengniu ambient milk as his agency product. Discussing the reason for switching products, Wu Lijun admitted that on one hand, the pressure of low-temperature milk was indeed high, and on the other hand, it was an opportunity. At that time, Mengniu ambient milk's monthly sales in Shangyu were only over 1 million yuan, but the monthly near-expiry products were nearly 10,000 boxes, equivalent to about 400,000 yuan. Such a high proportion of near-expiry products was unbearable for ambient milk, causing losses for distributors and easily triggering quality issues.
Wu Lijun analyzed the reasons, mainly three points: First, the market foundation was weak; in the ambient milk market in Shangyu, consumer recognition of the Mengniu brand was not high. Second, frequent changes of distributors led to improper handling of terminal customer returns and exchanges, leaving a bad impression on customers and greatly reducing their enthusiasm for stocking. More critically, the price system was unstable; customers hoarded goods at low prices but couldn't sell them, and when products neared expiry, they demanded returns or exchanges, which inevitably put great pressure on distributors. However, refusing returns would lose customer trust.
After Wu Lijun took over Mengniu, the market situation remained severe, so he decided to start from scratch and effectively control product expiry by building a solid market foundation. First, to restore the company's image in customers' eyes, Wu Lijun decided to resolve the previous return issues all at once. Some customers reported that they had already disposed of near-expiry returns as bonus items, and he compensated them in full. Wu Lijun said, "Although the return problem was not caused by me, to ensure smooth work in the future, these issues must be properly resolved. The key is to let customers see our sincerity. Only then can we establish a mutually trusting cooperative relationship." In this way, Wu Lijun took over all 400,000 yuan worth of returns in the market.
Second, he re-established the product price system and implemented unified supply prices. In Wu Lijun's view, when customers say Mengniu doesn't sell well, the problem is not with the product but with the price. If distributors do not strictly control prices and blindly favor large customers by lowering prices, it may lead to their retail prices being lower than the supply prices to small shop customers. For example, for yogurt, the normal supply price to small shops is 32 yuan per piece, but some large customers might get it at 30 yuan per piece and sell it at 31 yuan, which would inevitably harm the interests of small shop customers.
Moreover, if distributors solely consider profit and sales volume while ignoring the smoothness of the entire sales process, they will ultimately suffer greater losses. Some large customers order large quantities; distributors might think that even a 0.5 yuan profit per piece is worthwhile, but that's not the case. If these goods cannot be fully sold in actual sales, the result is that the more they order, the more they return. Facing these returns, the distributor's losses cannot be compensated by the 0.5 yuan profit. Therefore, stabilizing product prices not only ensures the overall interests of customers and distributors but also promotes orderly and stable market development.
Wu Lijun stated that now, regardless of customer size, the company supplies at unified prices. Even if there are discounts, they are controlled within 0.5 yuan per piece. Although this has caused some dissatisfaction among large customers, in the long run, it undoubtedly better achieves win-win outcomes.
Reducing Expiry: The Key Is to Make Products "Sell"
Currently, Mengniu ambient milk's annual sales in the Shangyu area have exceeded 20 million yuan, while the annual near-expiry products are only 3,000 boxes, with losses basically negligible. Wu Lijun said that the reason Mengniu ambient milk's expiry is controlled is mainly because the products are now "selling." As long as terminal sales are fast, the number of returns and exchanges naturally drops significantly, thereby effectively reducing the occurrence of near-expiry products. Behind this is terminal service.
To improve terminal service quality, the role of salespeople must be leveraged. Wu Lijun stated that in the past, it was often the boss who pushed salespeople to visit customers for maintenance. Therefore, first, it is necessary to enhance the initiative of salespeople, adhering to the principle of "more work, more pay," telling salespeople, "This area is entirely your responsibility; you are the boss, and you are working for yourself." Second, let salespeople establish a correct service awareness. What is service? Many salespeople think they are one with the customer, jointly earning the boss's money. If a customer says there are five boxes of near-expiry products, the salesperson says there are ten; if the customer says the goods don't sell well and orders less, the salesperson simply says don't order... Salespeople habitually exaggerate customer feedback, masking the true market situation. Therefore, salespeople must understand the actual problems customers face and then help customers solve them together.
"Now the company has over 900 outlets in Shangyu, all managed by our salespeople, strictly following a three-day visit schedule for maintenance. Through everyone's efforts, customers no longer say products don't sell well, no longer bargain, and no longer argue over returns or exchanges. We also tell customers, 'You only need to be responsible for receiving goods and paying; we will handle all the rest, including warehouse stacking, shelf display, and date management, so customers have no worries.'" Wu Lijun said that to avoid near-expiry products, the company has also strengthened terminal age management. Products about two months from expiry are exchanged among customers based on sales conditions in different areas, or special promotions and bonus gifts are organized in stores, ensuring smooth sales.
"When product sales are smooth, we can ensure that products on the shelves are always fresh. More importantly, this allows customers to trust your brand. In the past, when expiry control was not in place, product dates on the shelves were uneven. Customers would rummage through the shelves, thinking that products with better dates were hidden at the back. This is actually a sign of customer distrust in the brand.
Now, we ensure that products on the shelves are from the same production batch, and those with slightly older dates are taken out separately and paired with small gifts, such as cups or small toys, on top of the original price, creating interaction with customers. Customers can choose according to their needs, no longer doubting product quality. This in turn drives terminal sales, fundamentally solving the expiry problem."
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