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Introduction: Many companies are currently implementing deep distribution, where their terminal sales representatives visit retail stores daily to secure orders, which are then passed to distributors for delivery. However, a common issue arises: sales reps obtain orders, but distributors are reluctant to deliver, leading to terminal dissatisfaction and even refusal to sell the company's products. What should be done in such cases?

Distributors are essentially circulation intermediaries, and delivery is their most basic function. Unless a company engages in direct sales, it must rely on distributors to transport products from the factory to various consumption points. A distributor's unwillingness to deliver usually indicates issues in mindset or communication, rather than a lack of delivery capability. Therefore, aside from capacity constraints during peak seasons, the problem should be addressed from the following perspectives.

Based on real-world observations, the issue likely stems from one of three areas: (1) communication problems between the company (or its sales reps) and the distributor, (2) problems within the distributor itself, or (3) terminal-related issues that prevent the distributor from delivering. Only by identifying the root cause can the problem be resolved.

1. Adjust Deep Distribution to Be More Reasonable

Deep distribution has made distributor territories more defined, improving company management and market operations, and bringing companies closer to channel intermediaries and terminals, which benefits consumers. However, under the previous extensive management style, distributors were seen as market masters with full autonomy. This shift may have damaged some of their interests. Companies must first assess whether unresolved issues remain and communicate effectively with distributors.

This requires adjusting the model to be more equitable, aiming to bring distributors into true partnership rather than merely changing the form while keeping old practices.

What adjustments are needed? First, companies should not view distributors as obsolete or subordinate just because deep distribution is implemented. Instead, they should analyze distributor functions and leverage their strengths—such as regional management, development, and capital—rather than reducing them to mere delivery agents. If distributors excel in these areas, their capabilities should be utilized for the company's benefit.

Second, deep distribution is inherently a channel adjustment process. Distributors should be classified, selected, and either upgraded or phased out beforehand. If deep distribution is seen merely as terminal service without adjusting existing channel members—converting some traditional distributors into "deep distribution partners," eliminating others, merging some, and training others—cooperation issues will inevitably arise, leading to delivery refusals.

Third, deep distribution is not just about solving product delivery; it's about separating sales and delivery while enabling companies and distributors to specialize and collaborate within a unified system. Therefore, order volume and count, delivery area division, delivery support, and distributor profitability must all be systematically considered.

2. Communication Issues Between the Company (or Sales Reps) and Distributors

After being transformed into delivery agents, distributors may feel increased company control and a loss of their original market functions, leading to a sense of crisis and resistance. As businesspeople, they may not immediately stop selling the company's products but might express dissatisfaction through delayed deliveries, late payments, or cross-region sales. In such cases, companies must communicate effectively, helping distributors understand that the company is genuinely assisting them—in market development, growth, management, and building core competitiveness in a competitive distribution channel. The delivery process should be mutually beneficial and supportive.

It's crucial to prevent distributors from feeling marginalized. Through communication and training, they should see that following the new marketing model makes it easier to succeed alongside the company. A hallmark of successful deep distribution is that distributors visibly improve and strengthen their relationship with the company.

If the issue is between a sales rep and a distributor, the sales supervisor should intervene. Common solutions include:

  1. If the sales rep frequently fabricates orders by copying distributor orders, fails to perform duties, demands favors from the distributor, or disrupts the distributor's operations, the supervisor should gather evidence and decisively replace the rep.
  2. If there's a communication breakdown but reconciliation is possible, the supervisor should act as a mediator. The distributor can propose reasonable requirements, and the rep can commit to proving themselves through hard work.
  3. If the distributor is deliberately making things difficult for the rep, the supervisor should determine whether the issue is personal or aimed at the company. If personal, it's a communication issue; if aimed at the company, it may be about interests or communication methods, requiring targeted solutions.

3. Distributor's Own Issues

A distributor's refusal to deliver orders taken by sales reps may stem from various internal problems, such as:

  • Low profit margins making delivery unappealing, though they continue selling due to historical reasons.
  • Insufficient delivery capacity during peak seasons.
  • Fear of uncollectible credit sales, leading to avoidance.
  • Concern about terminals switching suppliers, resulting in wasted effort.
  • Reluctance to deliver to non-core areas.
  • Unclear territory boundaries, causing occasional missed deliveries in overlapping zones.

These issues do not mean the company should ignore them or blame the distributor. Instead, the company should treat them as shared problems and collaborate on solutions. In some cases, the company may provide support, such as delivery vehicles or personnel subsidies, to resolve these issues promptly.

4. Terminal-Related Issues

Terminals themselves may be problematic, making them undesirable for distributors to serve. Many terminals, unaware of the "terminal is king" concept, see themselves as the ultimate authority over companies and distributors. With companies increasingly investing in terminals, some have become overly demanding, creating challenges for both companies and distributors.

This may also relate to sales reps who, despite knowing a store is problematic for delivery or payment, push for delivery to meet their order targets.

Companies have a responsibility to work with distributors to communicate with terminals, turning them into effective long-term partners. For example, for large stores, companies can sign credit agreements to legally secure payments, reassuring distributors. For other retail outlets, companies can gather credit information and share it with distributors to ensure effective delivery and payment collection.

If none of these solutions resolve the fundamental issue and the distributor remains unwilling to deliver, it may be time to replace the distributor, as they have lost their basic capability—distribution and circulation.

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