Everything has multiple facets. It is often said that 'slow sales in the off-season are a chronic disease,' so distributors and their channels focus on 'how to stimulate sales' through various promotions. This leads to the dilemma where products sell only during promotions and not otherwise. However, when we look back at the root of the problem, we find that a major cause of poor sales across the entire chain is failed distribution.
Eight Common Manifestations of Failed Distribution:
Consignment leads to slow sales, and products quietly die. When new products enter the market, because retail outlets are uncertain about future sales and fear overstocking and tying up capital, they lack the desire to stock up, making distribution extremely difficult. Many salespeople, to meet company targets or expedite distribution, may agree to consignment to reduce difficulty and increase coverage. However, for the outlet, consigned products carry no risk—they can sell a little for profit or return unsold items. So, unless consumers specifically ask for consigned products, outlets prefer to sell their own stocked items to recover cash faster. Thus, consigned products often die at the outlet without active consumer demand. By the time the distributor notices the product is stagnant, it may be a month later, and it's too late. Converting consignment to outright purchase becomes doubly difficult. Therefore, in the first round of distribution, distributors should insist on cash-on-delivery and not waver easily.
Insufficient coverage leads to stagnant market sales. Total sales in a regional market are accumulated from all individual outlets. When distribution breadth is insufficient, cumulative sales are minimal. Additionally, lack of breadth reduces market influence and consumer visibility, limiting pull on outlets. This doesn't mean outlets shouldn't be selected or categorized. In some cases, focusing on core outlets first to drive sales and then expanding is acceptable, but execution goals and evaluation for each phase must be clear and accurate.
Excessive initial distribution intensity affects repeat orders. Product price space is limited, so promotional and profit margins are also limited. To speed up distribution and reduce difficulty, distributors often use heavy promotions during the first distribution. If not careful, these promotions can consume a large portion of the cost rate, even leading to losses. Since companies need profits, they can't keep cutting margins; they need to operate, so office costs can't be overly reduced; employees need to live, so wages can't be cut. Even if promotional budgets are insufficient, it's hard to increase them. Therefore, the intensity of the first distribution must be controlled within a reasonable range. Overly aggressive initial promotions can harm long-term channel, terminal, and consumer promotions, and in the short term, affect repeat orders.
No follow-up actions affect sales momentum. A 50-square-meter convenience store carries thousands of product varieties; a small restaurant has at least 5-10 types of alcoholic and beverage products. Just getting into an outlet doesn't guarantee visibility. Consumers won't buy what they don't understand. Distributors can't have staff at every outlet, so many outlets, especially small shops and restaurants, rely on owners and staff to recommend products. How to motivate them? After initial sales, distributors can't deliver directly to all outlets, so how to get second-tier distributors to help? These require planned, purposeful, and coordinated actions. Otherwise, after distribution, without push or pull measures, the sales network can't be built, and products won't move. They become stuck in the market.
Wrong timing for market entry. All products have seasonal peaks and troughs. Consumer purchasing power and demand curves change with customs, holidays, seasons, and income. For any product, there are relatively fixed periods for distribution, market maintenance, sales stimulation, and volume growth within a year. For beverages, typically March-May is for market infrastructure, June-September for terminal promotions and sustained sales; delays can directly impact annual sales. For white spirits, July-August is for infrastructure, September-October for promotions; delays can hurt annual sales because by October, consumers have already formed preferences for the year's spirits. Companies not prepared by then won't perform well that year. Also consider consumer acceptance, consumption habits, and purchasing power.
Wide communication but poor service leads to counterproductive results. New products typically enter the market through airwave (advertising) pull and ground push via distribution, network building, and promotions. Ground push can generate sales if there's display, supply chain, and promotions. But if only airwave pull exists without ground support, it's like shouting slogans with no one to pull the rope. Ground push requires alignment of organization, sales plans, resources, manpower, and channels. When these don't match market needs, products can't expand quickly, and ground can't respond to airwave campaigns. Even if distribution is completed, misalignment prevents building distribution and promotion systems, hindering sales. Channel partners may lose trust, and products may die in the market.
Distribution to many ineffective outlets. After distribution, products rely on outlet sales to survive. However, some outlets perform poorly due to location, customer income levels, product mix, sales format (retail/wholesale), or owner's connections. Some may not be suitable for initial market entry. Distributing to such outlets leads to no sales, overstock, and reduced channel confidence. These low-activity customers or second-tier distributors might be key for future work, but early negative results complicate later efforts. During the entry phase, such outlets are ineffective and should be avoided.
Limited manpower and loss of control over pace. Any company has limited financial, material, and human resources, and management and monitoring have limits. Market expansion must align with actual capabilities and adjustment limits. Overextending leads to high costs for personnel, travel, market, storage, and management, causing financial strain and management difficulty. Insufficient management creates loopholes; financial strain delays expense reimbursements, demoralizing the sales team and distributor system. Low morale leads to inventory buildup, worsening the situation. Inability to maintain efficient, consistent progress may force downsizing and retreat.
Summer is the peak season for beverages. How to double sales amid intense competition?
Select 20% of high-selling outlets for focused cultivation. The 80/20 rule applies to food and beverage: 80% of sales come from 20% of outlets. Thus, distribution and promotion should prioritize.
High-selling outlets typically meet two or three of these criteria:
- Location: Prime position, convenient transportation, high foot traffic, strong influence and recognition in local commercial areas.
- Product range: Large store area, comprehensive categories covering most daily products.
- Positioning: Low price points, mass-market appeal, such as hypermarkets or large supermarkets.
- Customer base: Often in closed communities like hospitals, prisons, schools, or community stores.
First, build good relationships with high-selling outlets to facilitate smooth operations. Second, ensure sufficient stock in these outlets. Only with adequate volume can you create visual impact and ensure consumers 'see' the product. Third, besides securing freezer space, make attractive displays, use large displays where space allows, and use props for eye-catching merchandising. Finally, don't neglect promotion: put up banners on streets, cooperate with schools, and use packaging, posters, and ads in stores.
Manage inventory to prevent stockouts. Summer beverage demand is high, and all brands push large volumes to terminals. Distributors must stock up and prepare ample manpower, materials, and capital for rapid distribution, securing terminal funds, shelves, freezers, ads, and channels for a first-mover advantage. Also, summer sales are weather-sensitive; prolonged rain can cause a sharp drop. Thus, managing inventory and terminal stock is crucial.
How should distributors manage inventory? A common method is the 1.5x inventory rule: keep inventory at 1.5 times the average monthly sales. Distributors should break down sales targets into monthly tasks for each sales group, typically setting tasks higher than the monthly target. This prevents stockouts during peak demand and avoids pressure from rainy seasons. Some stockouts are normal, but distributors should control the rate, especially ensuring the 20% high-selling outlets never run out.
Terminal stockouts often occur because delivery logistics lag during peak season. Simultaneous stockouts at both terminal and warehouse are rare, usually happening during specific periods like Spring Festival, Dragon Boat Festival, or Mid-Autumn Festival. If this occurs, distributors must have contingency plans. Since factory shipments take too long, they should urgently contact nearby distributors to coordinate and share stock to tide over.
Additionally, based on regular knowledge of terminal inventory in the area, transfer stock from outlets with excess to those with high sales to temporarily alleviate shortages.
The more popular summer beverages are, the more challenging distribution, promotion, and management become. Distributor teams should focus on priorities rather than being blindly led by the market. By grasping key points and solving difficulties, achieving sales growth is not difficult.
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