Introduction The overall environment is poor, sales are hard to break through, costs are rising, and profits are squeezed; manufacturers seek channel flattening, and e-commerce impacts, leaving distributors with only a 'small bun' of the cake. Under various objective and subjective factors, distributors face a bleak future! Since 2015, many distributors have switched careers or retired early, but in the new internet era, where is the big cake waiting for you to share? In a poor environment, switching careers is almost fatally risky! Instead, it's better to try transformation and stick to your original business! However, in the current environment, choosing transformation is not easy; it requires new awareness, an inclusive mindset, and an attitude of embracing new things. Effectively controlling and solving warehouse costs, logistics costs, and personnel costs are the three main aspects of transformation. Warehouse Turnover Management For each product's sales situation and warehouse turnover control, how can we achieve the most suitable? First, I suggest using a professional management system to analyze sales data, warehouse inventory, purchase in transit, and seasonal factors, thereby achieving reasonable purchasing and inventory control. While controlling inventory, we must consider that sales cannot be out of stock, and manufacturers' monthly targets. First, we must understand what the standard for reasonable inventory is? Some distributors think that controlling inventory at around 40% is reasonable, with a maximum of 60%. However, these are based on distributors' experience; from a scientific management perspective: safety stock = (daily maximum sales - daily minimum sales) × order cycle. For example, if a brand's monthly sales are 600,000 yuan, the order cycle is 7 days, maximum daily sales are 40,000, and minimum 15,000, then what is your inventory? It should be (40,000 - 15,000) × 7 days = 175,000. Of course, many distributors don't believe this, thinking that 175,000 inventory is too little and will likely cause stockouts. Based on experience, with monthly sales of 600,000, inventory should be around 300,000. Although excess inventory is inevitable, market demand changes, so you must be prepared! Thus, uncontrollable inventory stems from uncontrollable market. Every distributor hopes to minimize inventory while meeting market demand. But how? The answer is simple: arrange inventory based on terminal customers' orders, so products in the warehouse are essentially already sold. Distributors might ask: How to predict terminal customers' needs within 7 days and get their orders in time? Indeed, relying on traditional sales tracking and order management is hard to forecast sales. If this cannot be achieved, inventory cannot be reduced; reducing it may cause stockouts. But is it really impossible? In the mobile internet era, distributors can fully achieve data-driven management of terminal sales. For example, through B2B e-commerce platforms, they can not only collect terminal orders in real-time but also automate statistics and analysis of sales data, precisely controlling terminal sales. Thus, they can boldly cut excess inventory while ensuring safety. Logistics Cost Control Currently, a considerable number of distributors still use vehicle sales, integrating 'sales + delivery', which has many conveniences and benefits. However, when terminal sell-through is difficult and products are hard to move, the drawbacks of vehicle sales are amplified: empty runs and high fuel consumption! In reality, many distributors only focus on sales and have no concept of fuel consumption, nor corresponding evaluation indicators. For example, vehicle A sells 7,000 yuan a day with fuel cost 110 yuan, vehicle B sells 4,000 yuan with fuel cost 40 yuan. Which performs better? Some say A, others B, but the truth is both may be poor! Generally, vehicles running to townships spend 60-80 yuan on fuel daily, visit 30 terminals, close 12-15 deals, with a 50% close rate, and sales between 4,500-7,000 yuan. So how to control fuel? Simple: equip salespeople with A6 store inspection systems for data analysis, and based on customer purchase cycles, skip customers who don't need goods, reducing empty runs and saving time. In vehicle sales mode, distributors can reduce fuel by zoning routes and grading outlets: some terminals visited every 3 days, others every 6 days, some every half month... Vehicles strictly follow routes and outlet grades, spending limited time on the most valuable customers. If some townships are remote, with a vehicle spending 3 hours or more on the road, you can hand over delivery to secondary distributors. However, it must be admitted that this only avoids empty runs to a certain extent. To fundamentally improve delivery efficiency, first, know terminal orders in advance, and second, increase vehicle loading rate and delivery frequency. Simply put, you need orders, and enough of them! As mentioned, with B2B e-commerce platforms, systematic automatic order collection can be achieved, solving the question of whether terminals want goods; to get sufficient orders, you need enough sales support. To this end, internal and external product integration is necessary to achieve centralized purchasing and distribution. Then, half-truck loads become full, one trip becomes two, greatly improving delivery efficiency. Will fuel consumption still be a problem? How to Improve Operational Efficiency and Human Resources A distributor's organizational structure is determined by the operational model. Traditional models are either vehicle sales or visit sales. Vehicle sales typically use 'one vehicle, two people' (salesperson + driver), the most streamlined staffing, while visit sales separate people from vehicles, inevitably increasing manpower and vehicle investment. However, from an operational efficiency perspective, both models suffer from high labor costs. For example, in vehicle sales, the combined salary and commission for salesperson and driver is 150-200 yuan, plus fixed costs like fuel and vehicle wear, a vehicle costs at least 300 yuan per day. If average gross margin is 10%, sales must reach at least 3,000 yuan per day to barely cover vehicle costs. But for distributors, the purchase-sale price difference is almost the only profit source; if labor costs take up half or all, the company cannot even sustain operations, let alone profit! Additionally, distributor sales staff are generally not highly professional, with varying abilities and qualities. On the other hand, in a sluggish market, higher demands are placed on sales staff: besides sales, they must develop new outlets, promote new products, and enhance terminal visibility, shifting from 'sales-heavy, operations-light'. In the long run, sales staff functions will gradually differentiate, and organizational structures must adjust to improve efficiency and reduce labor costs. So the question arises: how to transform sales staff functions and reduce labor costs? By introducing B2B e-commerce platforms, the sales and order-taking functions of sales staff will be replaced by the platform, while marketing functions are gradually strengthened. For example, if a route or area has many blank outlets, you can assign a salesperson with strong development skills; after launching new products, you can have a salesperson with strong negotiation skills execute the market push... These salespeople can earn over 5,000 yuan per month, but the efficiency and value they create far exceed that; conversely, the previously largest sales cost is greatly compressed. Thus, people are truly used to their best advantage! In summary, in the current market environment, distributors must not only learn to make money but also learn to save money. On one hand, improve management capabilities and cut unnecessary waste; on the other, introduce advanced internet tools to achieve qualitative leaps in operational efficiency. -END- The best FMCG distributor learning platform in China Focusing on providing professional, practical, and actionable tutorials for companies and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Distributor market operations | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operations management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 First lesson for new salespeople | 015 Internet, brands | 016 Distributor B2B transformation | [Long press QR code to follow]