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"Reversing the channel" is a unique marketing concept from successful companies.
When a certain food company entered the market, its competitors had already established a strong leading position. However, the company achieved a rapid market breakthrough within just a few months, thanks to a special marketing strategy: "Reversing the channel."
Unlike other companies that first sell to first-tier wholesalers, who then sell to second-tier wholesalers, and so on until the product reaches retailers and final consumers, this company's strategy was to first sell to retailers and final consumers. When sales reached a certain volume, second-tier wholesalers would eagerly seek to distribute the product. When second-tier wholesalers' sales reached a certain scale, first-tier wholesalers would compete to distribute it. The company then held a bidding process among first-tier distributors, granting distribution rights to the one offering the best terms.
Relying on this "reversing the channel" strategy, the company was invincible, calling it their "secret" business "magic weapon" and "trump card." "Reversing the channel" has now become an important marketing tool for new companies and new products entering the market.
When a new product enters the market, the biggest challenge is not consumer rejection but the alliance of interests between competitors and distributors (especially higher-level ones). They try every means to exclude new products to maintain their vested interests. They may deliberately raise market entry barriers, hinder new products from entering, or intentionally cause new product failures and then shift the blame to the manufacturer.
When new companies and new products enter the market, due to their low visibility and credibility, they have low bargaining power with distributors. If they follow the traditional marketing channel starting with high-level distributors, they may have to accept harsh "market entry" conditions such as credit sales (or stocking shelves), large-scale promotions, price reductions, returns, etc. Agreeing to these conditions is tantamount to suicide, but refusing makes it difficult to enter the market. Many new companies and products fail for this reason. What's the solution? The answer is simple: reverse the channel.
Why is "reversing the channel" effective?
The reason is that it bypasses large distributors (who are actually the beneficiaries of vested interests) and directly sells to final consumers and terminal distributors, who are traditionally overlooked. They are not beneficiaries of vested interests, so they easily accept new products, have low "market entry" requirements, and are highly enthusiastic about distribution.
"Reversing the channel" also implies this: starting with final consumers and terminal distributors, the ultimate goal is to reach larger, higher-level first- and second-tier wholesalers. Why eventually deal with first- and second-tier wholesalers? Why not always sell to final consumers and terminal distributors? Smaller manufacturers might continue this way, and products suitable for direct sales or short channels might also do so. However, some products with wide coverage and high consumption frequency ultimately rely on the distribution networks of large wholesalers, whose market position and role cannot be ignored.
The purpose of reversing the channel is to attract the attention of higher-level distributors, gain bargaining power with them, obtain lower "market entry" conditions, and enhance their confidence in the new product.
A certain company fully utilized the "reversing the channel" strategy when developing the market. They had been in the Chongqing market for years, but sales had not taken off, remaining at around 5 million yuan annually. The company replaced a salesperson with one who understood the "reversing the channel" concept. He first approached a large, creditworthy distributor, but the distributor lacked confidence.
So the salesperson said, "How about this? I'll help you sell!" He then began assisting the customer's sales, delivering directly to final consumers (like college students) and terminal distributors (like retail shops and roadside stores).
Initially, sales were small, so he used a shoulder pole to carry goods, delivering one by one. The salesperson described the market as "carried out with a shoulder pole." After two months, 60-70% of the distributor's sales were made by the salesperson. Seeing the salesperson sell well, the distributor's confidence soared. Although still hesitant, fearing others would look down on him (if the salesperson could sell, why couldn't the distributor?), he had to use all his channels to sell. As a result, within just one year, sales skyrocketed to 45 million yuan, an increase of 900%.
This strategy is called "assisting customer sales" or "being the customer's salesperson." It is a concrete manifestation of the "reversing the channel" strategy and one of the effective methods for new products to open up markets.
For factory managers and salespeople who worry about products not selling and struggle with distributors' excessive demands, when your product cannot be sold through traditional channels, why not try "reversing the channel"? It might become the "golden key" to opening your market.
On October 23-24, during the Autumn Sugar and Wine Fair, New Distribution will host the "2018 FMCG City Distribution Logistics Conference." We will invite industry experts, FMCG warehousing and distribution specialists, and distributors who have transformed into unified warehousing and distribution platforms to discuss and answer questions about the future development trends of FMCG city distribution logistics and practical cases of distributor transformation. We hope it will bring you fresh insights and inspiration!
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