---
title: "Sales Director: Want to \"Cut\" a Major Distributor but Fear Market Impact? Here's What to Do"
description: "This article discusses how to handle the delicate process of terminating a major distributor's rights without damaging the market. It provides a case study and five key steps, including sales forecasting, terminal market penetration, selecting new distributors, promotional support, and consumer promotions, plus additional strategies like temporary company offices and distributor transformation."
author: "谭长春"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-09-25"
categories: "Dealer Operations"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/sales-director-want-to-cut-a-major-distributor-but-fear-market-impact-he-adc07c83/"
markdown: "https://xinjignxiao.com/en/articles/sales-director-want-to-cut-a-major-distributor-but-fear-market-impact-he-adc07c83.md"
original_source: "https://mp.weixin.qq.com/s/4w684tD-2bSwfoz84RSXaA"
translation: "https://xinjignxiao.com/zh/articles/%E9%94%80%E5%94%AE%E4%B8%BB%E7%AE%A1-%E6%83%B3-%E7%A0%8D-%E5%A4%A7%E7%BB%8F%E9%94%80%E5%95%86-%E5%8F%88%E6%80%95%E5%B8%82%E5%9C%BA%E5%8F%97%E5%BD%B1%E5%93%8D-%E6%80%8E%E4%B9%88%E5%8A%9E-adc07c83.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/sales-director-want-to-cut-a-major-distributor-but-fear-market-impact-he-adc07c83/"
citation: "谭长春. “Sales Director: Want to \"Cut\" a Major Distributor but Fear Market Impact? Here's What to Do.” New Distribution, 2016-09-25. https://xinjignxiao.com/en/articles/sales-director-want-to-cut-a-major-distributor-but-fear-market-impact-he-adc07c83/"
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---

# Sales Director: Want to "Cut" a Major Distributor but Fear Market Impact? Here's What to Do

> This article discusses how to handle the delicate process of terminating a major distributor's rights without damaging the market. It provides a case study and five key steps, including sales forecasting, terminal market penetration, selecting new distributors, promotional support, and consumer promotions, plus additional strategies like temporary company offices and distributor transformation.

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**Introduction:** Boss Jiang has always been a key contributor to a certain beer company (of course, he also regards himself as a meritorious veteran). When the company was expanding its territory, he established the entire sales landscape in the Hengshui area of Hebei, and sales have always been under his control. However, because he also deals in baijiu (white liquor), which has a larger sales area, while beer sales areas are typically smaller, he treated the beer sales area as equivalent to his baijiu sales area. As a result, he considered cross-regional selling and price undercutting as justified. Since the surrounding areas were not yet developed, the beer company tolerated these violations, treating them as market penetration and circulation.
However, due to the rapid sales growth in that region, the company was seeking new distributors to jointly operate the Hengshui market with Jiang, with no intention of granting him exclusive distribution rights. Consequently, Boss Jiang felt the company did not respect his achievements, so he intensified his cross-regional selling and price undercutting, and even began allying with distributors from other regions to oppose the company. After market research and careful consideration, General Manager Li decided to revoke Jiang's distribution rights—what we often call "cutting" the distributor.
But after being "cut," Boss Jiang was furious. When General Manager Li held an ordering conference with the newly selected distributor in the region, Jiang gathered a group of distributors to cause a disturbance. He brought a bottle of beer that he had tampered with, claiming it had quality issues and that selling the company's products would be problematic and irresponsible to consumers, urging the distributors present not to handle the company's products. The event ended in chaos, with both parties parting on bad terms.
When companies "cut" distributors, similar situations of broken relationships and mutual damage can occur, sometimes even leading to media exposure or legal action. The above is just one example. How should we properly handle the termination of a major distributor while maintaining a positive relationship?
This is a very tricky issue with no absolute perfect solution. However, thorough communication, thoughtful contingency plans, and, when necessary, putting yourself in the other party's shoes to consider the common development of both interests are crucial and necessary.
Since some distributors lack growth and development concepts and are no longer suited to a company's market expansion and reforms, there was a successful case in a region of Liaoning where a company effectively cut off a problematic distributor. Let's see how that regional manager approached and executed it:
**1. Forecast sales in advance and prepare temporary backup from surrounding regions**
Once you decide to cut off a problematic distributor, you should start looking for surrounding distributors as replacements. Of course, the distributor may not notice because the "encirclement" action occurs in surrounding markets outside their area, avoiding major conflicts before the plan begins and preventing the termination from stalling. Even if the distributor notices, they have no grounds to complain, though they may become more cautious. Therefore, developing new markets and distributors in surrounding areas is one of the best preliminary steps before terminating a distributor.
Reforms always come with pain, but channel reforms and distributor selection cannot afford sales declines due to such pain. So, forecast sales in advance, fully estimate the potential sales loss from cutting a major distributor, and ensure other distributors can compensate. The responsibility for finding backup teams, keeping the market unaffected, preventing competitors from seizing opportunities, and maintaining strong sales may fall entirely on the regional manager. Thus, the regional manager must be thoroughly prepared in advance.
**2. Dismantle the distributor's base through company resources at the terminal level**
Why are concepts like "reverse channel building," "terminal orientation," "deep distribution," and "terminal services" so popular now? Why do companies chase these ideas like a trend? They all align with the principle of better serving consumers. Capturing the terminal brings you closer to consumers and gives you core competitiveness; doing it early creates differentiation.
This same thinking can be applied when revoking a distributor's rights: Before deciding to revoke, the company should strengthen terminal services in the distributor's area under various pretexts (e.g., improving shelf fill rates, enhancing merchandising), conduct store visits or surveys, and gather data on terminal stores—their details, sales, locations, product mixes, foot traffic, etc. This gradually undermines the distributor's foundation.
Of course, if the distributor to be terminated is purely a wholesaler or passive operator who never focuses on terminals, it's even easier—they lack a solid foundation and cannot sustain long-term distribution status in the market!
**3. Redivide sales areas, select new customers within the area, and have them replace the old distributor**
Distributors won't easily let the company "eliminate" them. At the slightest sign of company action, they'll devise ways to cause trouble. While surrounding distributors temporarily fill in, the company must also study the situation carefully and prepare multiple contingencies. Besides calm, amicable negotiations, be prepared for the distributor to act out because they feel "suddenly killed" by the company. At this point, since the first step has been taken, you must follow through without hesitation!
New customers can be promoted from the old distributor's better second-tier wholesalers or selected based on new distributor criteria. At this stage, it's best to choose only suitable candidates—those who can seriously work the market and have certain market and distribution capabilities—rather than following the old method of prioritizing strength without considering consequences.
"Choose only the suitable, not the biggest or strongest" is the most popular distributor selection principle now.
**4. Increase terminal promotions to stabilize sales**
As the new distributor quickly steps in, considering the transition period, you can run terminal promotional activities to help the new distributor stock shelves quickly and fill the gap left by the old distributor. Additionally, having promotional policies may prevent the old distributor from using their existing stock to cause trouble, or at least minimize the damage, and help terminal stores accept the new distributor faster.
If you want the new distributor to establish their position and expand influence quickly, the company can also invest some resources to co-host product ordering conferences with the new distributor, attracting attention and maximizing their network and market impact in the short term, thereby meeting sales requirements.
**5. Invest appropriately in consumer promotions**
Consumer promotions are another "double insurance" measure, similar to terminal promotions, that regional managers use to mitigate sales impact. They also help expand the new distributor's influence through multiple channels.
The above are the usual steps and methods we adopt after revoking a distributor's rights. Extending this, we can also employ deeper countermeasures to resolve such matters more satisfactorily:
**1. If conditions allow, temporarily establish a company office or liaison station to coordinate business**
If we don't want the newly selected distributor to become too large or deliberately elevate their status, we can enter the market ourselves and jointly operate it in the early stages. This is a lesson from the past—it allows the company to penetrate market management from the start, making control easier. Setting up offices, liaison stations, or deploying more sales staff to manage channels, terminals, and even promotions can basically eliminate the old distributor's chances of turning the tables or causing trouble.
This method essentially changes the traditional wholesale approach, allowing the company to enter the market and assist distributors in managing it. It's also a result of companies transforming and gaining deeper channel insights as markets evolve.
**2. If possible, help the old distributor transform**
Often, companies revoke a distributor's rights because they no longer adapt to market development in certain aspects. However, any distributor still has cooperative value. We can conduct detailed analysis to find areas for continued cooperation, which is also a form of revoking distribution rights. For example, let the distributor continue as a delivery provider (becoming a delivery partner rather than a distributor); or revoke rights first, then negotiate to become a distributor for a single brand (lay off first, then rehire).
"Goodbye is also friendship." If we can truly give the "cut" old distributor a rebirth and new cooperation opportunities, that's ideal. This minimizes the negative outcomes of the "cut."
**3. "Air-drop" the distributor to new markets or regions**
Every company has strategic key sales regions, strategic key share regions, and possibly strategic key development markets or key profit markets. If the old distributor is no longer suitable for key sales regions, we can "air-drop" them to other markets, such as key development markets (these terminated distributors are often experts at market development) or key share regions, allowing them to continue contributing.
If the company doesn't have such classifications, the regional manager can place them in adjacent regions, letting them become "new veterans" in expanding territory.
Generally, companies nowadays don't favor terminating distributors; they prefer transformation. So, we should use company philosophy to communicate with distributors, helping them progress. Mutual progress leads to faster and better goal achievement. This also encourages distributors to understand that "reality is reality"—don't try to stop the tide of market progress or stand still. If they don't progress, they'll eventually be abandoned by the market. We should remind distributor friends that in the end, it won't be the company that deals with you; the market will ruthlessly eliminate you!
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## Citation metadata

- Publisher: New Distribution
- Author: 谭长春
- Published: 2016-09-25
- Canonical: https://xinjignxiao.com/en/articles/sales-director-want-to-cut-a-major-distributor-but-fear-market-impact-he-adc07c83/
- Original source: https://mp.weixin.qq.com/s/4w684tD-2bSwfoz84RSXaA

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

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