Click to read the original text for details. Introduction: Mr. Jiang has always been a key contributor to a certain beer company (and he considers himself a hero and veteran). When the company was expanding its territory, he established the entire sales situation 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 if it were the same as his baijiu area. As a result, he considered it natural to engage in cross-regional selling (diversion) and even price undercutting. Since the surrounding areas were not yet developed, the beer company tolerated his violations, viewing them as market penetration and circulation. But as the company's sales grew rapidly, it began seeking new distributors to jointly operate the Hengshui market with Mr. Jiang, with no intention of granting him exclusive agency rights. Consequently, Mr. 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 Mr. Jiang's distribution rights—what we often call "cutting" the distributor. However, after being "cut," Mr. Jiang was furious. When General Manager Li held a joint ordering conference with the newly selected distributor in the region, Mr. 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 said that dealing with the company's products would cause problems, and that it would be irresponsible to consumers. He urged the distributors present not to handle the company's products. The event ended in chaos, with both sides parting on bad terms. When a company "cuts" a distributor, there can be many similar situations where feelings are hurt and both sides suffer. In the worst cases, it might even end up in the media or in court. The above is just one example. How should we properly handle the process of cutting a major distributor so that we can part on good terms? This is a very tricky issue, and there is no absolute perfect solution. However, it is crucial and necessary to communicate fully, think of comprehensive measures, and when necessary, put yourself in the other's shoes, considering the common development of both parties' interests. Since some distributors lack the concept of growth and development and are no longer suited to a company's market expansion and reform, one company successfully handled the termination of a problematic distributor in a region in Liaoning. Let's look at how the regional manager planned and executed it:

  1. Make sales forecasts in advance and prepare for temporary replacement by surrounding regions When you mentally prepare to cut a problematic distributor, you should start looking for surrounding distributors as backups. Of course, sometimes the distributor won't notice because the "encirclement" action is in the surrounding markets, avoiding major conflicts before the action even begins, thus preventing the termination from stalling. Even if the distributor notices, they have no excuse, but they will be more cautious. So, developing new markets and distributors in the surrounding areas is one of the best preliminary steps to terminate a distributor. Reforms always come with pain, but channel reform and distributor selection cannot afford a decline in sales due to that pain. Therefore, it is essential to make sales forecasts in advance, fully anticipate the potential sales loss from cutting a major distributor, and then ensure other distributors make up for it. Finding a backup team to keep the market unaffected, prevent competitors from seizing opportunities, and maintain strong sales—these responsibilities may fall entirely on the regional manager. So, the regional manager must be thoroughly prepared in advance.
  2. Use company resources to dismantle the terminal Why are concepts like "reverse channel building," "terminal orientation," "deep distribution," and "terminal service" so popular now? Why are companies chasing these ideas like a trend? They all align with the principle of better serving consumers. By capturing the terminal, you get closer to consumers and gain core competitiveness. If you do it first, you demonstrate differentiation. This same idea can be applied when revoking a distributor's rights: Before the company decides to revoke the rights, it should strengthen terminal services in the distributor's area under various pretexts (such as improving shelf fill rates, enhancing merchandising, etc.), conduct terminal visits or surveys, and gather information on terminal stores—locations, sales, product mix, foot traffic, etc. This gradually undermines the distributor's foundation. Of course, if the distributor to be terminated is a pure wholesaler or a "sit-down" merchant who never pays attention to terminals, it's even easier. If their foundation is unstable, they cannot maintain a long-term distribution position in the market!
  3. Re-divide sales areas. Select new customers within the area and have them replace the old distributor Distributors won't easily let the company "destroy" them. Once they sense any hint of company action, they will definitely find ways to cause trouble. While the surrounding distributors temporarily fill in, the company must also study the situation in detail and prepare multiple contingencies. Besides calmly negotiating, you must also be prepared for the possibility that the distributor might do something extreme because they feel "suddenly killed." At this point, since the first step has been taken, you must follow through and not hesitate! New customers can be promoted from the old distributor's better second-tier distributors, or selected according to the principles for selecting new distributors. At this time, it's best to choose only those who are suitable, can seriously work the market, and have certain market and distribution capabilities. Don't use the old method of only considering strength without considering consequences. "Only choose the suitable, not the biggest or strongest"—this is the most popular principle for selecting distributors now.
  4. Increase terminal promotions to stabilize sales When the new distributor is quickly brought in, considering the transition period, you can run some terminal promotions to help the new distributor quickly stock shelves and fill the gap left by the old distributor. At the same time, having promotional policies might make it impossible for the old distributor to use their stock to cause trouble, or at least minimize the negative impact, and also help terminal stores quickly accept the new distributor. If you want the new distributor to quickly establish a position and expand influence, the company can also invest some resources to hold a product ordering conference with the new distributor to attract attention, maximize their network and market influence in the shortest time, thereby meeting sales requirements.
  5. Invest appropriately in consumer promotions Consumer promotions are another "double insurance" measure that regional managers use to guard against sales impact, with the same purpose as terminal promotions. At the same time, they also leverage several aspects to expand the new distributor's influence. The above are the usual steps and methods we adopt after revoking a distributor's rights. If we extend this, we can also adopt the following deeper measures to resolve such matters more satisfactorily:
  6. If conditions allow, the company can temporarily set up a liaison office or station to coordinate business If we don't want the newly selected distributor to become too large, or deliberately want to elevate their status, we can enter the market ourselves and jointly operate it in the early stages. This is also a lesson from the past, allowing the company to penetrate its management into the market from the start, making it easier to control. Setting up offices, liaison stations, or dispatching more salespeople to manage channels, terminals, and even promotions can basically eliminate any chance for the old distributor to turn the tables and cause trouble. This method essentially changes the traditional wholesale model, allowing the company to start entering the market and assisting distributors in managing it. This is also a result of companies transforming and gaining a deeper understanding of channels as the market changes.
  7. If possible, let the old distributor transform Often, a company revokes a distributor's rights because the distributor is no longer suited to market development in some aspects. However, any distributor still has some cooperative value. We can conduct a detailed analysis to find an area where continued cooperation is possible, which is also a form of revoking distribution rights. For example, let the distributor continue as a delivery provider (becoming a delivery provider rather than a distributor); or after revoking the rights, renegotiate to make them a distributor for a single brand (first lay off, then rehire), etc. "Goodbye is also a friend." If we can truly give the "cut" old distributor a rebirth and new cooperation, that's the best outcome. This minimizes the negative impact of the "cut."
  8. "Air-drop" the distributor to a new market or region Every company has strategic key sales regions, strategic key share regions, and possibly strategic key development markets, key profit markets, etc. If the old distributor is no longer suited to survive in a key sales region, we can "air-drop" them to other markets, such as key development markets (these terminated distributors are often experts at developing markets) or key share regions, where they can continue to play a role. If the company doesn't have such divisions, the regional manager can place them in adjacent regions, allowing them to continue as "new veterans" in expanding territory. Generally speaking, companies nowadays don't favor revoking distributors; they prefer to transform them. So, we should use the company's philosophy to communicate with distributors, help them progress, and achieve goals faster and better through mutual progress. This also encourages distributors to understand that "reality is reality," and not to try to stop the tide of market progress or stand still. If they don't progress, they will eventually be abandoned by the market. We should remind distributor friends that in the end, it's not the company that solves you; the market will mercilessly eliminate you! From August 22-24, the "2018 China Digital Innovation Conference (2018FDIC)" with the theme "Finding New Engines for Growth" will be held in Shanghai, hosted by the China FMCG Industry Association and organized by New Distribution. The conference will last 3 days, focusing on two main themes: marketing and supply chain, with six parallel forums on brands, channels, communication, B2B, same-city logistics, and innovative retail. We will invite industry experts, CEOs, and brand executives to deeply interpret the trends and drivers of digital transformation in the FMCG industry. We will invite over 500+ FMCG enterprise executives, 200+ B2B industry CEOs, and 1000+ major FMCG distributors to gather and discuss how the FMCG industry can use digital tools to achieve rapid growth again in the digital era. This conference will build a bridge for brand owners, distributors, retail enterprises, and marketing agencies, helping FMCG manufacturers get the latest information, understand best practices, and master more practical transformation skills. Proposed Invited Companies Conference Time: August 22-24, 2018 Conference Venue: Shanghai Baohua Marriott Hotel Conference Content: August 22: All-day registration Afternoon 14:00-17:30: Distributor same-city logistics parallel forum Evening 18:30-21:00: New Distribution Night Gala Dinner August 23: Theme: Marketing Digital Innovation Morning 9:00-12:00: Marketing Digital Innovation Main Forum Afternoon 14:00-17:30: Brand, Channel, Communication Parallel Forums August 24: Theme: FMCG Supply Chain Digital Upgrade All day: FMCG Supply Chain Conference Registration Method: Registration is now open. Long press the QR code below or click "Read Original" to register. Early bird tickets are limited to 200, with a 50% discount, available on a first-come, first-served basis! Registration Consultation: Ticket inquiries: Media cooperation inquiries: Highlights of New Distribution's Previous Conferences: Click the links below to review the highlights of the 1st, 2nd, and 3rd FMCG + Internet Conferences: -END-