Click the image for details Introduction: Should salespeople force inventory on distributors? What if salespeople's inventory pressure crushes distributors? Inventory pressure exploits the distributor's reservoir function A recent article mentioned a distributor who gave up a brand that had been a main product and profitable for six years of cooperation. The reason was that the manufacturer's salesperson ignored the distributor's survival and only pushed inventory. This is a common situation. But should reality be like this? This is a fact. But the facts should not be entirely like this. Since the enterprise is the product side, when it seeks distributor cooperation, it is to let the distributor distribute the products. Distribution should have only one main function: the sewer function, which diverts products to various places. But because the end of the sewer is the consumer, the diversion (i.e., purchase) may not be smooth and may even be a bit blocked. Therefore, there is another popular intermediary function: the reservoir function. As enterprises use this sewer function more and more skillfully, and some do not treat distributors as partners but only use their value, they frequently, vulgarly, endlessly, and regardless of the distributor's survival, force inventory, eventually crushing the distributor. Why 1.5 times inventory? Coca-Cola has a 1.5 times inventory principle for channel stocking. I believe colleagues in the consumer goods industry are familiar with it, but at Coca-Cola, I never heard a precise explanation of why the inventory value is 1.5 times. It might just be an optimal value obtained from global Coca-Cola operations. But 1.5 times inventory should basically reflect the distributor's acceptance, a reasonable value for market inventory, and the enterprise's ability to alleviate some inventory pressure. Indeed, at Coca-Cola, although there is this basic standard, in actual application, it was not strictly followed. It was a natural result after both parties negotiated the purchase. Of course, for some large brand enterprises, even if there is inventory pressure, they will start from the factory side and give distributors the maximum possible supporting measures to promote and relieve the inventory pressure caused by stocking. It's not SELL IN but SELL OUT Why can't enterprises force too much inventory on distributors? Because the real sale of goods and collection of payment ultimately depends on selling out (sell out), not on the distributor buying in (sell in), as the sign of sales success. This is also a basic sales common sense. Because many enterprises, regardless of whether the distributor sells, just in a "trade" form, push the goods to the distributor and then ignore it, this kind of cooperation relationship will mostly break down in the end. I remember the first lesson when I joined Coca-Cola was to instill this concept: cooperation with distributors should not be trade, not just a trade partnership, but a true partnership, jointly achieving sales performance and work completion through consumer purchases. In reality, many enterprises are actually doing trade in the name of distribution and cooperation. As long as the distributor pays, after shipping, the enterprise basically ignores it, and the salesperson disappears. It is considered all good. Since it is trade, not asking about sell out, then at least they should give the trader more market operation fees or support. Once upon a time, Coca-Cola vowed not to pressure distributor inventory This is a true story. At that time, Coca-Cola in China already had a high market share and sales, and carbonated drinks were always questioned and sales were stagnant, so the sales system brothers still had quite a lot of sales pressure. The leadership always required that monthly performance goals must be achieved. It was not possible to say that if this month's sales were not completed, it would be okay, and next month not only complete but also make up for this month's sales. This strategy, common in many other enterprises, was impossible here. This put even more pressure on frontline salespeople. Around the 20th of a certain month, the leader held a meeting with the sales system business brothers, counted the possible sales for the month, and after summarizing, found that no matter how hard they tried this month, there might still be a gap in sales, and performance would not be achieved! (Of course, in Coca-Cola's sales process, there were supporting market and promotion measures, sometimes a salesperson even held five or six activity policies at the same time!) There was no way out. Coca-Cola basically had to complete tasks every month, and we never saw a month where the monthly task was not completed. What to do?! In the end, the boss, in order not to force unlimited inventory on distributors, specially rented a warehouse outside and issued sales orders, thereby achieving the task! (That is to say, in the closed loop of sales orders and distribution, the goods were sold out) Although extreme and even a bit unreasonable, the enterprise spent money and effort, but it was to avoid damaging the friendly partnership with distributors, not to burst the "reservoir" function that distributors themselves have a certain fragility, and not to destroy the channel that truly has its own capabilities, so they did this unavoidable thing. Afterwards, when some distributors learned about this, the regional Coca-Cola bottling plant's management team and business team won the unanimous respect of the distributors, and also strengthened the distributors' confidence in cooperating with such a company. Pushing inventory on distributors without limits is like killing the goose that lays the golden eggs, and it will definitely end in multiple losses! Even to the point of terminating the distribution cooperation as mentioned in the article, and the entire market collapsing. Although some frontline personnel took preventive measures in advance and had already prepared other distributors to take over, as long as such practices spread, it would also hurt the entire distribution channel. Imagine if this article is a real situation, and if the distributor knows it is the brand they cooperate with, won't they be more cautious in future cooperation? In short, manufacturers really should not crush the entire channel for a little sales volume! New Distribution will hold the 2019 (5th) FMCG + Internet Conference during the Chengdu Spring Sugar and Wine Fair from March 16 to March 18. This conference, we will focus on the topic of "Breaking the Game" and conduct in-depth discussions with many brand owners, supply chain service providers, distributors, retailers, etc. Compared to previous conferences, this summit will be fully upgraded. In addition to the original topics such as channel innovation, city distribution logistics, distributor transformation, it also adds multiple parallel forums such as new marketing cases, IP + FMCG empowerment, community group buying, innovative retail, etc. Through three days of ten high-density and high-quality expert sharing and exchanges, we believe every brand owner and distributor can learn the latest business models, expert opinions, and落地 methods, find new tools and methods for their own 2019 breakthrough, and return to the track of rapid growth. Review of previous conferences -END-