---
title: "Scale Without Profit? Six Steps to Escape the Distribution Dilemma"
description: "Step 1: Product Introduction. Strictly speaking, a distributor's product management begins with product introduction. When selecting products to distribute, you must start from your own actual situation. The products you represent must be high-quality, meet market demand, and complement your current product line. This is crucial. Unrealistic or face-saving blind product introductions are doomed to leave distributors with excess inventory, increasing losses and wasting resources. For example, a distributor who had a good relationship with a salesperson from a instant noodle company later accepted a large shipment of beverages from that salesperson after he switched jobs, only to find the products unsellable and defective, leading to losses."
author: "崔自三"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2015-05-24"
language: "en"
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# Scale Without Profit? Six Steps to Escape the Distribution Dilemma

> Step 1: Product Introduction. Strictly speaking, a distributor's product management begins with product introduction. When selecting products to distribute, you must start from your own actual situation. The products you represent must be high-quality, meet market demand, and complement your current product line. This is crucial. Unrealistic or face-saving blind product introductions are doomed to leave distributors with excess inventory, increasing losses and wasting resources. For example, a distributor who had a good relationship with a salesperson from a instant noodle company later accepted a large shipment of beverages from that salesperson after he switched jobs, only to find the products unsellable and defective, leading to losses.

Step 1: Product Introduction
Strictly speaking, a distributor's product management begins with product introduction.
When selecting products to distribute, you must start from your own actual situation. The products you represent must be high-quality, meet market demand, and complement your current product line. This is crucial.
Unrealistic or face-saving blind product introductions are doomed to leave distributors with excess inventory, increasing losses and wasting resources, causing visible or hidden losses.
For example, a distributor had a good relationship with a salesperson from an instant noodle company. Later, that salesperson switched to a beverage company and approached the distributor, promising special policies. Out of obligation, the distributor stocked a large truckload of products. Unexpectedly, the products not only sold poorly locally but also had quality issues like leakage, eventually forcing the distributor to sell at a loss.
Step 2: Functional Positioning
Product management must clearly define the functional positioning of the product portfolio. This positioning, in my view, should be divided into two types:
First, external positioning, i.e., the role in the market, such as the common saying: "low-end products grab market share, mid-range products drive sales, high-end products build image." In fact, whether it's brands from different manufacturers or different product lines from one manufacturer, whether they play the role of "disruptor" or "cannon fodder," or long-term products to cultivate the market and build brand for long-term interests, there must be a clear product role positioning, and confusion should be avoided.
Second, internal positioning, i.e., which brands or products are for spreading costs, and which are for seeking profits, must have a clear positioning judgment. High-end products may not necessarily yield high profits, and low-end products may not be without potential; all decisions should be made after careful analysis.
Some distributors do this well. They categorize their products into four types: high volume but low profit, high volume and high profit, low volume but high profit, and low volume and low profit. Then, they eliminate the low-volume, low-profit products, and use the high-volume, low-profit bestsellers to bundle the latter two categories, thereby improving the product structure, driving the sales of the entire product portfolio, and ultimately building a well-functioning profit platform.
Step 3: Promotion and Sales
This is the focus of product management, but it must be managed through the process. Managing the process includes the following aspects:
First, whether the products are accepted by downstream channels, such as distributors and retailers. If not, what are the reasons? Is it a brand issue or product quality defect? Is the price too high or the value for money insufficient? Or is the promotion inadequate or lacking innovation? If accepted, what factors contributed to this recognition? Can these factors be replicated and promoted?
Second, consumer acceptance. Consumers are the touchstone of whether a brand or product can stand firm in the market. The product's taste, packaging, price, and customer return rate need careful observation by the distributor's team. When customers purchase products, do they focus on brand, product, origin, or purchase channel, price, promotion, and in what order? These also require careful research and analysis by the distributor's team, and timely communication with the manufacturer for improvement.
Third, compared to competitors, conduct SWOT analysis. For example, what are the product's strengths or weaknesses? What about threats and opportunities? How is the actual market performance, and what needs adjustment or improvement?
Fourth, product sell-through work, including: product display and merchandising, promotion design and execution effectiveness, and terminal customer relationship building. How effective are these efforts? Have they been done properly and ahead of competitors? These all require inspection and summary by the distributor.
Step 4: Flow Management
Product flow management includes inventory and inventory turnover.
We can adopt the 1.5 times safety stock rule commonly used in the FMCG field to maintain reasonable inventory levels, avoiding stockouts, shortages, or excessive stock that ties up capital.
It is important to remind distributor friends: do not covet attractive manufacturer policies and accept products far beyond your actual digestion capacity, leading to product aging, nearing expiry, or even expiration. Whether you handle it at your own cost or make the manufacturer "bleed," it is a tricky matter. If not handled well, it may not only be a double loss but could also lead to a falling out or even a split.
Inventory turnover means that when terminal inspection personnel do merchandising, they should promptly move products from downstream channel warehouses to shelves using the first-in, first-out principle, to facilitate customer selection. This is a key requirement that distributors should clearly specify when formulating terminal inspection standards.
Step 5: Assessment and Elimination
Distributors should regularly review their product portfolio, for example, quarterly, semi-annually, or annually, and set certain sales or profit standards for assessment. Those that meet the standards are retained; those that do not, the "chicken rib products," should be eliminated in a timely manner, with an elimination plan.
For retained products, according to the Pareto principle, determine which products are key for sales or investment, and which need cultivation or promotion and require manufacturer support.
Step 6: Lifecycle Management
In the new product introduction stage, distributors should offer downstream distributors higher profit levels than competitors, conduct product research and forecasting, and maintain timely and good communication with the manufacturer.
In the growth stage, vigorously expand sales channels, increase sales outlets, improve coverage density, and provide good sales service.
In the maturity stage, cooperate with the manufacturer to adopt more forms of promotion to drive sales, achieve seamless sales network coverage, suggest product improvement and upgrades, and pay attention to cultivating new products.
In the saturation stage, continuously explore new channels, such as group purchase channels and internet channels, and focus on promoting improved and replacement products to compensate for sales losses caused by product aging.
In the decline or death stage, adopt natural sales methods to reduce operating costs, or decisively exit early to take the initiative, and timely promote new brands or products to maintain normal market operation and growth.
Products are the foundation of sales and the source of profit. Only by doing product management well and fully leveraging the different functions of each product group can distributors truly grasp the overall business situation. Do what should be done and refrain from what should not be done, to be more proactive, to put sales on a virtuous cycle, and to continuously create a larger development platform.
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