Because of the pandemic, many distributors' businesses have been affected. Those in catering, wholesale, and gift boxes have been hit hardest. But we've also noticed that some multi-channel distributors have suffered less, or even seen growth.

Let's look at two cases:

Case 1: A catering distributor stocked up heavily for the Spring Festival, planning to sell during factory reopenings, New Year's Eve dinners, and hotels. But due to the pandemic, warehouses are clogged, products are basically unsellable, capital is tied up, and with employee and warehouse costs, it's now a big problem.

Case 2: A distributor of Haitian seasonings, Chubang, and Master Kong instant noodles operates across catering, circulation, and modern trade. Although catering was hit hard for Haitian, the growth in home consumption through circulation and modern trade offset the catering losses.

In fact, many distributors have a single-channel problem. The pandemic just exposed it. Some might say it's because of their product categories that they escaped, and I don't object. While category structure is important, I believe multi-channel operation is equally crucial.

Full-channel or multi-channel operation not only improves resilience—after all, black swan events like COVID-19 are rare—but most importantly, it can deepen sales and drive more profit growth.

At this point, many distributors might think, "I already do full-channel: traditional small shops, wholesale markets, chain stores, community supermarkets, restaurants, even gas stations." But perhaps Mr. Li Feng, Executive President of Hongye Hengda Trading, would disagree!

To give you a sense: Hongye Hengda has 5,000 terminal customers across "various regular channel outlets" and another 5,000 special channel clients. To discuss how distributors can expand across channels, New Distribution invited Mr. Li Feng to share how Hongye Hengda manages its channels.

1. What are a distributor's special channel clients? 2. Fresh supermarkets are rising—seize the opportunity. 3. Modern trade isn't hard; you just don't know how.

-01- What are a distributor's special channel clients?

When it comes to special channels, beverage distributors might think of gas stations, scenic spots, hotels; daily chemical distributors might think of corporate welfare group buys. But it's not just that. Special channels go far beyond what traditional distributors imagine.

Hongye Hengda categorizes special channels by industry or system, totaling nearly 30 different types. Imagine standing on the street and looking around—anyone could be your client.

For example: factories, enterprises and institutions, community property management, real estate, home furnishing retail (like Easyhome), department stores, petroleum systems, insurance systems, and even cross-industry cooperation with local distributors.

Through these, you can see that your special channels are not just what you think. Whether you distribute alcohol, beverages, milk, or other categories, many industry systems are your potential clients.

For instance, in the education system, education bureaus and school cafeterias need not only rice, flour, and oil, but also cleaning supplies; offices need bottled water. Railways and highways sell bottled water, snacks, and boxed meals (rice, flour, oil)—many industries have different needs.

If you have 5,000 special channel clients, each buying 10,000 yuan a year, that's 50 million yuan in business. How could sales and profits not grow?

For special channel development, Hongye Hengda advocates "all-staff marketing": everyone can sell to special channels and earn rewards. Frontline salespeople are limited in number and reach. Since these channels require finding key decision-makers, only all-staff marketing can bring in more clients and sales.

Based on my personal experience and Hongye Hengda's practice, here are a few examples:

1. A cleaner sold 480,000 yuan in group purchases in 2019.

A cleaner at the company is from a nearby village. Some villages around cities give welfare benefits during holidays, like rice, flour, and oil. The cleaner proactively talked to the village chief, saying she works at a good company that also distributes grain and oil, and she uses the products herself. She suggested they consider using the company for this year's welfare. Eventually, she convinced the village chief, and they've bought from Hongye Hengda for two consecutive years. With a village of 2,000-3,000 people and a 200 yuan per person standard, they took over 400,000 yuan in goods in 2019.

2. An office clerk sold 220,000 yuan in 2019.

An office clerk had a relative working at a government unit who ate at the unit cafeteria. She recommended Hongye Hengda's rice, flour, and oil. The relative persuaded the unit to buy from Hongye Hengda for the whole year. They took over 20,000 yuan a month, totaling over 200,000 yuan a year.

3. A local gas company expanded into e-commerce for home appliances.

Because of the pandemic, a local gas company started doing e-commerce for home appliances. Gas companies need to visit homes to collect gas fees, and with consumers unable to go out, they extended into home appliance e-commerce. One distributor sold over a million yuan in goods.

In the current context of intense competition and declining sales in traditional channels, if distributors keep circling around traditional channels and don't go out to develop new ones, achieving sales growth is relatively difficult. Conversely, if you have 30 systems as clients and add hundreds of special channel clients, that's extra increment.

Of course, developing these special channels sometimes requires the boss to personally use their network and friends; salespeople may not solve it. At that point, the boss's network circle is crucial.

Besides industry systems, there are seasonal channel clients at special times, like "spring plowing." Farmland plowing typically requires a concentrated half-month to a month, and farmers buy in advance. Distributors can seize opportunities with instant noodles, bread, ham sausages, etc., by doing concentrated distribution and running promotional activities with seed and fertilizer companies, like bundle sales or gifts with purchase.

-02- Fresh supermarkets are rising—seize the opportunity

One retail format—fresh supermarkets—is rising now, and distributors can't ignore it. Fresh supermarkets are getting bigger, from 300-500 square meters to 700-800 square meters.

Undoubtedly, fresh supermarkets focus on fresh produce, which is the FMCG of FMCG—fast-moving and high-frequency. They attract huge foot traffic.

Take a 1,000-square-meter fresh supermarket in Anshan: daily foot traffic is around 5,000 people. To capture this channel, Hongye Hengda started assigning dedicated staff in the second half of 2018.

For fresh supermarkets, you should enter with the full product range and invest appropriately. Invest in process metrics: rice bins, shelves, floor displays, merchandising, and multiple display points. Especially during peak times like Spring Festival and Mid-Autumn, increase investment to secure displays.

Also, fresh supermarkets are mostly run by individual owners, not corporate chains. Distributors can leverage the power of section staff. Build good relationships with them, because they decide whether your products get shelved on time, whether they reorder when stock runs low, and whether they promote your products to consumers.

For Hongye Hengda, the fresh supermarket channel alone grew 50% in 2019, with very healthy profit growth.

-03- Modern trade isn't hard; you just don't know how

Many distributors think modern trade (chain stores and A/B-class large stores) is tough due to long payment terms and high fees. But I believe the core of modern trade is two key points: relationships and professionalism. Relationships mean your rapport with buyers and sales staff.

Three indicators drive modern trade sales growth: 20% from new consumers, 25% from brand switching, and 55% from loyal brand consumers.

So, the core of modern trade is winning over that 20%+25%. How? Through sales data analysis! I once coached a distributor with 14 A/B-class stores, each doing 100,000 yuan a month. Costs were high, payment terms long, and some stores even closed, leaving hundreds of thousands in unpaid goods.

The distributor sent me sales, item mix, profit margins, and pricing data. I also had him use his relationships to get competitor data from four stores. We compared and analyzed, looking at the top 3 brands' product structures, prices, and specs against his own to find problems.

For example, if competitors' main products are priced at 5 yuan and yours at 3 yuan, and you're stuck with low-price bestsellers, you can't beat their high-price items. Also, we saw that the 5-6 yuan price band had the highest sales. Once we found that, the first step was to adjust the product mix.

My approach: Analyze competitor POS data monthly, and use it to attack the largest competitor. If you're the largest, defend against competitors catching up or attacking a specific product. Also, analyze your own POS data to optimize spending and product mix for growth.

After three months of coaching, the distributor told me sales had doubled. In six months, they hit their original annual sales. Gross margin also rose from 11% to 15%.

Conclusion:

Where users are, products should be; the closer you are to users, the farther you are from competition, and the greater your sales opportunities. Multi-channel expansion not only reduces a distributor's operational risk but also wins favor with brand owners.

Future distributors will become more intensive and expand across all channels, not just for their own development but also for brand development. Of course, one point to emphasize: doing full channels doesn't mean spending equal time and effort on all. Match the business share of each channel with personnel and resources, analyze ROI, and don't put the cart before the horse!