Hello friends. I am Yuan Lai from New Distribution. Small dealers rely on luck, medium dealers rely on management, large dealers rely on direction. These are some insights and thoughts I have recently summarized based on the dimension of dealers' business scale. Small dealers rely on luck and courage. You bet on a brand, follow it, build a basic channel network through it, and then continuously add more products to this terminal network. Medium dealers rely on management and professionalism. When you have agency rights for three to five leading brands and have reached a certain scale, you start to build a team. At this point, the importance of management is self-evident. Management is not just about managing people, but about how to make frontline salespeople truly execute professional sales actions (display, promotion, negotiation, etc.). Large dealers rely on direction and choice. When you reach a certain business scale, brand manufacturers start to approach you proactively because you have more comprehensive channel coverage, stronger capital, and a more complete team. At this stage, the test is the boss's understanding of the business. Where should the business direction go? There are four paths; which one to take? Perhaps every path is correct, but the fear is that you realize halfway that it's wrong and have to switch. This article discusses the core operational obstacles and difficulties at different business scale stages, hoping to inspire and provoke thought among dealer bosses. Before we start, let me explain that due to differences in product categories, channel coverage, and cities, there is no strict standard for the operational characteristics corresponding to business scale. The reference is mainly third- and fourth-tier cities. Based on business scale, I divide the business into three stages:
Stage A: 10-20 million yuan business
Stage B: 20-40 million yuan business
Stage C: 40-80 million yuan business Let's analyze the specific core operational obstacles at each stage. Stage A: 10-20 million yuan business Dealers at Stage A, with a business volume of 10-20 million, have achieved TOP5 positions in some channels by distributing one or two leading brands. It is precisely by doing well with one or two leading brands (for daily chemical sub-categories, multiple brands are needed) that they achieve the leap to 20 million and gradually start diversifying their brand portfolio. Similarly, the core difficulty for Stage A dealers is obvious: the key reason they cannot reach 20 million is that they have not selected or cultivated a core strategic brand to build a basic local channel network. In a third- or fourth-tier city (not a county-level market), if the business hasn't reached 10-20 million, it's likely that there is no brand with over 5 million in sales. Without that, their local channel coverage is superficial, with only one to two hundred outlets. The boss's mentality is: "This is basically it, enough to survive." Stage B: 20-40 million yuan business Dealers at Stage B, with a business volume of 30-40 million, have started diversifying their brand portfolio. In one or two sub-categories, or under large-capacity categories, they have achieved a certain market dominance through a combination of several brands, gradually forming a partial category advantage. With 30-40 million in business, dealers begin to have more shelf resources at the store level. The core operational obstacles for Stage B dealers not reaching 40 million are: Either a lack of capital, unable to bear the store credit period and the funds needed to choose more brands.
Or facing management issues, especially the process, standardization, and institutionalization of internal organization management. If we talk about specific manifestations, it's the management of personnel. With 10-20 million in business and five to seven people, the boss can shout and information is transmitted with zero loss. The boss is also running on the front line, knowing the market situation, essentially still a self-employed individual. Employees' actions and results are rewarded accordingly. But when it reaches 30-40 million, with more than ten people, the internal organization begins to have layers, departments, and supervisors or managers. Information transmission inevitably suffers loss and attenuation. With the prototype of a small company, you cannot rely solely on individuals; you need management, especially in the management of accounts and expenses with stores and manufacturers. For example, when a manufacturer invests in a system supermarket for a promotional event, the costs for special prices, ground promotion, gifts, and temporary promoters often need to be advanced by the dealer. Just calculating the price difference for special offers is a headache. For a promotional event, regardless of sales volume, you can't tell whether it's a loss or profit; even if it's a loss, you can't calculate how much. A responsible manufacturer supervisor will reconcile accounts with you, but an irresponsible one won't even bother. Moreover, even if accounts are reconciled, from the manufacturer's perspective, the profit and loss they calculate may not be the true profit and loss. Without a process-oriented and standardized financial management system, it is easy to form a financial "black hole" where money keeps circulating on the books, but as it circulates, the money decreases. You might think it's due to increased inventory or longer credit periods, but in reality, you've been losing money all along. In addition, in personnel management, never test human nature; use processes and systems to set bottom lines and principles. You can trust the team's combat capability, but you cannot let team management run loose. Only when people are managed well can work be done meticulously; only when people are managed well can the business continue to grow. Regarding the management of salespeople, dealers often find themselves in an awkward position: they don't know how to use them, don't know how to reward them, don't dare to manage them, and don't dare to punish them. Stage B must overcome the "hurdle" of management, but many dealers fail to do so and remain stuck at around 20-30 million. Conversely, why do most dealers today still remain at 20-30 million in business volume? Apart from upstream manufacturers' regional divisions and controls, more than 80% is due to poor internal management and limited management capabilities. Stage C: 40-80 million yuan business Dealers at Stage C, crossing from 40 million to 80 million, have overcome the basic management hurdle. At this point, dealers can dominate the local market in a large-capacity category or three to four sub-categories, such as sanitary products, oral care, personal care (sub-categories) or snacks, condiments (large-capacity categories). The core obstacle for Stage C dealers not reaching 80 million is unclear business development planning. Having reached 40 million, you already have a certain influence in the local dealer circle. Especially in sub-categories, you might even be a leader, with more resources and bargaining power. With more resources and influence, you often have more choices. But having more choices is not always a good thing, because you might look around, trying this and that. Without systematic category planning, today a friend introduces a brand that seems good, so you try it; tomorrow a manufacturer manager comes to you with high gross margins and strong expense support, so you want to give it a shot. Unable to focus and concentrate, without a clear business direction, you remain stuck at 50-60 million, unable to move forward. These are my thoughts on the typical characteristics and key obstacles of dealers at the current three stages. Dealer bosses can consider which stage they are in. Of course, I haven't proposed specific solutions here, but I believe that in many cases, defining the problem clearly is often more important than the solution itself. In the trading business, methods and measures are limited; you can learn whatever you don't know, and if you still don't understand, you can hire someone to solve it. The worst is not knowing where the problem lies. In conclusion Over the past decade or more, dealers have grown continuously due to demographic and economic dividends, store expansion dividends, and product demand dividends. With people, vehicles, and products, you could make money. But now, with the diversification and fragmentation of retail formats, competition is increasing, and the value dealers deliver locally is being diluted or even replaced. Low-price impacts, manufacturer direct control, and business diversion are becoming more common. With the differentiation of retail channels and competition for existing demand, the dealer business has entered an era of meager profits. In daily operations, if you're not careful, you won't make money and might even be doing fake business. Can the business still be done? Where should it go? Many dealer bosses respond: confused! We believe that in the current environment, the focus for dealers in 2024 and beyond should be: survive, outcompete peers; go out, expand your survival radius. When facing business confusion, looking inward often doesn't provide answers and may lead to more internal competition; looking outward, observing the thoughts and practices of excellent large dealers, may bring you different inspiration and thinking. From March 14-16, 2024, the [Supply Chain Revolution] 9th China FMCG Innovation Conference will be held in Chengdu, and the 2nd China FMCG Dealer Conference, co-organized by New Distribution and Zhoupu Data, will also be held simultaneously. At this conference, we will share the theme "City X Trade Circulation Business Development Model" and hope to bring deeper inspiration to the attendees. On March 15, a closed-door private session for dealers will be held: "Low-price impact, manufacturer direct control, declining customer traffic, what are the options for dealers?" with one-on-one dialogues with excellent large dealers to share experiences, explore business opportunities, and discuss era dividends. At the same time, we will invite 16 benchmark dealer bosses and relevant industry executives to share their latest thoughts on dealer business. We hope to provide direction for dealers in the face of drastic changes, set up a lighthouse, and at least ensure that business direction is not blurred or confused! The 2nd China FMCG Dealer Conference is not only an ideological feast of knowledge, cases, and methods, but also a conference that leads the future development of dealer business! In this era of supply chain revolution, a new business era will be born. We hope every participant will still have a place in this wave, and we believe this will be a conference worth attending! For business cooperation, please contact: 🔺Scan code for ticket consultation🔺