Developing community-based outlets such as tobacco, alcohol, grocery, and small department stores as dairy sales terminals is a strategy already used by many dairy companies. The decision to use this sales channel for dairy products is based on four main reasons: First, as the pace of life accelerates, convenience has become a primary choice in daily consumption, and the numerous community sales terminals can precisely meet this consumer habit. Second, it is determined by the current state of commodity circulation in China. Analysis of recent data on total retail sales of consumer goods shows that modern retail channels, represented by hypermarkets and chain supermarkets, account for only 2% of total retail sales nationwide, and even in cities, the proportion is less than 20%. In other words, in cities, over 80% of sales are still achieved through traditional retail channels. Third, it is dictated by the special characteristics of the dairy industry. In urban dairy consumption, pasteurized milk with a short shelf life is mainstream, which has a short shelf life and high inventory and sales risks, making it difficult to sell through conventional retail channels. Fourth, it is determined by the strength of the enterprise. Some city-based dairy companies build their own specialty stores to establish sales channels. These channels are closed, effectively blocking foreign competitors once established, and offer high stability. However, due to limited resources, they cannot be widely deployed, resulting in small channel scale and low market coverage, leaving opportunities for competitors. Therefore, leveraging existing community outlets such as tobacco, alcohol, grocery, and small department stores can greatly improve the company's sales network and lay a solid foundation for sales.
This type of sales channel has advantages that other channels cannot match:
Good cash flow: Since products are basically settled in cash, there is no risk of accounts receivable, which not only reduces financial risk but also ensures smooth and efficient capital flow.
Easy channel expansion: Developing community outlets like tobacco, alcohol, grocery, and small department stores as dairy sales channels involves no complex procedures or formalities, fast development speed, low entry barriers, and avoids the cumbersome procedures and high costs of entering supermarket systems.
Favorable for brand communication and consumer loyalty: Due to the large number of terminals in the channel and wide consumer contact, the exposure rate of information is high, which is very beneficial for brand communication. Moreover, the spatial proximity and personal relationships between terminals and consumers facilitate word-of-mouth promotion, which is highly effective and can easily cultivate consumer loyalty.
Quick response to market changes: The short-shelf-life product characteristics determine a flat channel structure, which shortens information transmission time and preserves the authenticity and accuracy of information. Therefore, companies can capture market and consumer demand changes at the first opportunity and adjust marketing strategies promptly.
Although individual community terminals are small in scale, weak in influence, and generate low sales, the large number of terminals can easily form cluster scale advantages, making a significant contribution to overall sales. For example, a city-based dairy company in the southwest, with nearly 2,000 community retail terminals in the main urban area, achieves monthly sales of over 2,500 tons of dairy products, accounting for more than half of its monthly sales. Therefore, as long as the advantages of community terminals are leveraged, big results can be achieved in these small outlets.
To fully utilize the role of numerous community terminals, extensive detailed work is required in terminal construction, management, service, and daily maintenance. Based on my experience serving several dairy companies, establishing direct-operated community sales channels requires particular attention to the following important tasks.
Establish a dedicated team for community terminal development and management
Developing community sales channels represented by tobacco, alcohol, grocery, and small department stores has inherent drawbacks that are hard to overcome. These outlets often have poor storefront images, single service functions, and cannot meet consumers' rising shopping demands. Moreover, these channels are highly unstable; merchants are inherently profit-driven and will sell products from whoever offers the most benefits. Additionally, individual terminals vary greatly, with uneven management levels and staff quality, making conventional management models often ineffective.
Given the various shortcomings of community terminals, to fully leverage their sales potential, it is essential to establish a dedicated terminal support and management team solely responsible for daily maintenance, service assurance, and management support. In practice, to improve management efficiency and ensure service quality, the entire market should be divided into several districts, with each district assigned to a salesperson who is fully responsible for all tasks.
Development of community sales terminals
Finding community terminals with location advantages and good business conditions can quickly open up dairy sales. When developing community terminals, geographical location is a critical factor. With the continuous development of urbanization, the division of urban functional areas has become increasingly clear. Candidate areas should be classified according to their urban functions, such as residential, commercial, school, factory, and tourism/leisure areas. Community terminals rely on residential communities to serve residents, so large residential areas and school districts are the preferred areas for establishing sales terminals. Considering promotional needs, commercial areas with high foot traffic are also a good choice. After determining the target area, specific site selection should consider locations such as inside residential communities, at community gates, street corners, school gates, commercial streets, and major traffic intersections. Additionally, the convenience of store access should be observed. Consumers buy dairy products at community terminals mainly for convenience; if the terminal is not easily accessible, even a large surrounding population will not yield good results.
Furthermore, site selection should be forward-looking. For example, if an area currently has a small population but is planned to become a residential area according to urban planning departments, it is wise to enter early to secure effective store resources, laying the foundation for future community channel construction, and the cost of early entry is relatively low. Besides location, the business condition and commercial quality of the operators of the proposed terminal should also be observed and evaluated. From my experience, terminals with overly good business are not necessarily a good choice because if the store is too busy, the merchant may not have time to focus on a particular product category. Milk, as a relatively special product, requires dedicated attention to achieve good sales results. Developing community sales terminals requires high market penetration; only by establishing a dense distribution network can the scale effect of community retail be realized, which necessitates a large number of terminals. In practice, the number of retail terminals can be determined by dividing commercial areas or specifying population size. For example, a commercial area can be defined by a 3-5 minute walking distance radius, with one terminal selected per such area; or one terminal per 1,500 to 2,000 people.
Develop a reasonable product mix and pricing strategy
City-based dairy companies' advantage lies in short-shelf-life pasteurized milk. Even if they develop ambient milk products, it is mainly to fill gaps and defend against invasion by external ambient milk products. Therefore, community terminals, as the key sales channel for city-based dairy companies, should primarily offer pasteurized milk. At the same time, these terminals mainly serve household consumption, so the product mix should be oriented towards family consumption. Additionally, with the accelerating pace of life, the on-the-go consumption market is growing rapidly. Developing small-pack, nutritious, and great-tasting products for the on-the-go market to supply community retail channels can yield good results.
Currently, most companies in the community retail market follow a low-quality, low-price approach. As the market environment changes, there will be a growing demand for high cost-performance products. Dairy companies must recognize and grasp this trend and adjust their product mix early. Regarding pricing strategy, companies should establish retail prices, dealer prices, factory prices, and rebate systems based on their market objectives (share-first or profit-first) and the competitive landscape.
Build a cold chain system for terminals
Pasteurized milk requires storage under refrigeration, so terminals must have cold chain systems. The completeness of cold chain facilities in community terminals directly affects product flow and sales in the channel. There are two methods for building community cold chain systems: first, utilize and integrate existing cold chain facilities at terminals, such as the store owner's own freezers or refrigeration equipment provided by other manufacturers; second, self-build by the company, where the company purchases equipment and rents, sells, or provides it free to terminals. Using this method to build cold chain systems offers fast development speed, wide coverage, and unified equipment with better image, but requires significant capital investment.
Terminal visualization
As mentioned earlier, these community channels have poor storefront images and cannot meet consumer shopping needs. Since city-based dairy companies regard community networks as an important sales channel, they should continuously upgrade the channel's quality to give it strong vitality. This can be achieved by making store signs, counters, and other elements to unify the terminal's storefront image; setting clear requirements for refrigerator placement, door orientation, number and position of promotional posters, and strict requirements for product display; and striving for uniformity in visualization across all terminals to enhance terminal image and create a strong visual impact.
Training for community terminals
In warfare, "troops and horses move before provisions." Dairy sales differ from other products, requiring more dairy knowledge and sales skills. Therefore, "training should precede sales." However, community terminals are numerous, and sales personnel quality varies, making centralized training impractical and ineffective. Companies can create operation manuals for dairy sales, including basic dairy knowledge, storage methods, sales techniques, word-of-mouth promotion methods, and solutions to common sales problems, and distribute them to community terminals, requiring operators to learn dairy management methods, with explanations provided by terminal maintenance staff. When new products are launched or new promotional activities are held, operation guides or service bulletins should be compiled to help community terminals quickly understand new products or promotions, ensuring smooth operations. Training for sales terminals should be ongoing and repeated to instill knowledge in terminal operators.
Motivate sales terminals
The ultimate goal of community terminal operations is to generate profit. To fully leverage terminal enthusiasm, terminal interests must be valued. A basic premise for cooperation between companies and retail terminals is the reasonable distribution of profits; only by meeting terminal interests can channel smoothness be ensured. Providing reasonable profit margins to terminals is the most direct and effective channel promotion method.
Additionally, to strengthen terminal management and increase enthusiasm for dairy sales in the early stages of community terminal development, incentives should be considered for better-performing terminals in areas such as purchasing and product display.
To better stimulate terminal sales enthusiasm, sales rebates can be issued to terminals during daily sales to boost sales volume. The rebates are not extra funds from company profits but rather a phased distribution of the terminal's due profits. This method not only motivates terminals but also uses rebates as an economic lever to adjust and regulate terminal business behavior.
Besides economic benefits, retail terminals also desire recognition and respect from the company, i.e., psychological value benefits. This is because community terminals often perceive themselves as being in a weaker position compared to companies, leading to strong defensive psychology. If companies can make terminals feel valued and respected, it will also stimulate their sales enthusiasm. Economic benefits are the foundation of psychological value benefits, which enhance and reinforce economic benefits. To satisfy terminals' psychological value needs, companies should treat terminals as partners, improving their dairy management capabilities through training, on-site guidance, information provision, and quality service, making terminals feel equal to the company and thus achieving psychological value satisfaction.
Through terminal promotion, the goal is to transform terminal operators into full-time promoters for the company, which is highly beneficial for rapidly increasing sales and brand communication.
Establish inventory and ordering management systems
Short-shelf-life dairy products have very short shelf life, with high inventory and sales risks. If the order quantity is too large and not sold within the shelf life, it causes losses for the terminal and dampens enthusiasm; if too small, it loses sales and profits and misses market opportunities. Therefore, strong planning for inventory and ordering is essential. For terminals new to dairy sales, terminal salespeople should help operators understand sales patterns and strictly control inventory and order quantities.
These sales terminals are scattered throughout the city, mostly located in residential areas with complex traffic conditions, making logistics distribution difficult and costly. Typically, company distribution cannot cover all terminals daily. This requires terminals to always know their daily sales inventory and forecast the next day's sales, striving for zero inventory sales while meeting market demand.
Conduct daily visits and maintain customer relationships with sales terminals
Management of community terminals is mainly carried out through daily visits. Salespeople should make careful arrangements for their visits.
First, develop a visit plan, determining the visit area and route, and prepare necessary materials such as promotional materials. During visits, salespeople should understand and record the terminal's sales situation in detail; verify whether the terminal has fully implemented the company's sales policies and promotional activities; check inventory levels and product shelf life; inspect product display and visualization, making adjustments as needed; and collect market information and competitor sales dynamics.
A common mistake many salespeople make is frequently visiting terminals with high sales or good relationships, while visiting less often those with low sales but potential, or those with high sales but poor relationships. This practice should be absolutely avoided.
Salespeople should analyze the execution of their visit plans.
First, whether the visit plan was seriously implemented. For example, plan the number of community terminals to visit daily, then compare with actual visits. If the monthly plan completion rate is low, analyze the reasons. Second, salespeople should make constructive visits, meaning each visit should help the terminal's management. If terminals welcome visits and do not see them as a nuisance, the visit is successful.
Good emotional relationships between salespeople and community terminals promote sales work. Maintaining good relationships with community terminals is an important part of daily work. Salespeople should regularly review their relationships with customers and seek to deepen emotional connections. Good customer relationships make terminal operators feel valued and respected, which fosters enthusiasm for selling the company's products.
Building good customer relationships means befriending terminal operators, but not being friends.
Exchange opinions and transmit information
Salespeople should frequently exchange opinions with community terminals. Salespeople might reflect: do they regularly exchange opinions with key community terminals? If not, they should consider how to improve communication methods.
Information transmission, simply put, is the downward and upward flow of information. Salespeople should convey the company's sales policies and promotional plans to community terminals. Then, they should feed back problems exposed in daily sales and new market changes to the company. Community sales terminals have direct contact with consumers, and through communication with consumers, they can learn about consumers' views and attitudes towards the company's products, services, and sales policies; understand new consumer needs for products and services; understand consumers' awareness of dairy products; and understand consumers' attitudes towards competitors. The value of this precious first-hand market information to the company is self-evident. Therefore, opinion exchange and information transmission between salespeople and terminals are very important.
When transmitting information, salespeople should follow four principles: first, the information channel should be smooth; second, the speed of transmission should be fast; third, the content should be accurate; fourth, the transmission should be constructive. The fourth is the most important. When conveying company information to terminals, salespeople should not simply relay rules and regulations, acting merely as a "mouthpiece," but should combine the actual situation of each terminal and introduce and explain company information, sales policies, promotional activities, and product knowledge in plain language. When feeding back terminal information to the company, they should not just be collectors of information but should organize and analyze it, extracting valuable insights to shorten the company's response time to market information.
Rectify market order
During the construction, development, and operation of community terminals, improper practices may inevitably occur, such as vicious competition disrupting the market, cross-regional selling, and unauthorized price cuts. Although these may increase sales in the short term, they harm the company's overall interests and are detrimental to the development of the entire sales channel. Therefore, making community terminals understand, comply with, and cooperate with company policies is an important aspect of salesperson management. Harmful market behaviors should be detected and stopped early, resolving problems in their infancy to prevent escalation.
Establish and improve customer service and complaint systems for terminals
Relying solely on terminal salespeople cannot fully solve the various problems that arise at community sales terminals. Some common issues in community terminal management can be addressed through the company's customer service system, such as service hotlines, and also by setting up complaint hotlines to facilitate terminals reporting issues with product distribution and salesperson daily management.
Understand the role of sales channels and properly resolve channel conflicts
Dairy companies generally do not choose a single sales channel but use multiple channels simultaneously, such as supermarket channels, home delivery channels, and community terminal channels. The diversity of sales channels inevitably leads to conflicts between channels.
First, correctly understand the role of different sales channels. The supermarket channel is a newly emerging sales channel in recent years. This new form of commodity circulation offers a wide variety of products, a good shopping environment, and features of low prices and quick shopping, meeting consumers' "one-stop" shopping needs. Therefore, it has developed rapidly and has become an important part of urban commodity circulation channels, and is the development direction of commodity circulation. This modern retail format attracts a large number of urban consumers with strong purchasing power and newer consumption concepts. These consumers lead urban consumption trends and act as opinion leaders, having a profound impact on the consumption behavior of other social strata. Therefore, this channel is an excellent place for dairy companies to establish corporate, product, and brand images.
Companies should not neglect the operation of supermarket systems. They should use supermarket channels to comprehensively enhance the image of the company, brand, and products, and this image enhancement can greatly promote the establishment and development of traditional community sales channels. These two sales channels have their own focuses and complement each other, forming an organic and unified interactive sales channel system.
The home delivery channel is the earliest type of sales channel developed by city-based dairy companies. Emphasizing service is a characteristic of this channel. It has great appeal to consumers who value convenience, and with the aging population and improved living standards of the elderly, milk consumption capacity is increasing, so the vitality of the home delivery channel remains strong. It is a powerful supplement to other sales channels.
The main manifestation of conflicts between different sales channels is: promotional activities targeted at one channel often trigger opposition from operators of other channels, and may encounter resistance. Companies sometimes have to adjust their originally planned marketing strategies under channel pressure. If this continues, it is not the company controlling the channel but the channel holding the company hostage. To fundamentally resolve conflicts between channels, companies should proactively differentiate products, prices, and promotions based on the characteristics and roles of different channels, and combine market environment and competitive situation to assign different market missions to different sales channels. For example, the supermarket system focuses on image, launching high-end products with a high-quality, high-price strategy; community channels offer high cost-performance products to drive volume and profit; and the home delivery channel leverages its service advantages to effectively supplement the other two channels.
The above are important matters to address in the construction and daily management of community sales channels, most of which are details in sales management. In fact, sales management is the concatenation of many small links. Once details are resolved, seemingly complex sales management becomes much easier.
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