The distributor business is not complicated; it essentially acts as an intermediary, passing goods from upstream to downstream. This positioning remains unchanged even today. Despite the unchanged underlying model, operational difficulty has multiplied. Lower product margins, declining per-store sales, rising operational costs, new channel impacts, and bare procurement by supermarkets all make the distributor business harder. Especially in the snack food category, distributors must also cope with the rapid expansion of snack stores, with discounts like 8.8折, 8.5折, even 5.5折... Over the past year, many snack food distributors told New Distribution that their business has been significantly impacted, with sales declining across various channels. Market changes are irreversible. How should distributors respond? Are there any distributor cases in the snack food category that show growth and are worth referencing? Last week, I met a snack food distributor and had a two-hour in-depth conversation. She has only 57 employees but achieved 200 million yuan in sales in 2024, with the goal of becoming Hefei's No.1 snack food brand operator. This distributor is Liu Lina, Chairman of Hefei Baili Food. What surprised me even more is that Baili Food does not have absolute top-tier snack food brands, yet it manages to make many of the brands it represents the No.1 in their sub-categories. Next, I will share the case of Hefei Baili Food with you. Small Goal: To Become Hefei's No.1 Snack Food Brand Operator "Looking back, luck has played a big part; we chose the right direction at every stage." When asked about Baili Food's competitive advantage, Ms. Liu shared with a smile. But after hearing Ms. Liu's entrepreneurial journey, in my view, it wasn't that Baili Food chose the right direction, but rather that it seized opportunities from industry changes at every critical moment. In 2010, Liu Lina rented a 20-square-meter stall in a wholesale market in Hefei, thus establishing Hefei Baili Food. In the early days, Baili Food focused on imported food, leveraging price advantages and market differentiation to quickly accumulate its first batch of customer resources. Around 2014, the information gap advantage of imported food disappeared. Liu Lina saw that bulk food was rapidly growing in the domestic market, so Baili Food gradually shifted from imported food to domestic snack food, from bulk to packaged, seizing the second wave of growth opportunities. However, the model of relying on wholesale markets limited the company's scale and development. Liu Lina soon realized that low-price wholesale alone could not support sustainable growth. In 2016, Baili Food began to expand into more channels, moving from wholesale markets to local supermarkets, convenience stores, community stores, and snack chains, building a multi-channel sales network in the regional market. During this process, Liu Lina formed a professional sales team to serve customers more efficiently and closely to the market, achieving a role transformation from "selling goods" to "doing operations." After 2020, with consumption upgrades and the rise of internet-famous brands, Liu Lina keenly seized market trends, bringing online celebrity brands offline. Through deep operations of these brands, she quickly captured market share, propelling Baili Food into a rapid growth phase. Today, Hefei Baili has grown from a 20-square-meter stall to a regional snack food distributor benchmark with annual sales exceeding 200 million yuan. The next goal is to become Hefei's No.1 snack food brand operator. What gives Hefei Baili Food the confidence to aim for this? In the view of New Distribution, Hefei Baili possesses three core capabilities: 1. More precise product selection and promotion capabilities 2. More refined channel management capabilities 3. More efficient data-driven decision-making capabilities 10% Profit Products + 20% Star Products + 50% Traffic Products Monthly Replacement of 20% Inefficient Products Among various FMCG categories, snack food distributors have high requirements for "product selection capability." On one hand, the snack food category has many sub-categories; on the other hand, consumer purchases of snack food are often random, implying relatively weak loyalty, requiring distributors to continuously select and eliminate products to respond to changing demands. Baili Food's core advantage lies in product selection. Liu Lina summarized a four-quadrant management method for products, building Baili's biggest competitive barrier. Baili's underlying logic for product selection is: First look at the sub-category, then the brand, then the product, and finally the pricing. First, look at the sub-category. The snack food category is a broad category that can be divided into dozens of sub-categories such as puffed snacks, spicy products, instant drinks, and candies and pastries. Which sub-categories align with consumption trends, and whether they are missing from Baili Food's portfolio. How to judge trends? A practical method is to use industry data, such as snack food industry reports and online platform sales data, to see the growth of these sub-categories. Second, look at the brand. List all brands in each sub-category and classify them into first-tier, second/third-tier, local, and internet-famous brands. Baili Food's principle for brand selection is: Cut brands that cannot become No.1 in their sub-category, cultivate brands that can become No.1, and negotiate with brands that are already No.1 in their sub-category. Following this principle, Baili Food basically does not choose second/third-tier or local brands in sub-categories. Its product structure is 30% brands + 70% internet-famous hits. The difficulty here is selecting internet-famous brands, because online hits often face challenges when going offline. Baili's approach is to first look at sales data from major e-commerce platforms, then communicate with their offline teams to see if their offline operational strategies fit the offline market. Third, look at the product. Previously, Liu Lina posted a video on her WeChat Channels account mentioning "not doing OEM products," which sparked much controversy. This doesn't mean refusing to cooperate with OEM products, but rather cooperating with products that have sales scale. If your sales scale is large enough to cover your own production capacity, and you choose OEM to reduce costs, that kind of cooperation is acceptable. Fourth, look at pricing. Two methods: forward reasoning, comparing with products in the same track to see if the price is reasonable; reverse reasoning, from the product's ingredient list, inferring the production cost to evaluate whether the market pricing is reasonable. With this standard in place, Baili holds two meetings every week. One is a product decision meeting with procurement to discuss the week's product selection and elimination, confirming new products; the other is a product promotion meeting with both sales and procurement to determine how to promote products in different channels. Of course, product selection is just the beginning. Baili Food further delves into optimizing specific products to ensure SKUs maximize consumer satisfaction while avoiding resource waste. Liu Lina summarized a four-quadrant management method for products to dynamically optimize the product structure. Through sales data, all products are divided into four categories:
Star products: high sales, high margin
Traffic products: high sales, low margin
Profit products: low sales, high margin
Replacement products: low sales, low margin Through this classification, 10% profit products + 20% star products + 50% traffic products, with monthly replacement of 20% inefficient products, ensures scientific and profitable product management. Reduce SKUs, increase brands, broaden categories, and complete price ranges. Focus on TOP 30% Core Customers Reduce Inefficient Outlets, Lower Return Rate to Single Digits Baili Food's sales department is divided into 6 business teams. Except for Sales Department 5, which is the brand business center and not responsible for specific sales, the other 5 business teams are divided by channel. In channel management, a layered operational strategy is adopted while maintaining unified principles. The overarching principle: Focus on 30% core customers and reduce inefficient outlets. For example, the supermarket department has 100 customers, but 80% of sales and profit contributions come from 30 core customers. The business manager's core task is to mainly manage the 30% of customers, while salespeople mainly manage the remaining 70%. Here, management mainly refers to thinking actions, such as marketing plan formulation and promotional policy communication. All customers' performance still counts towards the salespeople. Middle managers like business managers are not assessed on sales volume but only on profit. Under the overarching principle, Baili Food adopts differentiated management methods based on the characteristics of different channels to ensure each channel maximizes its value. For example, the supermarket channel focuses more on deep cooperation and refined operations, such as providing customized promotional activities, exclusive display support, and regular sales data analysis to improve store sell-through efficiency; circulation stores focus more on customer screening, only working with quality stores; convenience stores focus more on product mix, adjusting recommended SKU combinations based on the consumer demographics of different stores, etc. Meanwhile, in channel customer management, Baili Food also adopts the "four-quadrant management method," classifying customers into four types based on sales volume and cooperation potential: Star customers: high sales, high margin
Volume customers: high sales, low margin
Profit customers: low sales, high margin
Rectification customers: low sales, low margin For star customers, Baili Food invests key resources, consolidating cooperation through customized services and joint marketing activities; volume customers are treated as stable sales sources, maintaining basic services; profit customers are seen as key development targets, striving to increase their sales through increased visit frequency and trial support; rectification customers are either eliminated or have investment reduced based on specific circumstances. Through management strategies tailored to different channel characteristics, Baili Food not only improves overall channel operational efficiency but also fully leverages the value of core channels and quality customers, establishing a strong competitive barrier in the regional market. Final Thoughts Finally, I want to say that Baili Food's excellent product management and channel operation capabilities are essentially built on data. At Baili Food, employees must possess data analysis capabilities. Baili Food, combined with Zhoupu Data, has created two important data tables for the business side: one is the "Sales Universal Table," helping salespeople push high-margin products from the first and third quadrants to high-sales customers in the first and second quadrants; the other is the "Data Return Table," helping salespeople manage processes. Due to space limitations, the full operational methodology of Hefei Baili Food cannot be elaborated here. On April 25-26, we organized a study tour to visit Hefei Baili Food, where you can have in-depth discussions with Chairman Liu Lina and General Manager Yang Jinhu. Interested friends can scan the QR code to add WeChat for details.