Warm TipsClick****↑“FMCG Distributor Professional Consulting” for more marketing and distributor internal management content. In the era of thin margins, facing crisis, profitability is the top priority. Distributors must comprehensively apply various profit models to take the first step toward success. It's easier said than done; systematic profitability and execution determine everything. 1. Contract-to-Household: Zero-Cost, High-Efficiency Profit Model Distributors, based on a comprehensive calculation of supply costs, national taxes, and merchant profits, contract products to employees for sales at appropriate prices, with quarterly or annual sales tasks. Contractors operate independently, earn more for more work, and bear business costs. For employees, this form offers the most direct benefits, specific responsibilities, and simplest methods, maximizing sales efficiency and reducing distributor operating costs. As an innovative profit model, contract-to-household requires clear workflows to reduce the "travel" time of tasks in intermediate links, effectively improve work efficiency, promptly handle issues during sales contracting, and reduce work errors. 2. Leaning on Big Trees: Enjoying Shade Under a Large Tree Chengdu Dehongju Trading Co., Ltd. is such a consortium of distributors. In 2007, Chengdu Jixiang Industrial Co., Ltd. united 17 strong distributors from secondary markets in Sichuan, including Chengdu and Mianyang, to jointly establish Chengdu Dehongju Trading Co., Ltd. By joining forces, they won cooperation opportunities with famous liquor companies like Langjiu Group and Jiannanchun, achieving rapid development. In China, as long as there is a circulation market, distributors will have opportunities for survival and development, because manufacturers must rely on distributors for distribution and later management and maintenance. Therefore, distributors should base themselves on circulation channels, seek development opportunities, and through repositioning, focus on professional and segmented markets, gaining competitive advantages through differentiated advantages or channel monopoly operations. 3. Relying on the Mountain: Following Trends for Rapid Development "Even the best grassland has skinny horses." In the same market field, why do some distributors of the same manufacturer grow and strengthen while others are gradually eliminated? Now, most local famous liquor companies have plans for cross-regional expansion, aiming to go national. Distributors should lock onto such "promoted big shots" enterprises, grow together with the manufacturer's "origin effect," and expand following the local famous liquor's expansion. Distributors can rely on production enterprises for profit expansion, leveraging the manufacturer's promotional momentum to expand their battlefields. Strong distributors can develop their own brands and cooperate with manufacturers to seek gold across regions. At the distributor stage, relying on the enterprise's quality products and choosing a market-share-centered expansion model can achieve short-term profit growth. However, as profit-oriented marketers, they should continuously adjust profit models, gradually moving toward customer- and profit-centered approaches to obtain lasting, stable profitability. Now, distributors are not troubled by a lack of products but by too many products. I believe some businesses and products are unnecessary; blindly seeking more and bigger is not necessarily good, and over-obsession with market share often drags down enterprise development. 4. Drawing Circles Locally: Intensive Cultivation of Base Areas In the future, distributors will not be troubled by losing choices but by having too many choices. Distributors should shift from "fishing mode" to "farming mode." Choose a "one-acre, three-fen land" with harvest prospects, root in it, and cultivate intensively. There is only one simple principle: "Repeat simple work, and persist in repeated work." Since Hubei Chuxiangyuan Trading Company invested in building a factory, it has rarely sought big general agents to support; provincial and regional general agents are also rare. In 2007, Chuxiangyuan first proposed the "Anhui Camel Partner Plan" in the Anhui market, focusing on three aspects: channel stability, breakthrough, and deep digging. Stability means adhering to the existing channel structure and continuing to stabilize Chuxiangyuan's traditional distribution channel system; breakthrough means focusing on developing partners in county-level markets and achieving breakthroughs in key regional markets; deep digging means exploring the potential of third- and fourth-tier township markets, expanding market breadth and depth. 5. Enclosing Land: Opening New Battlefields Across Regions This era belongs to "fast companies," which have keen business acumen and more flexible profit models. The purpose of cross-regional expansion for distributors is to achieve scale advantages and obtain more customers and profits. However, scale often becomes a profit trap; if the market after cross-regional expansion is poorly managed, it can become a black hole that devours profits. Large distributors with over 50 million in revenue generally have some money, and money provides the foundation and passion for expansion. But the difficulty lies in how to operate and manage overseas companies, how to continuously create benefits rather than sustained losses. Relying solely on concepts and methods like attracting investment to raise funds, dumping goods and channel conflict, and burning bridges after crossing the river, cross-regional expansion is doomed to fail. Large distributors' cross-regional expansion can first adopt a "pilot" expansion strategy, selecting markets similar to their home benchmark market as "benchmark markets" for trial expansion, initially operating as offices, and then establishing branches once the market improves. 6. Relationship Marketing: Intimate Customer Strategy Relationship marketing, as a profit model, is a series of methods and techniques that enhance brand loyalty and consolidate the market through continuous emotional benefit exchanges. As a marketing strategy with sales resilience, it not only helps distributors continuously tap customer potential but also protects enterprise development from competitive pressure. Relationship marketing views marketing activities as a process of interaction between a company and consumers, suppliers, distributors, competitors, government agencies, and other publics. The core of enterprise marketing activities is to establish and develop good relationships with these publics. Before establishing transaction relationships with customers, companies should first establish non-transaction relationships to lay the foundation for future transactions. For example, a distributor in Anhui participated in the annual meeting of the Anhui Planning Association as a sponsor of alcoholic beverages, made friends with leaders of enterprises and institutions, and after the meeting, identified a list of public relations targets. Through the association secretary's introduction, they often had tea, watched games, and played cards together, establishing close friendships, and used traditional festivals to open up welfare liquor sales for these units. 7. Extending Upstream and Downstream: Drinking Milk and Raising Cattle Manufacturers and distributors jointly fund the establishment of a "joint venture branch company," which is a brand-new manufacturer-distributor cooperation model and a further deepening of brand joint operations. This cooperation model clearly defines the roles of enterprises and distributors in market development and clearly divides functions. Enterprises are responsible for brand and market construction, while distributors are responsible for distribution and payment collection. Enterprises sink marketing focus to the terminal, have zero-distance contact with consumers, and jointly grasp and control the market with distributors, thereby maximizing manufacturer-distributor resources. In 2006, Shaanxi Taibai Liquor Industry changed its previous approach of only focusing on strategic investors to focusing on both strategic investors and strategic partners. The manufacturer-distributor cooperation model also achieved diversification, such as cooperating with distributors through holding to develop the high-end product "Taibai Big Move"; establishing Taibai Dingxin Liquor with Shaanxi Dingxin Huicheng Industry and Trade Company, exploring the "specialty store + club" sales model, planning to open 100 Taibai Liquor image specialty stores in some prefecture-level and county-level cities to promote Taibai Liquor's marketing model innovation. 8. Corporatization: Building the "Core" Before the "Shell" The key to a distributor's corporatization path is still the boss. If the boss cannot be corporatized, the business cannot be corporatized. How can a boss be corporatized? Here are several suggestions:

  1. The boss should first learn to plan the vision and motivate employees through frequent meeting communication;
  2. Form a corporatization reform team, creating a strong change team that supervises each other and strictly executes;
  3. Relatively delegate authority to middle managers, letting them lead frontline employees to strive for the vision;
  4. Use corporatization management systems and methods to create short-term results and promptly reward and punish those with merits and demerits;
  5. The boss leads middle managers to consolidate results and continue efforts;
  6. Repeatedly strengthen to form corporate management habits and build corporate culture. Henan Yixing Commerce is a company that emphasizes refined management. Driven by senior management, Yixing actively strengthens normative management, such as target quantification management, organizational optimization management, and performance appraisal management, striving to shift from the original "result-oriented" to "process and results equally important," and from "pursuing short-term interests" to "long-term stable growth." 2014 may be the most prominent year for traditional distributors' corporatization transformation. Forward-thinking distributors are shifting from focusing on opportunity brands and price differences to focusing on customers and profit design, corporate management, and system construction. 9. Branding: Building Brands from Scratch "Renting a house is not as good as buying a house." Many distributors dream of building their own brands. However, the threshold for OEM, buyout, or self-built brands is getting higher, like the current high housing prices. When brands become substitutes for products, brands give consumers an imaginable quality guarantee. Smart distributors have begun to register their own trademarks to reserve for the future. The development of distributors' own brands must pay attention to the consistency of trademark name, manufacturer, and company name. In 2007, the author contacted a distributor in Hebei. At that time, a TV drama called "Qiao Family Courtyard" was airing. The distributor rushed to register a trademark called "Qiao Fu" and planned to produce OEM products under "Qiao Fu" at Sichuan Luzhou Guocui Liquor. At that time, the author pointed out that this approach was unreliable. Because the gap between the manufacturer and the product name was too large—Guocui is a Sichuan enterprise, while "Qiao Fu" is from Shanxi—such a forced "two-layer skin" would inevitably lead to difficulties in launching the new product. 10. Industrialization: The Road to a Century-Old Enterprise Large distributors seize opportunities to develop from brand buyouts into brand operators, but more importantly, they rely on the strategic layout of channel networks. In the past, having a well-known brand meant having a market, but in the future, only with networks can there be brands. Therefore, network quality is always the foundation of a distributor's survival. In 2008, Shijiazhuang Qiaoxi Sugar and Wine Company, after having Beijing and Southwest branches, continued to add East China and Northwest branches, with the goal of building the most sales-effective and influential distribution network in the country and establishing the best logistics platform. Obviously, the purpose of expansion is still to strengthen the main business; putting the cart before the horse in diversification is not advisable. We suggest that distributors' industrialization path should first choose related industry extension. For example, extending upstream to buyout brands or acquire production factories; extending downstream to build their own terminals, investing in catering hotels or famous liquor chain stores, which is both channel expansion and real estate operation. Just like the development ideas of McDonald's and KFC, it is both fast food development and real estate operation. Distributors moving toward industrialization must invest early, quickly, and boldly to outpace competitors and establish a higher development platform for finding the next turning point. --------------------------------------

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