The domestic market calls for 'marketing expert' type distributors, but unfortunately, such distributors have not truly emerged. There are two reasons: first, the overall market environment makes it difficult to cultivate such distributors. Due to the difficulty in establishing sufficient trust between manufacturers and distributors, the two sides both cooperate and restrain each other. Even if ultra-large distributors with sales exceeding one billion yuan appear, it is only an expansion of scale, not a fundamental change in their functions. Second, distributors are unwilling to position themselves as such. They feel that building a market for others' products is like making a wedding dress for someone else. Therefore, after making their first pot of gold, some distributors either move upstream to develop their own products or downstream to open their own supermarkets. Few focus on the present. The competition in the entire FMCG industry is becoming increasingly severe, and the era of truly thin profits is approaching. Expenses are growing positively, while profits are growing negatively, making life increasingly difficult for distributors. With drastic changes in consumption patterns, channel reforms and market adjustments continue to deepen, and distributors are facing unprecedented challenges. However, amidst the daily complex work, distributors encounter various operational and management difficulties. This article categorizes and summarizes the common problems that distributors generally face, and provides some operational suggestions, hoping to be helpful for distributors' business guidance.

  1. Business Direction: Product Expert or Channel Expert? This issue involves a positioning topic. How can distributors fully leverage their resource advantages and convert them into competitive advantages? Every distributor is under pressure from market saturation and competition from peers. There is a game of interests with manufacturers, peers, retail terminals, and sub-distributors. In each round of the game, the question is how many cards you hold to achieve final victory. This requires distributors to establish their regional advantages in the industry. There are basically two ways for distributors to gain advantages within the industry: first, to become a specialist in a certain product category, a product expert. As we often see in the market: milk king, beverage king, famous liquor distributor, etc. This business model is advocated by many distributors. Second, to specialize in a certain type of channel, such as catering channels, supermarket channels, or distribution channels. By specializing in one type of channel, they form their own channel advantages and become channel experts. Both models have their pros and cons. The advantages of being a product expert are: first, it allows full integration and utilization of resources. Most supermarket procurement is divided by category. Specializing in a certain category facilitates better coordination with retail terminals. Second, it allows adjusting the channel model according to the characteristics of the products being distributed, better integrating manufacturer resources and saving costs. Third, it helps form competitive advantages within a certain industry, making it easier to obtain agency rights for quality products and squeeze out competitors. The disadvantages are also obvious: first, any fluctuations in the industry can harm the distributor, with poor risk resistance. Second, it is difficult to obtain strong support from manufacturers. Having agency rights for similar competing products in one hand is a major taboo for manufacturers. Manufacturers tend to use such distributors more than rely on them. The advantages of being a channel expert are: first, it facilitates internal management, attracts excellent talent, and strengthens control over the channel. Second, it speeds up the distribution of new products and facilitates market cultivation. Third, it allows reasonable allocation of resources and improves capital turnover. The disadvantages are: first, due to the single channel, it is difficult to obtain the general agency rights for a product in a certain region. Second, it is susceptible to pressure from peers and the risk of being impacted. From the above analysis of the pros and cons of the two models, it is not difficult to conclude that when choosing their business direction, distributors should fully leverage their strengths. The product range should not be too wide, but rather focused. Specializing in a certain category and a certain channel makes it easier to form advantages and achieve optimal economic benefits.
  2. Enterprise Development: Win by Profit or by Volume? Distributors of fast-moving consumer goods all have a deep understanding: "Products that sell well are not profitable, and products that are profitable do not sell well." Products that are both profitable and sell well are rare. This is caused by market competition and the fast turnover of products. This divides distributors into two schools: one is that they do not do products with a gross profit margin below 10%. The other is that they only make 5 points on the products they distribute, not more. These two schools have completely opposite attitudes, but each has its own reasoning. The first type of distributor thinks: "No profit, no early rise." Why do unprofitable chicken-rib products? If the gross profit margin is below 10%, after deducting storage, transportation, labor, losses, taxes, etc., it is just being a porter. The second type of distributor thinks: "Thin profit, fast sales." Small profit but large volume also makes money. Distributors may ask: Should an enterprise win by profit or by volume? I believe that distributors must maintain appropriate operating profits while increasing volume. But how to achieve this? Distributors should do the following: Divide the products they distribute into three categories. The first category is products with profit but no volume. These are sunrise products. Operating such products is preparing to earn money tomorrow. The second category is products with volume but thin profit. These are sunset products. The purpose of operating such products is to stabilize customers. The third category is products with both volume and profit. These are golden products. Maintain the existing profit as much as possible while increasing volume. The proportion of these three categories in a distributor's product mix should be controlled within the range of 30-30-40%. For the first category, focus on cultivation. For the second category, appropriately control sales volume. For the third category, do not easily reduce prices. In short, distributors should learn to seize opportunities and earn all the money they can.
  3. Management Structure: How to Transform Family Management? The first generation of distributors mostly originated from family-run husband-and-wife shops. The husband handles external affairs, the wife handles internal affairs, the sister-in-law does the accounting, and the father-in-law manages the warehouse. This family management model played an important role in the startup and development stages of the enterprise. The synergy reflected in kinship management allowed the first generation of distributors to complete their primitive accumulation. However, with the development and expansion of the enterprise, the drawbacks of the family enterprise have been fully exposed. First, the internal management system of the enterprise is virtually ineffective. Internal family conflicts directly affect the development of the enterprise. Second, talent is suppressed. Employees within the company form two tribes: one is the special class with kinship to the boss, and the other is ordinary employees without such connections. The struggle between these two tribes can lead to the loss of key personnel. Third, family enterprises can cause conflicts of interest. At the startup, they can work together, but when the scale grows, relatives inevitably have conflicts over interests. If distributors want to make their enterprises bigger and stronger, they must change the current family management model and transition to an institutionalized and systematic management model. How to transform a family enterprise? I believe the following points should be done: First, let some veteran employees retire. Regardless of the relationship with these veterans, they can gradually be paid to stay at home and retire. Such people have become obstacles to the company's development. Keeping them in the company brings more harm than good. It is better to spend money to buy peace. Second, concentrate equity. If the distributor has multiple shareholders, it is recommended to buy back the shares distributed among relatives. The company's equity needs to be highly concentrated, with control over decision-making, to avoid disputes over principle issues. Third, let the wife go home, or the boss himself steps back. The company can only have one core; multiple leaderships will cause chaos. Fourth, dare to introduce talent with high salaries. In key positions such as the business department, be willing to spend money to hire capable and competent personnel. Fifth, establish a complete management system and operational processes, and ensure the seriousness of the system.
  4. Personnel Management: How to Establish an Effective Performance Appraisal Mechanism? Most distributors' assessment of sales personnel is relatively simple. They generally use a model of basic salary plus sales commission. This model is relatively simple and crude. In actual operation, the following three problems may arise: First, sales personnel sell whatever sells well, which is not conducive to the promotion of new products. Second, when product sales enter the off-season, it can cause laziness among sales personnel or even the loss of excellent staff. Third, capable sales personnel may leave and start their own businesses, increasing competition. It should be said that most distributors offer limited salaries, making it difficult to recruit excellent talent. The sales personnel they use are mostly trained by themselves. Long-serving sales personnel hold the company's customer resources. Once they leave, it has a significant impact on the distributor. In this situation, it is particularly important for distributors to establish an effective performance appraisal and management system. How can distributors establish an effective performance management mechanism? I believe the following changes should be made: First, transform the individual independent operation model into a team collaboration model. According to the work ability and personality characteristics of sales personnel, and based on the various links of sales work, each person is responsible for a part of the work. Set up network expansion specialists, market maintenance personnel, full-time collectors, etc. Sales personnel support and assist each other, leveraging their respective strengths to improve work efficiency. Second, formulate assessment standards and reward and punishment measures according to each person's work content. Third, formulate commission standards based on the product's position in the company and its profit margin. Fourth, when setting monthly sales targets, not only set the overall sales target, but also set sub-targets by category. Fifth, hold regular meetings and training systems. Sixth, allow key sales personnel to participate in shares, with annual dividends based on company profits, to enhance their sense of belonging to the company.
  5. Inventory Management: How to Deal with Unreasonable Stock Pressure from Manufacturers? Manufacturers' sales personnel often require distributors to stock up unreasonably to complete monthly sales targets or to accelerate capital recovery. This adds operational risks to distributors and affects the normal turnover of enterprise funds. Manufacturers force distributors to stock up mainly through the following methods: First, inducement with benefits. If the distributor makes a one-time payment of a certain amount, the company gives a few more points of rebate. Second, threatening to add new distributors. If the distributor's monthly sales volume does not meet the company's target, a new distributor will be added. Third, fabricating a grand market prospect. Telling the distributor how the company will increase advertising investment and promotional efforts this month, inducing the distributor to stock up. On the basis of maintaining reasonable inventory, unreasonable stock pressure is more harmful than beneficial. But it is not easy to offend the manufacturer's sales personnel. How should distributors deal with unreasonable stock pressure from manufacturers? I think the following methods can be used:
  6. The "delay" tactic. Use reasons such as the supermarket payment not yet received to delay until the end of the month, and the manufacturer will give up the stock pressure requirement.
  7. "Say the ugly words upfront." If the product inventory exceeds the reasonable line, absolutely do not make payment. Generally, a distributor's inventory should be controlled at about 50% of monthly sales. If it exceeds this line, think twice.
  8. Make the manufacturer's sales personnel retreat. Put forward harsh requirements for stock pressure. If the requirements cannot be met, absolutely do not make payment. When resisting unreasonable stock pressure from manufacturers, distributors should not only argue on the basis of reason, but also avoid conflicts with manufacturers. Try to resolve it tactfully. Handling such issues with a slick cold treatment is the best policy.
  9. Customer Management: How to Establish Your Own Distribution Channels? To obtain the agency rights for a certain region, a distributor must establish its own distribution channel system within that region. In establishing distribution channels, there is also a completely opposite approach: not to have sub-distributors, but to set up offices at the county level. This approach is of course faster and has stronger control. But this model, first, lengthens the management line and capital chain, increasing operational risks. Second, it increases operating costs and weakens profitability. When the distributor's management ability and scale strength have not reached this level, I suggest not adopting this model. So how can distributors establish their own distribution channels? First, establish a distribution cooperation alliance with sub-distributors. Give appropriate rebates based on annual sales. Second, establish a return and exchange system. Exchange slow-moving products for sub-distributors. Third, regularly hold sub-distributor networking events to communicate and build relationships. Fourth, strengthen work guidance for sub-distributors. Fifth, establish a reserve of sub-distributor customers. Timely replace unqualified or disloyal sub-distributors.
  10. Customer Negotiation: How to Refuse Unreasonable Fees from Supermarket Systems. For modern channels - KA stores and supermarkets, most distributors have mixed feelings of love and hate. For distributors, supermarket procurement is like a dog that is never full. There are various fees with many items, increasing year by year. Especially at the beginning of the year, when signing contracts with these stores, they propose various unreasonable fees. How to deal with them is a headache for distributors. There is inherently a passive, asymmetric, and unequal relationship between distributors and KA stores. As a vulnerable group, distributors are inevitably squeezed by KA stores. But distributors should not be lambs to the slaughter. When dealing with unreasonable supermarket fees, they should grasp the following principles.
  11. Never be the first to speak out. When supermarkets add new sales fees, do not express an opinion first. See how the situation develops. Neither agree nor disagree. Delay for a few days and see how other companies react. If suppliers react strongly, supermarkets will also adjust their fee standards.
  12. Absolutely do not do loss-making business. In business, there is no need to worry about face. If there is no money, "volunteer labor for the supermarket and the enterprise" is not as good as switching to a more relaxed project. If the supermarket wants to increase fees, clearly tell the supermarket procurement your psychological bottom line. If it exceeds the bottom line, rather give up. The more resolute your attitude, the more the supermarket will have concerns.
  13. Increase the shelf presence of your products in the supermarket. The larger the sales volume of your products in the supermarket, the less likely the supermarket will dare to increase fees on you.
  14. When negotiating with supermarkets, do not loosen your mouth until the last moment. The more easily you agree, the more unreasonable fees will be imposed on you in the future. Negotiating with supermarkets is often a game of interests. Distributors often think that the manufacturer will bear the supermarket fees. But any manufacturer has a fee control rate. If the manufacturer bears more fees in supermarkets, it will provide less support in other areas. The wool comes from the sheep's back. Every fee in the supermarket is spending your own money. You must grit your teeth and grasp the scale.
  15. Resource Management: How to Strive for the Maximum Support from Manufacturers? Distributors cannot become stronger and bigger without the support of manufacturers. Only with mutual support and cooperation between manufacturers and distributors can the market situation be opened up and both sides achieve win-win results. There are three major misunderstandings in distributors' support from manufacturers:
  16. "I don't need support, just give me the bare price to operate." This saves both sides from disputes. This model is often accepted by small manufacturers. Such products are often short-term products with no future.
  17. "The more support, the better." The greater the manufacturer's market support, the higher the manufacturer's expectations. If the manufacturer's short-term goals are not achieved, the manufacturer often gives up the market. Therefore, the manufacturer's market investment is not the more the better.
  18. "The fees invested by the manufacturer are my due benefits. Saving them is profit." So try to deduct and falsely report expenses. Because of these three misunderstandings, it is difficult for distributors to obtain support from manufacturers, or it is difficult to obtain the maximum support within a reasonable range. How can distributors strive for the maximum support from manufacturers? First, persuade the manufacturer to list your market as a key market. The higher the manufacturer's attention to the market, the greater the market investment ratio. Second, after confirming the market operation plan with the manufacturer's sales management, fully cooperate. The higher your cooperation, the greater the manufacturer's support. Third, make market investment costs transparent. Try to spend all expenses in the open so that the manufacturer can see the results. Fourth, appropriately increase your own investment. Use your small investment to exchange for the manufacturer's larger investment.
  19. Fund Management: How to Control Accounts Receivable? In the course of business, distributors inevitably have accounts receivable. Many distributors prefer a cash-on-delivery model. Although profits are thinner, the money earned in their own hands is real. But now the industry competition is increasingly fierce, and achieving full cash-on-delivery is difficult. Especially for distributors dealing with supermarkets, the amount of accounts receivable is quite large. How can distributors control accounts receivable? The following points should be noted:
  20. For customers who cannot achieve cash-on-delivery, an approval process must be established. The sales personnel apply, and the boss approves. Without approval, no credit sales are allowed.
  21. For customers with accounts receivable, a credit limit must be determined. If the limit is exceeded and payment cannot be collected, stop supply and investigate the reason.
  22. Review accounts receivable once a week. Determine the payment deadline for those due receivables.
  23. Distributors with large amounts of accounts receivable should assign dedicated personnel to manage receivables. Every receivable is real money. Improper management of receivables will directly cause company losses and also allow bad elements in the company to exploit loopholes. Therefore, the management of receivables is an important part of distributor management.
  24. Profit Analysis: How to Maximize Benefits? The products distributed by distributors have varying sales volumes and profit levels. Distributors should differentiate and reasonably match them in the course of business. Products with large sales volumes often have low profits and occupy large amounts of capital, so sales volume should be appropriately controlled. Products with small sales volumes often have high profits and should be the focus of promotion. Source: Internet, Author: Chen Zhiping -END-