Poor Product Mix In pursuit of a comprehensive product structure and using "full range" as an advantage to attract distribution customers, distributors often fail to consider the sales prospects of products or the consumption habits of target customer groups when purchasing and stocking. They accept products from manufacturers without any screening. While this ensures a full range, it inevitably leads to a mix of good and bad products. As a result, products may not be marketable due to price, quality, style, or grade, leading to overstocking and tying up warehouse space and capital. Distributors then either resort to "clearance sales at rock-bottom prices" or demand returns from manufacturers. The former can strain relationships with peers, while the latter can break manufacturer-distributor relations.
Sales Volume Acquisition Through Incentives Instead of Management To increase the frequency and quantity of purchases by distribution customers, distributors often use various tactics to stimulate short-term purchase desires: giving gifts, offering premiums, increasing rebate points, lowering supply prices, promising regional exclusive distribution rights, etc. They treat every customer as a god and comply with all their demands without any principles. Conversely, they neglect price control and regional management during product distribution, and fail to assess the credit rating and financial strength of distribution customers. This ultimately leads to distribution customers completing sales tasks but disrupting the market, or even "relocating, going bankrupt, or closing down" overnight, causing huge bad debts for distributors.
Overly Hot Treatment of Large Customers and Cold Treatment of Small Customers In the distributor's operations, "low prices," "rebates," and "courtesies" seem to be preferential sales policies enjoyed only by "large customers" with high purchase volumes (so-called volume is purely based on amount). Distributors' excessive "support and tilt" towards large customers is fully exposed. In contrast, they treat "small customers" with low purchase volumes indifferently, arbitrarily inflating supply prices, let alone considering year-end rebates. Little do they know that the more support given to large customers, the easier it is to cultivate a competitor in the shortest time. This is akin to "using your own vital energy to open someone else's Ren and Du meridians," depleting your own energy while enhancing others' internal strength. Raising a tiger only to be harmed by it later. Meanwhile, small customers, unable to bear the cold treatment, switch their purchasing channels to other distributors. Openly, they lose customers; secretly, they contribute to competitors' sales growth.
Price Wars in a Low-Margin Era Due to low industry profit margins, distributors have lamented "making wedding clothes for others" (one for manufacturers, one for retailers) and "both ends active, middle shrinking" (money is earned by manufacturers and retailers at both ends). However, in this low-margin business environment, some distributors do not fight "quality wars, brand wars, or service wars" but still use "price wars" such as giving profits and lowering prices as means to snatch customer resources. On one hand, disorderly competition severely disrupts the industry's circulation order, leading to tense industry relations; on the other hand, because they do not truly have low-price advantages, they suffer serious losses.
Common Channels for Different Products After obtaining products from manufacturers, some distributors do not accurately position the products or formulate marketable channel strategies. They indiscriminately ignore the price, grade, and maturity of products, completely forgetting basic marketing principles: high-priced, high-grade products are suitable for urban markets, while low-priced, low-grade products are suitable for rural markets; mature products are suitable for traditional wholesale channels, while novel and niche products are suitable for terminal retail channels with strong promotion capabilities. Instead of "fishing with focus" by region, customer, and channel, they "cast a wide net" across all regions, customers, and channels. Although this increases market coverage (note: not market share) and seizes some possible sales opportunities, it inevitably leads to slow-moving inventory in some distribution customers' hands. In the short term, it causes channel overlap and waste; in the long term, it affects customers' confidence in distributing other products later, ultimately not worth the loss.
Individual Heroism in Market Operations Many distributors, in market operations, always rely on sound networks, thoughtful service, and strong strength as "heavy bombs," thinking they can conquer the world alone. They believe their sound networks ensure smooth channels; thoughtful service makes customers loyal; strong strength provides credit support to customers. Yet market operations still fail. Why? Because they do not "combine swords" with product manufacturers, failing to unleash the power of "1+1 greater than 2." "No one knows the child better than the mother." Think about it: Are distributors clearer about product selling points than manufacturers? No! Are they more accurate in product positioning than manufacturers? No! And these are the most critical factors in decision-making. If they could obtain guidance on strategy formulation and support in promotional materials from manufacturers, wouldn't distributors be like a tiger with wings, invincible in market operations?
Weak Corporate Brand "Planting others' fields while letting your own lie fallow" is a common ailment of traditional distributors. Creating sales and building brands are all done for manufacturers. After a cooperation, what do distributors get? Market share, sales, profits, and product brands all belong to manufacturers. Distributors only get very limited profits. Successful distributors have created batch after batch of well-known product brands, but their own company names are far less famous than the product brands. In the new era, distributors will embark on a path of building their own brands, using numerous products as a foundation to create and accumulate brand value for their own enterprises.
Management Not Matching Development Speed Some distributor enterprises have already embarked on the path of large-scale intensive development, but still implement management models from the stage of small and medium enterprises; some private and family-owned enterprises have initially achieved scale and strength, but the "small workshop" management style hinders their further progress. For example, some large distributors have very backward data informatization, without even basic computer networking, unable to integrate internal purchase, sales, and inventory data through network information; unable to achieve synchronized operations among departments and branches; and unable to share information and exchange among enterprises and between enterprises and the industry. This is one manifestation of mismatch: distributor management methods lag behind development speed.
Conversely, some distributors raise the banner of "seeking benefits from management," ignoring the actual situation of enterprise strength, scale, and business volume, and vigorously introduce "advanced" but "inappropriate" management ideas and tools. Ultimately, advanced tools and equipment are introduced but cannot be used, so they are put into warehouses to sleep. This results in resource waste. This is another manifestation of mismatch: distributor management methods are ahead of development speed.
- High Costs Because manufacturers and distributors are two different interest groups, the product from manufacturer to distributor reflects not only logistics and transportation relationships but also buying and selling transactions. As long as there are transactions, there are interest disputes. For their own interests, manufacturers inevitably consider many tangible factors (such as raw materials, wages) and intangible factors (such as brand value, equipment depreciation, formulas) in product cost accounting. For distributors, this increases procurement costs.
Downstream distribution customers are increasingly "demanding": besides requiring initial stock and lowest supply prices, they also require door-to-door delivery. This further increases distributors' logistics and transportation costs.
Higher procurement costs and lower product added value bring a series of "complications" such as high pricing, making it difficult for distributors to form price advantages to attract downstream customers; higher logistics costs also reduce profit margins, leading distributors to lament that "business is getting harder and harder."
- Difficult-to-Change Mindsets First, there is the "setter" (volleyball) business mindset. Distributors believe their responsibility is only to smooth the product sales channels and distribute products to downstream customers' warehouses; other tasks like promotion are the manufacturer's business. They lack the awareness to transform from "setter" to "agent" (as "sales agent" for manufacturers' products and "purchasing agent" for distribution customers' products).
Second, there is the value concept of "making wedding clothes for others." They think that after cooperation with manufacturers, market share, sales, profits, and product brands all belong to manufacturers, and they only get limited profits. Little do they know that by leveraging product operations, they can also improve their own marketing networks and create a golden signboard with high value for their own enterprises, becoming model enterprises in the industry.
In addition, there are competitive concepts that replace quality, brand, and service wars with price wars; policy allocation concepts that determine support based on sales volume rather than customer type, etc. These fundamentally restrict distributors' market operations, brand cultivation, competitive strength, and customer management. These mindsets can be described as the "inner demons" hindering distributors' transformation in the new era.
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