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Distributors commonly experience the difficulty of "finding products," and even worse, they may be forced to use non-commercial means. But have we ever wondered why we are compelled to do so? Since enterprises and distributors are equal economic interest communities, why do distributors lack the voice to decide our cooperative relationship? The reason is that distributors lack unique core competencies in cooperation.
The Business Essence of Distribution: Channel Division and Terminal Victory
Distributors must first recognize their own value of existence, or what distribution is, what the business essence of distribution is, and what determines the cooperative status and relationship between businesses and enterprises. Only then can they follow economic laws and trends and control the destiny of their own enterprises. We do not need to expect to gain the ability to pressure enterprises; we only need to think about how to gain the ability to earn their respect.
Earning from Location: Good Channel Relationships. For distributors, good channel relationships are resources, voice, and competitiveness. This power makes it impossible for enterprises to surpass or replace them through other means, and it is also the capital for distributors to earn from their location. In other words, distributors must have their own territory. If an enterprise wants to successfully enter a regional market, it must do so through the distributor's channel relationships. This is precisely the greatest value of distributors.
Category Monopoly or Category Leadership: Excellent Distribution Capability. Having territory is not enough; distributors must use their well-constructed distribution channels to handle a product category that others cannot outperform, and eventually achieve "category monopoly or category leadership" in the local area. Only by becoming the number one in a certain category within the region can distributors be more competitive among peers and gain more favor from enterprises.
Regional Network Building: Excellent Company Operation Capability. As the saying goes, "He who wins the terminals wins the world." Building a comprehensive terminal network is the biggest test of a distributor's operational capability. How to develop and maintain terminal customers, how to assist sub-distributors in opening up external markets, and how to continuously improve logistics and delivery capabilities are all issues that distributors must address one by one after implementing corporate operations.
In summary, the business essence of distributors is channel division and terminal victory. The former reflects the core capital of distributors, while the latter is their core capability. Mastering either one makes the distributor's business easy; mastering both not only brings easy profits but also begins to yield excess profits, and negotiations with enterprises shift from a weak position to an equal footing.
The Big Business of Distribution: Mastering Six Winning Principles
Focus Principle. What is the focus principle? In short, "doing less is doing more." Specifically, it means adhering to the thinking of being a champion in a single item and sticking to limited categories. "Injuring five fingers is not as good as cutting off one"—breaking through with a single brand, single product, or single channel is the foundation and growth path for small businesses. After more than thirty years of reform and opening up, most of China's markets have become segmented. Rather than losing money to pursue a comprehensive range, it is better to become a leader in a region, a consumer group, a channel, a brand, or a product. Distributors must learn to choose, learn to give up, and learn to concentrate. Choosing, giving up, and concentrating are the true essence of doing big business.
Brand Discrimination Principle. Distributors must understand that choice is greater than effort; not all brands are the distributor's business. Choosing a strategic brand that suits the distributor's own development will drive the distributor to achieve leapfrog development. Therefore, distributors must always be clear about what products they need and filter out other unrelated brands, even if those brands have big names, they should not be considered. This is the so-called "brand discrimination principle."
Relative Large Capital Principle. When you are absolutely number one in your field, luck will follow you, and everything becomes easy. But when you enter a new field or are no longer number one, you will find that the whole world is against you. Being number one is easy; being a follower is hard. However, when you become number one, you must constantly think about how to maintain that position. Regardless, distributors must first become the leader in their field. By then, your voice will be able to overshadow everyone else's.
Hedging Cycle Principle. If you compare the distributor's business to selling umbrellas, then you might only have business on rainy days. But the first person to think of selling parasols will always have customers, whether it's sunny or rainy. Distributors must always remember that there are only off-season products, not off-season business. In the same terminal, sell jelly in spring and summer, and candy in autumn and winter. What distributors need to do is to have both products in hand.
Pipeline First Principle. The length and width of the pipeline are the strength and height of the distributor. First focus on the length of the pipeline, which is the length of the agency channel, and then gradually broaden its width, which is the variety of channels. Channels are the foundation of distributors. The length and width of the agency channel determine the strength and height of our distributors. If distributors want to grow their business, the first thing to do is to manage their channels well. The stronger the foundation, the better the business.
Benchmark Boundary Principle. The scope of influence of benchmark channels is the size of the distribution area boundary. When you establish a foothold in one channel, opportunities in the next channel often come to you proactively, at a low cost, or even free of charge. Distributors who have obtained high-quality supplier qualifications in Carrefour or Walmart can easily enter other commercial systems and also easily obtain additional fees and investment support from enterprises. Since this is the case, we should deeply understand the "benchmark boundary principle" and proactively use the perspective of building "benchmark channel influence" to define and expand the boundaries of our distribution area.
Text: Sugar Tobacco Weekly
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