As a benchmark in China's food, beverage, and FMCG industry, Nongfu Spring's every move attracts attention. Recently, rumors about its drastic reduction of distributors in favor of a big customer system have circulated, sparking various discussions. In my view, times have changed; Nongfu Spring's implementation of the big customer system is temporary and it will inevitably backtrack. Has the time truly matured for Nongfu Spring to implement the big customer system? While everyone emphasizes intensive channel cultivation and regional deep cultivation, the news of Nongfu Spring adopting the big customer system has surprised many. But does the big customer system really fail to achieve meticulous market cultivation and run counter to it? This is clearly a misconception based on impressions. In fact, the big customer system itself has many benefits, such as reducing the number of inferior distributors, which helps lower management difficulty and point-to-point logistics distribution costs; stabilizing market price order and controlling cross-region dumping; reducing the difficulty of deploying promotional personnel and other resources while improving per-capita efficiency and output; and enhancing channel quality by supporting quality distributors to grow stronger. However, when a company long engaged in multi-channel intensive distribution abandons its long-standing channel strategy in favor of the big customer system, certain conditions must be met. First, even with a significant reduction in the number of distributors, terminal channels must remain controllable and meet standards. It is foreseeable that in this channel reform, distributors on the blacklist will face two outcomes: either accept merger, transitioning from first-tier distributors to sub-distributors of a supported first-tier distributor; or exit. The former is easier; they continue operating modern trade, traditional channels, and A, B, C, D stores as before, but their status and rights in the channel hierarchy are reduced. For the latter, the risk of losing control and attrition of existing terminals is relatively high. To minimize attrition, the following points are crucial: First, Nongfu Spring's distribution system must have a relatively complete and timely updated terminal database for reference. Second, Nongfu Spring's regional sales support personnel have done much in distribution, shelf placement, display, and promotion. If the current regional market situation is that distributors only handle financing, warehousing, distribution, and settlement, while Nongfu Spring's own people do the actual work, then the terminals are effectively in Nongfu Spring's hands, and there is no need to worry about attrition. Third, the supported big customers must have the capability and willingness to cooperate with Nongfu Spring in expanding warehousing capacity, adding insufficient delivery vehicles, and increasing the number of sales and promotional staff. Because corresponding to the reduction in distributor numbers, the tasks for supported big customers will increase, along with demands on capital, warehousing and distribution capacity, route sales, and vehicle sales. Under the previous model, Nongfu Spring could not rely solely on its own sales staff to visit and maintain all terminals. Without increasing its own personnel investment, it would need distributors to add staff. Without Nongfu Spring making concessions and return commitments, it is very difficult to get distributors to add people, vehicles, warehouses, and capital. This may be why Nongfu Spring promises to sell at bare price and bear all operating costs. However, for special channels that emphasize relationships, there remains a high risk of attrition. Second, be prepared to mitigate market turbulence. A basic fact is that when we divide a distributor's regional market into two or four parts to emphasize small-area deep cultivation, we generally see sales increase rather than decline; but conversely, when multiple distributors in a region are consolidated into one, the risk of market shrinkage is much greater. To mitigate this risk, we typically need to make the following preparations: First, mentally prepare for a possible decline in shipment volume over the next 3-6 months. During the implementation of the big customer system, there will be a market handover and transition period. On one hand, distributors facing elimination may become inactive; on the other hand, the taking-over distributors may not be fully prepared in resources and capabilities, inevitably leading to a period of volatility. Second, guard against possible retaliation from "unhappy" distributors. Inactive distributors facing elimination is actually not the worst scenario; more worrying is malicious retaliation such as low-price dumping. Therefore, before undertaking such channel reform, it is necessary to survey distributor inventory, freeze shipments, and assess risk distributors with contingency plans. Third, make business plans for supported big customers and ensure execution. Previously, a distributor's annual task might be 2.5 million yuan, now 5 million; or previously 5 million, now 10 million. The significant increase in tasks for supported big customers needs an outlet. Among these outlets, expanding market areas and possible new channel types and numbers are important, but to implement them, the manufacturer must assist distributors in making more detailed and executable business plans. For example, first divide the distributor's jurisdiction into several small areas, determining reasonable and achievable increments for each; calculate per-store output for each type of outlet, how much increment can be achieved in old areas and old stores through resource investment, and how much new stores to develop or add can contribute; and how many personnel and delivery vehicles are needed to develop and maintain these stores... These business plans are the blueprint for achieving sales targets; the more solid the execution, the more grounded and guaranteed the completion. In this process, we must pay attention to the issue of too large a proportion of business relying on wholesale circulation channels; otherwise, one of the original intentions of the big customer system—"stabilizing market order and price system"—will be difficult to achieve, and the unchanging pursuit of "controlling terminals" will also fail. Nongfu Spring Will Eat "Back to the Old Ways" The world is long divided, must unite; long united, must divide. For manufacturers, they also go through cycles of regional general distributors, splitting markets into multiple distributors, messing up the market and crashing prices, then returning to reshape big customers, rising and falling. In Li Zhengquan's view, after implementing the big customer system, Nongfu Spring will inevitably return to splitting market areas and re-embracing small-area distributor intensive cultivation. The main reasons are as follows. First, maintaining the market with a small number of big customers carries a higher risk of being held hostage compared to entrusting the market to more distributors. The store bullies the customer, the merchant bullies the factory! When a distributor's business in a market accounts for 40%, 60%, or 80%, sales personnel must carefully handle their attitude toward this distributor, because a small move affects the whole, greatly impacting the achievement of regional sales targets; spoiled by favor, these distributors may also change their mentality in terms of cooperation and execution. And when a market transitions from multiple distributors to a single distributor, the distributor's own resources and capabilities may constrain coverage and intensive cultivation of various sales areas and suitable channels. Second, there are not many quality distributors who can truly control terminals and achieve terminal intensive cultivation while bearing overly large sales areas and channel types. If a distributor's livelihood is channel management, their shortcomings often lie in regional market channel operations. Many factors contribute to this problem: First, although we are now in a stage of new and old distributor alternation or "successor" ascension, there are still many distributors who started in the 1980s and 1990s, with fixed market operation awareness and models that are hard to change. In fact, whether new or old, there are many distributors who are "content with small wealth," with no big ambitions; they are satisfied as long as the market is decent and life is comfortable. The existence of these distributor groups is a very significant factor hindering terminal control and intensive cultivation. Conversely, in this channel reform, whether Nongfu Spring has clear, systematic evaluation criteria and what types of distributors it chooses to retain and support is crucial. Second, input-output expectations are an important criterion for distributors to decide whether to cooperate and execute regional deep cultivation, terminal intensive cultivation, and investment. If manufacturer support does not meet expectations, if market price order has not recovered to their "safety line," or if they lack confidence in the output from adding people and vehicles, distributors will lack motivation and willingness to cultivate the market deeply. For example, development of C and D small stores, deep coverage of township markets, etc. If the current big customer system is implemented nationwide, a regional market originally operated by three or four distributors will now be handled by one distributor. If this distributor happens to have the input-output expectations described above, then Nongfu Spring's big customer system will face major problems in achieving regional market intensive cultivation. Third, distributors themselves have a radius of resources and capabilities. The small areas and scopes they cover, the channel types and resources they are good at and own, and their investment evaluation criteria often determine that they will only operate within a certain "frame." If distributors are insufficient, will Nongfu Spring fill the gap? Nongfu Spring's reform policy of selling at bare price and bearing all operating costs, as well as its frontline sales personnel configuration and operation model, is conducive to breaking the limits of distributor resources and capabilities, but this is also affected by distributors' awareness and enthusiasm, and Nongfu Spring's own resources are limited. Third, fewer distributors does not necessarily mean better market order. The relationship between market price order and the number of distributors is direct but not inevitable. In the real environment, the reasonableness of sales tasks, the path dependence of distributors in achieving sales targets, the calculation of input and return and each party's "abacus," and the dependence on wholesale circulation channels—the high-risk link for price dumping and cross-region dumping—all significantly affect market price order. Since the big customer system now being implemented cannot achieve regional deep cultivation and terminal intensive cultivation, cannot cure market disorder, and also carries the risk of being held hostage by distributors, times have changed; why must Nongfu Spring go all the way on the big customer system? In fact, the sub-distributors under Nongfu Spring's first-tier distributors, as well as those former first-tier distributors converted to sub-distributors under supported distributors during this big customer system implementation, are also a good reserve and fallback for Nongfu Spring to abolish the big customer system in the future and develop small-area intensive cultivation distributors. Channel Reversals: Focus on Reversing Losses and Following Trends Any plot reversal has its inevitability. For Nongfu Spring and other enterprises, whether it is a regional multi-distributor system or a big customer system, no matter how many cycles, to achieve a good result, the key is to reverse losses and follow trends. The so-called reversing losses means bringing back to the normal track things that violate basic market success laws, that are causing us to lose reasonable growth and profits, market order health and sustainable development, terminal controllability and standards. The so-called following trends means acting in accordance with observable basic trends. These two are the fundamental points for carrying out channel reform and channel reversals. Speaking of following trends, I think the following points deserve special attention. First, the redesign and adjustment of the channel affairs value chain is inevitable. The channel affairs chain at the distributor level can be broken down into individual links, such as warehousing, distribution, shelf placement, delivery, display, sales support, promotion, price management, settlement and payment collection. A more reasonable approach is: how many links in this channel affairs chain does the distributor handle, how well, and then I give you corresponding returns. But in the past, for a long time, some distributors were involved in most or even every link, while others only did warehousing and delivery, yet they received the same returns; or for some powerful manufacturers, their business personnel did many things that other manufacturers would think should be done by distributors, but distributors' earnings were not reduced at all. This is unreasonable. In the context of increasing emphasis on refined management and link-based returns, redesigning the channel affairs value chain is increasingly necessary. This is actually a very important part of reshaping manufacturer-distributor relations. Second, the distributor group will see more types of differentiation, and we will need more types of distributors, rather than the old fixed standards. Every company has a fixed set of standards for selecting and evaluating distributors, but in my view, those standards are increasingly outdated. The main reasons are: under the new situation of consumer behavior and commercial upheaval, more and more new distributor business forms or commercial forces that can participate in and take on one or several links of our channel affairs are emerging, and the distributor group itself is also differentiating, transforming, and reforming. For example, there are distributors who directly distribute our products to consumer users and deliver them to their hands, distributors who help us with display, promotion, and other execution services, O2O-type distributors, and distributors who directly distribute and deliver to terminal stores based on internet platforms. After such differentiation, distributors' capabilities and tasks become more focused, and they become more professional in corresponding links. That is to say, in the future, a regional market may see several distributors not only competing with each other as now, or each doing their own thing, but more in functional cooperation and complementarity. Third, the role of channel push is fading, but terminal intensive cultivation remains the main theme in the FMCG industry. As Li Zhengquan judged in his book "From Trends to Action: New Business Ecology + Enterprise Transformation and Reform in the Next Decade," in the era of mobile internet and further intelligent IoT, with the emergence and maturity of related technologies, platforms, and commercial supporting forces, consumer users scattered at various points and manufacturers/brands producing a certain product have the possibility and conditions for near-zero-distance contact. This will cause the intermediate forces in the marketing channel chain—distributors, secondary wholesalers, etc.—to collapse to a certain extent. At the same time, because the start and end points can more directly engage in communication and buying and selling, and with the emergence of more online and offline consumption channels, the importance of consumer marketing behavior from manufacturers to consumer users is increasing, which will also reduce the importance of the push from distributor groups. Nevertheless, for low-value, random, impulsive FMCG products like Nongfu Spring, we still need to follow the basic law: appearance stimulates demand, demand triggers thought, thought leads to seeing, seeing leads to buying. That is to say, terminal intensive cultivation in regional markets will remain the main theme of our market operations. Related Reading: If Channels Need to Reverse, How to Eat "Back to the Old Ways" Once there was a company that, considering its excessive channel links and lack of profit margin competitiveness for channel members at each level; distributors' jurisdictions too large to form focused investment in the market and difficult to achieve intensive cultivation in every blank market, painstakingly changed its previous regional general distributor model to a small-area general distributor model. But later facts were far from the company's expectations: areas were smaller, distributors greatly increased, more merchants asked for policies and raised problems; more complaints about cross-region dumping; distributors did not intensively cultivate their own small plots but waited for advertising, promotion, and sales support... Some old problems were not solved, while logistics costs, sales support costs, and market maintenance costs surged. This annoyed the company's several heads. After painful reflection, they found that the previous regional general distributor model suited them better, so they planned to return to the channel model. But how to return? Simply copy the previous channel model? Then the problems in the previous model would remain unsolved. How to solve them? It is more appropriate to find distributors with shared values, sales teams, delivery tools, and the ability to directly serve terminals to take over. In this way, the links in the distributor distribution system can be reduced, and their interests can be protected to a certain extent. What about blank markets where distributors have weak investment capabilities? We can implement sales support in these markets, supervise and cooperate with distributors to expand together, and after achieving certain shelf placement and listing targets, hand over to distributors; or set up awards like "Blank Market Development Award" and "Weak Market Improvement Award" to conduct sales competitions, motivating distributors to cultivate blank and weak markets. Should we cut off all existing distributors and select new ones? No, some existing distributors are doing well; we should retain quality distributors and use them to merge the territories of inferior distributors; we can even consider converting some better merchants into members of the taking-over distributor's distribution system. Is it feasible to launch a channel reversal movement now? No, this must be prepared in advance: first, survey distributor inventory to prevent dumping retaliation; second, find a taking-over general distributor to avoid market gaps; third, classify existing distributors to treat them differently. If you are also planning a channel reversal, you will inevitably experience similar problems. However, the above case has individual characteristics and may not be suitable for all enterprises undertaking channel reversal movements. Here, it is necessary to summarize some basic rules. First, any view that channel reversal is simply copying the previous channel model is wrong. Because there are two basic facts: first, the previous channel model underwent reform because it had problems; second, when returning to the old channel path, the current channel environment may have factors different from the past. For example, the decline or rise of major competitors, the strengthening or weakening of one's own product brand influence, and changes in market support policies all play a role. That is to say, our channel reversal movement should be a reversal with changes, more adapted to the situation. Second, reversal is not repeating problems, but reversing while solving problems. The problems existing in the channel model to be restored should be prepared to be solved before the reversal; this channel reversal will also affect some people's interests. To prevent their obstruction and retaliation and reduce abnormal market turbulence, it is necessary to understand their bottom lines and do prevention and guidance work. Third, whether before the reversal or after confirming the reversal, "persistence" is involved. Although "plans cannot keep up with changes," too rapid channel changes are a major taboo for all enterprises and should be resolutely avoided. This warns us that although we may hesitate when making channel reform decisions, once decided, we should persist. The best annotation for persistence is: investment and action, not a casual try, with timid actions, and not investing or solving when investment and solutions are needed. Of course, the best way to deal with this problem and its risks is small-scale piloting. Fourth, reversal is to achieve the enterprise's strategic goals, not to deal with short-term problems. Lack of integrity, lack of enterprise strategy and resource planning capabilities, should not become the main theme behind channel reversal. What truly determines channel reversal should be the enterprise's strategic goals. For example, if we want to strengthen market control, enhance product market penetration and share, channel self-operation, close sales support, and deep distribution integrating internal and external resources and channel resources, these may again become our reversal targets. Obviously, the above is mainly set for more common channel reversal situations. Finally, I wish everyone a smooth journey on the road of channel reversal. Source: Business Trends (ID: lizhengquan02), author Li Zhengquan. At the request of many distributor friends, the fourth B-end e-commerce inspection class of this public platform will go to Nanjing and Hangzhou from August 15-18 to inspect Qianmi.com and Alibaba Retail Link. Distributor friends with transformation intentions can join us for on-site inspection: Activity process: Time: August 15-18

15th: Check in at designated hotel in Nanjing; 16th: Inspect Qianmi.com, take high-speed rail to Hangzhou in the afternoon; 17th: Participate in the "FMCG Distributor B2B Transformation Exchange Summit"; 18th: Inspect Alibaba Retail Link in Hangzhou; Distributor friends with transformation intentions are welcome to join us to learn and inspect on-site: Organization Form ************1. Company visit

  1. Actual market case visit
  2. On-site explanation
  3. One-on-one communication************ Participating distributor friends only need to pay a registration fee of 200 yuan Other expenses are self-paid Note: This inspection is limited to distributors only Distributor friends with intentions can long press the QR code below to register. When adding, please note: "Fourth Registration". Non-participants please do not disturb Previous inspection group photos: Third B-end e-commerce inspection group photo, from top to bottom: Yunbaoshangmeng, Weijie City Distribution, Wanshang Yizhan. Second B-end e-commerce inspection group photo, from top to bottom: Jinhuobao, Caiba, Yishang. First B-end e-commerce inspection group photo, from top to bottom: Piduoduo, Beiquan, Yishang. -END- The best domestic FMCG distributor learning platform Focusing on providing professional, practical, and actionable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Distributor market operation | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operation management | 010 Team management | 011 Efficient shelf placement techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 First lesson for new sales | 015 Internet, brand | 016 Distributor B2B transformation | [Long press QR code to follow]