"High costs," "no profits," and "long payment cycles" are the reasons many distributors "flee" modern trade channels. For many distributors, cooperating with hypermarkets and supermarkets has become a chicken rib - tasteless to eat, but a pity to discard.

However, some distributors thrive in modern trade channels, even turning relatively unknown brands into top products in KA channels within a short time, making modern trade channels an enviable "cornucopia."

At New Distribution's April conference, I had the pleasure of meeting Mr. Qiu Xiaomin, chairman of Shanghai Rongjin Industrial Co., Ltd. At the time, colleagues introduced that Mr. Qiu had a deep understanding of modern trade channels and ran a very large business.

After the May Day holiday, I visited Mr. Qiu at Shanghai Rongjin Industrial. After more than two hours of face-to-face communication, I was truly impressed by the depth of Mr. Qiu's thinking on modern trade channel strategies.

Rongjin operates over a dozen brands, including Qianhe, Dingdingxian, Donghu, Longxi, Laohenghe, and others, with over 100 SKUs, covering more than 1,000 KA hypermarkets and 2,000 chain supermarkets in East China. The company employs over 600 full-time sales assistants and achieves annual sales exceeding 300 million RMB. Its main brands, such as Qianhe, Dingdingxian, Donghu, Longxi, Jinshansi, and Laohenghe, all rank among the top three in Shanghai's KA systems.

We hope that Shanghai Rongjin's operational model and practices in modern trade channels can bring inspiration and food for thought to more distributors.

-01- A Team of 600+ Sales Assistants: The Confidence to Excel in "Operations"

Shanghai Rongjin was founded in 1997. Before that, Qiu Xiaomin was an employee of a sesame oil manufacturer in Xiangyang, Hubei. When the company happened to set up a liaison office in Shanghai, he returned to his hometown. Later, when the office was dissolved, Qiu Xiaomin became the agent for this sesame oil brand.

In the early days, they sold mostly relatively industrialized products, such as mushrooms, fungus, and sesame oil from Xiangyang. These products were not standardized, making the business difficult. They simply delivered goods to merchants according to the manufacturer's requirements. Since the products were not branded, the business never improved.

To address this, Qiu Xiaomin tried many models and methods to boost sales, but none succeeded. By chance, he noticed that cosmetics counters and health product sections had sales assistants to stimulate consumer purchases.

At that time, in the food and beverage industry, no distributor or manufacturer used sales assistants because the profit margins in food and beverages were far lower than those in cosmetics and health products, and might not support the cost of sales assistants.

But Qiu Xiaomin saw an opportunity. After calculating market and profit margins and building a market model, he concluded that the sales assistant model could work.

Coincidentally, traditional commercial organizations in Shanghai were being impacted by KA channels, and a group of store managers from state-owned enterprises were laid off. However, these people had worked in the industry for one or two decades and were extremely familiar with product sales. Qiu Xiaomin hired them as part-time sales assistants, paying 50 RMB per day, while supermarket employees at the time earned only 300 RMB per month.

After a period of operation, the results were surprisingly good. Some stores even sold over 1,000 bottles of sesame oil per day.

Thus, after two to three years of operation, Rongjin developed a complete sales assistant system, and part-time assistants gradually evolved into full-time ones. Even after the Xiangyang sesame oil factory went bankrupt, Rongjin maintained a 70% market share for this sesame oil in Shanghai's KA systems.

After establishing the sales assistant business model and gradually gaining a foothold in KA systems, Rongjin began to use this model to develop other sub-categories, laying the foundation for later operating brands like Xinhe, Qianhe, and others.

-02- One Hit Product Is "Luck," All Hit Products Is "Capability"

Qiu Xiaomin has a confident saying: "As long as Rongjin selects a product, after a period of operation, it will eventually become a hit product in East China's modern trade channels, quickly gaining volume, without a doubt."

1. Product Selection Is the Foundation

First is product selection. Shanghai Rongjin has a unique selection logic. First, the product must be delicious and healthy, as Rongjin's target audience is urban family consumers. For family consumers, especially for food products, taste and green health are key; price is not the main issue.

Second, there must be room for price negotiation. When a distributor has stable bargaining power in the channel, it can negotiate prices. Note that this refers to bargaining power with downstream terminals.

For example, when Rongjin operated Xinhe June Fresh, the retail price in Shandong was 7 RMB, but Rongjin operated it in Shanghai at 10 RMB. By simply reducing the salt content and increasing sweetness, the cost increased by a few cents, but the price premium reached over 40%.

This is also one of the reasons Rongjin has never operated tier-1 condiment brands like Haitian or Chubang. These are standardized products with insufficient price negotiation space, meaning Rongjin's pricing advantage in KA channels cannot be leveraged, and the added value cannot be created.

Third, the product must be able to become a big single product. In the past, New Distribution visited category distributors with hundreds or thousands of SKUs, but Shanghai Rongjin has only about 100 SKUs, yet each one is a big single product.

The logic behind this is Rongjin's big single product principle: For each brand, the average annual sales per SKU must reach 3 million RMB, i.e., brand sales divided by the number of SKUs must be greater than 3 million. This is why Rongjin can achieve annual sales of 300 million RMB with only 100 SKUs.

Of course, the implementation of the big single product principle is based on an advanced sales model. Qiu Xiaomin told New Distribution that Rongjin's standard is to make a product account for one-third of the market capacity of its sub-category in East China's modern trade channels. Therefore, they first estimate the category size and market capacity.

2. Sales Model Is Key

After determining the sales model centered on sales assistants, Rongjin continuously discussed and summarized this model, forming a standardized process of "Eight Methods." Newly recruited sales assistants can adapt quickly based on this process.

First, confidence. Confidence is built on product quality. Sales assistants are usually women in their 40s or 50s who cook at home. After using the product and approving of it, they recommend it with more confidence.

Second, familiar taste tests, expanding from point to area. For example, if the retail price in the supermarket is 10 RMB per bottle, the price for sales assistants is 5 RMB per bottle, with a monthly limit of 24 bottles. Sales assistants can give or sell at low prices to friends and family for taste tests, expanding influence and driving repeat purchases.

Third, consumer emotional identification. Close the distance with consumers, such as using appropriate terms for different people, or identifying the key decision-maker. For example, when a family shops, the housewife is usually the decision-maker, so the sales assistant should target the right person.

Fourth, affirm first, then negate. Many consumers have used other brands like Haitian or Chubang. Sales assistants must not say these brands are bad; first affirm them, then introduce what is better.

Fifth, on-site taste tests. Family consumers are highly perceptive about product taste, which is easy to test. On-site taste tests can quickly gain consumer approval.

Sixth, three looks and three comparisons. First, look at raw materials: compare with competitors, what are the differences in raw materials, and what benefits do these differences bring to consumers? Second, look at the formula: tell consumers what a healthy formula is, with fewer additives being better. Third, look at the process: using soy sauce as an example, traditional soy sauce is sun-dried, while another type is brewed, which is more process-intensive.

The essence of "three looks and three comparisons" is to educate consumers about product differences and what constitutes a good product, rather than just pushing them to buy. Once consumers know what a good product is, they will compare and eventually choose your product, leading to higher repurchase rates.

Seventh, chain recommendation method. After selling a product to a consumer and gaining their trust, you can recommend other products in a chain, turning a single purchase into multiple purchases.

Eighth, herd introduction method. Brands talk about KOC (Key Opinion Consumers), and distributors should also cultivate key customer groups. Customer introductions can influence potential consumers' purchasing decisions more effectively.

3. Execution Is the Result

With the foundation and sales system in place, Rongjin has also developed a complete set of tactics for terminal operations.

1) Refine selling points, "penalty kick" style

Most of Rongjin's products are high-priced, high-end products. When operating Xinhe June Fresh, its price was twice that of Haitian and Lee Kum Kee at the time. To get consumers to accept the price, there must be new selling points and a way to spread them.

The 600+ sales assistants are the medium for spreading selling points. Qiu Xiaomin calls this the "penalty kick" style: in football, it's hard to score from midfield, but the probability of scoring from a penalty kick is greatly increased.

Consumers are not professional, but sales assistants, through training, have professional knowledge and are very clear about product selling points and usage. Through sales assistants, product selling points are instilled into consumers bit by bit. Over time, consumer acceptance greatly increases.

2) Conquer competitors step by step

When operating a product, Rongjin first selects a competitor in the market, with similar price range and quality.

For example, when operating Xinhe June Fresh, Rongjin chose Japan's Kikkoman as the benchmark. Kikkoman has always been a high-end soy sauce, having established quality recognition in consumers' minds.

Qiu Xiaomin believes that theoretically, if your product has the same quality but is priced 20-30% lower, you can beat the competitor. A typical case is Changhong TV defeating Panasonic TV. Changhong introduced Panasonic's assembly line, achieved similar quality, and then quickly defeated Panasonic through price advantage, becoming the industry leader.

It is this standardized process from product selection to system to execution that gives Rongjin the ability to continuously create hit products. In just a few years of operating Qianhe, it achieved annual sales of 150 million RMB in East China's modern trade channels.

-03- Keeping Pace with the Times Is the Foundation for Distributor Development

Qiu Xiaomin believes that the core of any enterprise's development and survival is not changes in the external environment, but internal governance. Can your corporate management and culture keep pace with the times and make forward-looking adjustments as the industry changes?

China's retail industry will not be subverted by any single change. Many distributors say that e-commerce and community group buying have impacted them, making business difficult.

But looking back, why are they so impacted today? Ultimately, it's because our thinking is too conservative. For example, when KA hypermarkets emerged, many traditional distributors were unwilling to cooperate because traditional distributors operated on a cash-on-delivery basis, without KA's payment cycles, deductions, entry fees, and various other costs.

E-commerce appeared more than a decade ago, but until today, most distributors haven't even mastered old e-commerce, let alone new retail or new e-commerce. This is being out of touch with the times. From a professional perspective, older-generation distributors have more advantages in products and operations than the newly emerging distributors.

The retail industry is constantly evolving. Sticking to old ways is the most terrible thing; elimination is inevitable.

To use Shanghai's construction industry as an analogy: in the 1950s, buildings were basically shacks; in the 1970s, they gradually became bungalows; in the 21st century, high-rise buildings began to be constructed. If you are a construction company that used to build bungalows, but in the era of high-rise buildings, if you don't learn the technology to build high-rises and lack the capability, is there still a need for you?

Returning to the commercial circulation field, distributors are in the middle of the commodity circulation chain. The development of internet platforms is an upgrade of the circulation link.

In the past, the internet already had an impact on traditional distribution, but not so much that distributors paid much attention. However, in the past two years, their rapid growth has indeed had a huge impact on traditional businesses.

In this process, the test is whether distributors can change in sync and become top-tier. To this end, Shanghai Rongjin is constantly trying new things, such as community groups, e-commerce, and new channels. Although still in the exploratory stage, they have achieved good results. In just one or two years, annual sales from non-modern trade channels have reached 30-40 million RMB.

In Conclusion:

During the exchange with Mr. Qiu Xiaomin, what impressed me most was his love for learning and his exploration of new models and methods. In the era of hypermarkets, he experimented and took the lead in implementing the "sales assistant" model in the condiment industry, establishing barriers in East China's modern trade channels and growing the business.

Similarly, in the new retail era, he is exploring new models to make the business bigger and stronger. The emergence of any retail format is inevitably accompanied by new business opportunities. In this process, distributors need to continuously learn and use new models to "transform" their businesses.