With current overcapacity, a poor economic environment, and e-commerce impact, market competition has intensified, causing a large number of distributors to slowly 'die' while resisting the cold of economic downturn. An autopsy reveals many causes, both subjective and objective; by learning from the past, we can prevent future tragedies. Let's get to the bottom of it and bring the truth to light, so that later generations do not repeat the same mistakes and tragedies. 1 Death #1: The Five-Finger Mountain of the Buddha – Crushed to Death Five-Finger Mountain: adding staff, adding vehicles, switching to larger warehouses, increasing capital, and stocking up Companies typically assess sales personnel based on sales volume, profit, and process management. Salespeople only do what is assessed. To earn high salaries and avoid criticism, they transfer this pressure onto distributors. Experienced salespeople will appeal to distributors' emotions and reason, toasting at banquets, complaining, saying, 'Heavens, earth, brother, I'm forced too. Just continue paying, and I'll find a way to clear your inventory.' Some salespeople directly 'rape' distributors with threats – if you don't pay, we'll terminate the contract or withhold promotional fees and rebates – and inducements – only by closely cooperating with the manufacturer can you reach 'climax'; we'll give you special treatment, more promotions, and solve more expenses. But monthly tasks rise like sesame flowers – higher and higher. Distributors' warehouses are full of stock, market coverage is already high, and customers are 'constipated.' Companies, eager for quick success to meet annual marketing goals, continue force-feeding stock, eventually causing distributors to die from bloating due to undigested inventory. 2 Death #2: Without Food and Clothing – Starved to Death Without profit, a distributor's survival is like a tree without roots or water. A merchant's purpose is to make a profit; a merchant who doesn't profit is foolish. However, the true profit period for a product at the customer stage is during the growth phase of the product life cycle. The introduction phase is often a cultivation period with more付出 and less gain, often yielding little profit or even negative. One fate is losing money for applause: the terminal looks good but doesn't move, prospects are dim, and the distributor dies from early blood loss. Another fate is the manufacturer giving up: the manufacturer's product is too ahead of its time, pioneers become martyrs, and when the big river dries up, the small streams dry too, so the distributor dies with the product. In the maturity phase, volume is high but profit is thin, and distributors often die from excessive costs or chaotic market management. 3 Death #3: Manufacturer Direct Control of Terminals – Strangled to Death With the rise of concepts like 'channel wins, terminal is king,' and deep distribution, manufacturers push for channel flattening. To control terminals more directly and effectively, some manufacturers resort to unscrupulous means, 'beating the local tyrants, dividing the land, and confiscating assets' – shrinking distributors' territories, persuading and absorbing the second-tier distributors that distributors painstakingly cultivated. Any local gentry or tyrants reported by the masses are registered and besieged. After large-scale netting, only small fry remain. Many distributors are functionalized and marginalized during integration, reduced to delivery or service providers without control, and eventually killed by the manufacturer's 'tendon-cutting and bone-breaking.' 4 Death #4: The Cancer of Cross-Region Dumping – Killed Dumping can be benign, malignant, or natural, but the fatal kind is malignant dumping. Dumping directly causes price chaos and channel blockage. After years of hard work, you're back to square one. Downstream distributors complain, the distributor loses prestige, prices spiral out of control, product profits become transparent, and eventually the distributor dies from losing the ability to generate blood. 5 Death #5: Internal Friction – Worn Out Severe internal friction often occurs during the transition from small to large, from weak to strong, when self-improvement lags behind market growth. Internal management is chaotic, personnel are used irrationally, efficiency is low, and laziness prevails, causing terminal complaints, high customer complaints, and severe terminal loss. Low pay and unreasonable assessments make it hard to recruit and retain staff. Systems are incomplete and change frequently, with loopholes everywhere, such as drivers selling fuel on the side, salespeople intercepting gifts, and rampant moonlighting. Financial management often favors relatives, with weak awareness, focusing only on sales volume while ignoring costs and profits, just staring at the books without analysis, overlooking operational issues and risks. Warehouse management chaos leads to untimely delivery and expired products. 6 Death #6: When One Side Fails, the Other Succeeds, but Dies on Two Boats Benefits of diversification: 'risk diversification; optimal resource allocation; profit advantage; increased bargaining power with manufacturers.' Drawbacks: 'heavy capital burden, more complex management, loss of economies of scale, increased decision difficulty, and impact on existing brand and manufacturer relationships.' Distributors implementing diversification must act within their means. First, they need their own niche products and markets, and they must consider their development stage. They should also keep their eyes open, investing in areas that can share resources with existing products. After all, every industry has its own mysteries. Avoid being greedy, looking at the pot while eating from the bowl, or thinking the grass is greener elsewhere, eventually robbing Peter to pay Paul until there's nothing left to rob. 7 Death #7: Choosing the Wrong Product, Marrying the Wrong Man – Depressed to Death Choice is greater than effort. Facing a dazzling array of products, bustling糖酒会 exhibitions, and salespeople coming in droves, without the Monkey King's piercing eyes to distinguish truth from falsehood, you'll be eaten by wolves in sheep's clothing. Salespeople, to get you on board, go to great lengths, swearing by their company's strength, market support, staffing, and advertising advantages. But often, after the first order is paid, they vanish – 'a cut plum blossom.' 8 Death #8: Stagnation and Complacency – Asking for Death Robert Kuok, winner of the China Economic Person of the Year Lifetime Achievement Award, once said: 'When you find a profitable project, act quickly, have drive, and sometimes patience. After making money, be especially careful. There's a saying that failure is the mother of success, but in my view, success is also the mother of failure.' Many distributors, through opportunity and personal effort, achieve stage victories and accumulate capital, then become complacent, lacking ambition, content with small wealth, and arrogant, thinking they're second only to the best. Everyone has their own way of life; not everyone needs great ambitions. But the increasingly competitive market forces you to be vigilant, not slack off, and change your mindset promptly. Those who change slowly are either eliminated by manufacturers or by the market. 9 Death #9: Discord in the Manufacturer-Distributor Relationship – Tortured to Death One type is the distributor who betrays trust, is two-faced, stabs in the back, and likes to tattle. If the manufacturer and distributor disagree on a decision, the distributor reports the salesperson's daily behavior to their superiors or headquarters. The result is either the salesperson is fired, or the salesperson has protection and survives, but you get eliminated. Another type is the distributor who is too upright, unyielding, unfamiliar with sauna culture or mahjong culture, unable to properly serve the 'imperial envoys' from headquarters, and is eventually killed on trumped-up charges for not knowing how to adapt. Or the distributor is too shrewd, eating meat without spitting bones, forgetting the well-digger when drinking water, ungrateful, and thus killed. The customer's own level is insufficient, unable to keep up with the times, update marketing concepts, align with the manufacturer's thinking, lagging behind, stuck in empiricism, always challenging the manufacturer – if the manufacturer goes east, the customer goes west. 10 Death #10: Only Sitting at the Table, Not Performing – Waiting to Die Sitting at the table is easy and saves effort; performing is initially laborious and risky. Only by persistently visiting terminals on routes, strengthening customer relationships, continuous promotions, increasing market coverage, and doing vivid displays to boost sales – 'doing simple things well every day is not simple; doing very easy things very seriously is not easy' – can you avoid losing terminals and dying from excessive blood loss. Working as a porter – tired to death; being beaten by competitors until nowhere to run – squeezed to death; manufacturers suppressing expenses and not paying, with payment methods that tie up rebates – strangled to death; being extorted by manufacturer's salespeople – forced to death; being the manufacturer's test subject – tested to death; after market maturity, being flooded by big-brand products – washed to death. Tolstoy said: 'Happy families are all alike; every unhappy family is unhappy in its own way.' Only by learning from failure can the road to success be less distant and wider. Therefore, finding a transformation model suitable for the new situation is not only necessary but urgent for FMCG distributors. How to transform and self-rescue? The author believes: transformation is the fusion of one's own advantages and the grasp of opportunities.

  1. First, every distributor must sort out their strengths and weaknesses, such as their organization, operational capabilities, and channel network capabilities. Based on their advantages, seek resource matching rather than blindly abandoning accumulated resources to enter a completely new field. For example, if operational capabilities are strong, consider upward development – build a factory or develop proprietary products, create your own brand. If the channel network is good, specialize in delivery and platform services.
  2. Combine your current situation to further optimize and change existing operating methods. Don't use yesterday's methods to compete in the future; keep pace with changes in the marketing environment. Generally, the boss must change first; otherwise, all changes will be thunderous but with little rain, ending up as before. The key is the distributor's vision and realm.
  3. Go out – both physically and mentally. Some distributors do go out, but they blindly copy without considering their actual situation, ending up like the man from Handan who imitated the walking style and forgot his own.
  4. The FMCG industry is not a high-profit industry. Cook rice according to the size of the pot – act within your means. There's no need for high-interest financing. Similarly, when choosing a brand, it's not about bigger or smaller being better; choose based on your development stage's needs.
  5. Regarding manufacturer-distributor relationships, each side has demands, and both must follow the rules of the game with bottom lines. After each cooperation, take what you need and move on; don't keep playing the game of negotiation.
  6. Strictly pay attention to operating accounts and strengthen your core competitiveness – channel network resources and team building. Source: Marketing Perspective Mirror (ID: yxtsj518) The 3rd (CFIC) China FMCG + Internet Conference will be held in Chongqing in November 2017. The conference will closely focus on the theme 'New Forces, New Ecology,' inviting 1000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions to jointly explore a new chapter of cross-border integration! Core topics of this conference:

  • How can the FMCG industry leverage B2B to achieve new growth opportunities?

  • How should the new supply chain behind new retail be built?

  • How can intra-city logistics help B2B achieve leapfrog development?

Highlights of this conference:

  • The industry's first '2017 China FMCG B2B Industry Competitiveness White Paper'

  • Case sharing of excellent transforming and upgrading distributors

  • Conference + exhibition upgrade: Hall 6 Internet Technology Exhibition strengthens matchmaking

  • Leaders from various fields, including JD New Route, ProLogis Finance, Alibaba Retail Link, EAS Supply Chain, Zhongshang Huimin, Best Store Plus, Yijiu Pi, and Haiding, will deliver speeches on pioneering views.

November 8-9, 2017 Xinyue Hall, Chongqing Yuelai International Conference Center Registration is now open. Long-press the QR code below or click 'Read Original' to register. Add friend with note 'Conference Registration' Click the link below to review the highlights of the 1st and 2nd FMCG + Internet Conferences: 2016 'FMCG + Internet' Summit Forum -END-