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Sales volume = terminal count × turnover rate × product variety.

The more terminals covered, the faster individual product turnover, and the richer the product mix, the easier terminal sell-through becomes. However, things are often easier said than done. Currently, difficult sell-through has become a headache for companies and distributors. Without sales, there's naturally no profit.

To achieve sell-through, the market must be meticulously cultivated. Doing market work means getting people moving and terminals active; otherwise, you're just running a warehouse. Products piling up in the warehouse naturally won't generate sales. How do sales come about? The sell-through effect of covering one terminal versus ten thousand terminal stores is vastly different. However, with terminal coverage, distributors also need to control terminals and accurately measure product turnover rates. After solving terminal control and sell-through rates, the next step is to promote multi-variety and multi-item advancement—a gradual process. So, what factors actually influence terminal sell-through?

Three Major Factors Affecting Terminal Sell-Through

The three key factors affecting sell-through are share rate, control rate, and visit rate. Share rate is usually calculated by region: a brand's share rate is its sales revenue divided by the regional category market capacity. The higher the share and control rates, the easier sell-through becomes. Among these three, visit rate is the most important. In the scorching summer, even salespeople hope to work in a cool, comfortable environment. But after product distribution, maintenance is needed. Under such conditions, distributors need to implement process management and incentive measures for salespeople.

If salespeople neglect terminal visits, their products will inevitably be suppressed or covered by competitors. When you're not looking, competitors' salespeople may have already damaged terminal displays, posters, store signs, POP materials, and other visual merchandising, hindering your product's sell-through. Without these vivid displays, achieving sell-through becomes even harder. Visiting customers and maintaining relationships requires being on-site, but using new media tools to connect and maintain relationships is also necessary. Fully implementing these three factors is not easy; if all can reach above 80%, the sell-through problem will surely be solved.

"Our product is priced higher than competitors, has no advertising, and few market policies, so terminal owners don't want it." When a product faces sell-through difficulties, distributors often hear their salespeople complain like this. This is exactly when strong push from salespeople is needed, adhering to four major principles.

Four Major Principles: Persist for Sell-Through

The primary principle of terminal sell-through is the "point-line-plane" principle. First, do well in one terminal store or image store, then expand to a street, then radiate to a region, and finally build a national brand.

Second is the 80/20 principle. We often think 20% of outlets generate sales, but that's not entirely true. Large supermarkets emphasize pull, while mom-and-pop stores emphasize push. These 20% of outlets mainly serve to radiate influence over the trade area, affecting 80% of sales and profits.

Third is the matching principle. Channel layout should match product positioning. High-end products should appear in upscale venues to reflect their status. Evergrande Spring Water's sell-through problems arose from distributing through circulation and convenience store channels. Additionally, Kunlun Mountain using JDB's herbal tea channel also compromised its "high-end identity."

Finally, the "mushroom strategy" principle. All strong brands have followed this: first select and occupy the most attractive target regional market, then choose and occupy less attractive regional markets, and gradually radiate nationwide. Wahaha, Master Kong, and Wanglaoji all developed along the route from advantageous markets to balanced markets to disadvantageous markets.

Distributors should do the same for distribution and sell-through: first do well in their strong coverage areas, then gradually expand business scope.

Five Major Countermeasures to Solve Sell-Through Difficulties

Many factors affect product sell-through. Distributors need to address terminal control, terminal management, soon-to-expire products, and distribution timing.

Countermeasure 1: Terminal Evolution, Push First. The degree of distributor control over terminals is a gradual evolution process. Convert blank stores where products haven't entered into target stores where you want them. Frequently visit terminal owners, build relationships, and maintain goodwill. The more familiar you are with the owner, the stronger the relationship, and the more conducive it is to product turnover. At this point, target stores become relationship stores, also called loyal stores. Simply distributing to terminals doesn't guarantee sell-through; sell-through often occurs in stores with good relationships. In this process, the terminal owner's push is far more important than consumer pull. Then, in stores with good relationships, choose prime positions such as front shelves, counters, and other visible spots for your products, and pay the owner a fee—this greatly benefits sell-through. After distribution, consider how to occupy the terminal owner's inventory, manage your product's inventory ratio, and ensure backup support for sell-through. Once inventory is in place, think about how to drive sell-through. At this point, discuss making your product the owner's main recommendation, and based on monthly sales, give the owner rewards like TVs, microphones, or other incentives to ensure terminal push.

After the relationship between distributor and terminal owner deepens and you occupy significant warehouse space and prime display positions, leverage that push to turn the terminal into a distributor's exclusive store—then sell-through is assured.

Countermeasure 2: Terminal Management, Salesperson Responsibility. Who is responsible for terminals? Generally, salespeople are directly responsible for terminal stores. At this point, clearly define each salesperson's responsible terminal locations, and specify visit frequency, visit standards, and visit performance. Normal visit frequency should be once a day or once every three days; long-term neglect of terminal visits easily leads to switching allegiances. Visit standards require terminal visual merchandising to build product image. Additionally, salespeople should go deep into terminals and communicate face-to-face with owners, not just stop outside the store and expect to reach cooperation agreements.

During this process, a terminal inspection system must be established. Distributors can use WeChat check-ins and GPS positioning to confirm whether salespeople entered stores, what they did, the standard effect of their visual merchandising, and their daily goals. This system should be tied to salespeople's wages, not just basic salary plus commission, but with multi-dimensional assessment criteria. For example, reward for opening new terminal stores, penalize for losing terminals; reward for standard visual merchandising, penalize for non-compliance. These require systematic management; simply assessing employees by sales volume leads to quick gains but quick losses.

Countermeasure 3: Properly Handle Soon-to-Expire Products. Managing soon-to-expire products is also important. Product expiration is neither the manufacturer's fault nor due to poor sell-through, but rather caused by distributor management. At this point, transfer near-expiry products from slow-moving locations to fast-moving locations for promotions, such as supermarkets and community convenience stores. If expired products aren't handled promptly, it leads to returns and exchanges, increasing costs.

Countermeasure 4: Master Optimal Distribution Timing. Conventionally, distributors often choose to distribute during the off-season, which indeed captures the peak sales node. However, off-season distribution requires withstanding the pressure of slow sell-through, preparing for stock transfers, exchanges, and related services. Therefore, distribution should differentiate between peak and off-seasons; distributing in the middle period between peak and off-seasons both prepares sufficient inventory for peak-season marketing and avoids timing delays.

Countermeasure 5: The 30/60 Rule for Distribution Rate. Survival line = 30%, brand line = 60%. If a distributor's distribution and control rates reach 30%, survival is not an issue. But such a distribution rate inevitably increases inventory pressure, and over time, you'll face a large number of near-expiry products. Only when distribution and control rates reach 60% in all business coverage areas—such as cities, counties, and towns—will sell-through be relatively smooth, and the distributor's and company's reputation be established.

Credit sales are also a major factor affecting sell-through. Credit sales tie up a distributor's substantial funds, preventing proper relationship maintenance and reducing terminal push. Additionally, product placement, shelf space, and product variety all affect terminal owners' enthusiasm for recommendation. Placing products at the entrance, in visible spots, or where consumers can easily reach them, and bundling multiple items, is more conducive to sell-through. Implementing effective new product launch scripts and building the distributor's influence at terminals are also important factors for promoting sell-through.

Six Key Points to Remember for Terminal Sell-Through

What is the most objective and effective way to assess terminal sell-through? Simply put, there are six key points. First, look at distribution rate: besides understanding your product's distribution, it's also necessary to know competitors' per-store variety and inventory, and record their price bands to adjust your pricing accordingly. Second, look at your product's visual merchandising: distributors should have salespeople record the elements that create product image and use a visual merchandising scoring sheet to assess employees. Third, look at shelf age: check production dates, whether first-in-first-out is followed, whether there are near-expiry or expired defective products, whether inventory is reasonable, and whether there are stockouts or overstocking. Fourth, look at customer relationships: whether terminal owners know the salesperson's name and visit cycle, whether there are complaints or grievances, and which of the four stages the relationship is in—no conversation, formal talk, normal communication, or open dialogue. Fifth, look at service quality: whether terminal owners know the delivery person's phone number, product delivery time, promotion thresholds, and whether promotional items are withheld. Sixth, look at the distributor's terminal influence: whether terminal owners know the customer's name or company name.

When people move, products sell. The problems behind product non-movement are what distributors should focus on. Sell-through is a system and hard work—there's no shortcut or standard answer. After products are distributed, continuous follow-up visits, maintenance, and follow-through are needed to sustain sell-through.

Source: Sugar, Tobacco, Wine & Food Weekly, Food Edition

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