--- title: "Two Fatal Misconceptions in Distributor Expansion" description: "This article discusses two common mistakes distributors make when expanding: confusing sales success with management ability, and mistaking sales performance for brand-building capability. It uses case studies to illustrate these pitfalls and emphasizes the importance of management and brand strategy." author: "New Distribution" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2014-10-10" language: "en" canonical: "https://xinjignxiao.com/en/articles/two-fatal-misconceptions-in-distributor-expansion-eb5a9932/" markdown: "https://xinjignxiao.com/en/articles/two-fatal-misconceptions-in-distributor-expansion-eb5a9932.md" original_source: "https://mp.weixin.qq.com/s/x9wVSV7kbbuJMU8b0dk_Jw" translation: "https://xinjignxiao.com/zh/articles/%E7%BB%8F%E9%94%80%E5%95%86%E6%89%A9%E5%BC%A0%E4%B8%AD%E7%9A%84%E4%B8%A4%E4%B8%AA%E8%87%B4%E5%91%BD%E8%AF%AF%E5%8C%BA-eb5a9932.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/two-fatal-misconceptions-in-distributor-expansion-eb5a9932/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Two Fatal Misconceptions in Distributor Expansion > This article discusses two common mistakes distributors make when expanding: confusing sales success with management ability, and mistaking sales performance for brand-building capability. It uses case studies to illustrate these pitfalls and emphasizes the importance of management and brand strategy. Warm reminder: Click the blue text above to follow "FMCG Distributor Professional Consulting" for more marketing and distributor internal management content. Can managing a wholesale department well mean you can manage a large company well? Faced with this question, most people would say "not necessarily." But in reality, after a wholesale department owner becomes a company owner, who else is managing but themselves? Is successful product agency the same as successful brand operation? Many would say: those are not the same thing. But most successful agents believe they built the brand themselves. These seemingly simple questions are often overlooked by distributors in actual operations because they are successful people. Many failures are built on success, as people tend to view success in one area or at one stage as overall or long-term success. Successful people easily go from confidence to stubbornness, and success can mask their shortcomings. **Mistaking Limited Sales Success for Management Success** There is a distributor, Mr. Zhang, whose path to success was like this: he started a small shop in the county town, then opened a wholesale department, and later became the county agent for a food brand, achieving moderate success in the county. His catchphrase was: "There is no product I can't sell." He was very sharp, with ideas and drive. After becoming successful in the county, he expanded to the prefecture-level city, established a trading company, and became an agent for two well-known brands. However, he still set commissions for salespeople based on his county-town approach. He wanted to hire a professional manager, but he gave up on anyone with an annual salary over 100,000 yuan. In the end, he hired a batch of "let's see" salespeople and a sales manager with low demands. When setting the product pricing system, he still used the "small profits, quick turnover" mindset from the county, setting prices very low. His logic was: "My brand is good, I've been selling products for years, what don't I know about sales? Can't I manage just these ten or so people?" But after a year, the results were dismal: products were neither dead nor alive, most sales staff had changed, and although the finance and warehouse staff were relatives who kept working, the accounts and inventory were chaotic... What was the reason? Salespeople had low motivation due to low commissions. His low-price, high-volume pricing strategy left little profit for each channel link, reducing sales enthusiasm. He was running between the county and the city, lacking focus. Over time, some salespeople, due to low pay, started diverting goods and were penalized by the manufacturer. After a few years, Mr. Zhang's team wasn't built, the network wasn't established, and business scale didn't grow. He was frustrated: "I'm good at selling things, right? The brand isn't bad either?" He attributed the failure to the sales team's lack of effort and skill. In fact, Mr. Zhang made mistakes in two areas: team compensation and incentive design, and product pricing system design. These are actually marketing management issues. Many distributors face marketing problems in the early stages of development; as long as products sell well, they make money. But as business grows and teams expand, the company's problems shift from "marketing problems" to "marketing management problems." However, many distributors assume that because they are good at sales, they are also good at management. The larger a trading company becomes, the more weight management carries relative to marketing. Small victories (survival) rely on sales, but big victories (development) also require management. Sales are periodic and can fluctuate, but management is long-term, and fluctuations are more dangerous. Many distributors think management is about solving leaks and drips, but in complex situations, management is about solving work efficiency, motivating people, and systematically solving sales problems. **Mistaking Sales Performance for Brand-Building Ability** In the market, we often see that a large distributor can support a brand or even a manufacturer, and a good brand can make a large number of distributors successful. We often hear distributors proudly say: "If it weren't for me, that brand wouldn't have succeeded. I have the network and the team; what product can't I build?" Under the guidance of "being able to successfully operate brands," many distributors make innovative breakthroughs, such as easily taking on high-profit but low-brand-power products, easily developing private-label products, or easily acquiring upstream manufacturers. While some succeed, more fail. Mr. Li's case is very common. He was an agent for a famous liquor brand in a city, with annual sales of nearly 100 million yuan. Because this liquor brand is a national historical famous brand and the company was booming, and the products Mr. Li represented were the manufacturer's main products, sales grew year after year, leading the local liquor competition by a wide margin. "Sell well, then produce"—Mr. Li contacted a real estate developer to jointly invest and acquire a small local distillery. Because of his years of successful distribution, when acquiring the small distillery, industry experts advised him to formulate strategic plans, brand design, marketing planning, etc., but he dismissed them. Mr. Li wouldn't believe that a brand's success or failure is determined when the product is produced. The determining factors are its market positioning, marketing plan, selling points, packaging design, promotion plan, etc. Distributors only determine the speed of its success or failure, not the fundamentals. After acquiring the small distillery, setting aside production, land, workers, and other miscellaneous matters, let's talk about brand development. He named the product, set the price and imagined packaging image, and started product development. First, he found a packaging factory, but it only produced, not designed. Then he went to Shenzhen to find design companies. After negotiating with several in his small-business way, he chose one with moderate prices. During design, he found his chosen name was already registered, so he had to choose another... After three or four months of fuss, when the packaging was produced, many people gave feedback, both positive and negative. Mr. Li sighed: "When the manufacturer launched each product, I would point out several shortcomings and criticize them for being slow to change. Now, after months of hard work, my own packaging seems to have even more shortcomings." Because he chose a small factory to save money, the packaging and bottles had a very high breakage rate, leaving Mr. Li speechless with anger. Next came designing ads, setting prices, and formulating strategies—every step kept him busy and overwhelmed. The product originally planned to launch before the Mid-Autumn Festival finally hit the market hastily before the Spring Festival. Due to the small factory's low brand awareness and packaging lacking features, the product had no selling points. Although profit margins were high, most customers didn't bite. "I've been dealing with these customers for years, calling them brothers, but why don't they support me when the product comes?" Mr. Li finally understood: "That's not my network; it's the brand's network!" After much effort, he managed to get a few customers willing to take the goods, but they required free distribution, and there were personnel wages, display gifts, store entry fees, holiday promotions, etc. A year later, the sales of Mr. Li's distillery products were far from what he imagined. He was exhausted and kept thinking about quickly getting rid of this hot potato! The two cases above are like football. Maradona was a football genius, leading Argentina to two World Cup titles. As a player, his achievements and honors are unmatched. But as a coach, his record was poor, never winning a championship. Mourinho, who basically never played football, as a coach led the unknown Portuguese club Porto to the Champions League title, and then coached Chelsea and Real Madrid, winning domestic league titles in each country. He is one of the most successful football coaches today. Thus, being good at sales doesn't necessarily mean being good at branding; and those who haven't done sales might still be good at branding. -------------------------------------- **Like this article? Feel free to click the top right corner to share to your moments;****** About us: WeChat ID: FMCG Distributor Professional Consulting Management Account intro: 20 years of FMCG distributor operation and management experience, specializing in distributor internal affairs: We understand distributors better than manufacturers, and we understand internal management better than distributors. Senior marketing experts help your business grow. > Learning and exchange QQ groups: > > Group 1: 344257092 (full)**** Group 2: **231512457****** > Click "Read the original" below to enter our micro-community for interaction and questions. --- ## Copyright and AI use This article is sourced from New Distribution. 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