What Era Is It Now, Still Talking About Distribution Rate and Visit Rate?

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First, a case study on distribution rate In 2015, I met a county-level leisure food distributor who had been in business for only 3 years. These 3 years were the toughest for business, and while others complained, he kept improving. He had three secret weapons. First, he brought online best-selling leisure products (usually high-end) offline, using online sales as a product test. Second, he only distributed to a few stores. Consumers with purchasing power and good stores coexist. Third, when anyone doubted his products, he would simply say: "Try it." Because his prices were higher than others, a taste would dispel doubts. His distribution rate was low but precise; his prices were high but accepted. Store owners who tasted the products had more confidence in recommending them than through mere relationship-building. Next, a case study on visits One noon, I visited a township store. I asked the owner, "How many salespeople have visited your store today?" The owner counted on his fingers and said 28. I thought to myself, if all 28 were seriously received, the owner would have no time for anything else. So I asked, "When salespeople visit, what's your first thought?" The owner thought for a moment and said, "To get rid of them." I felt sorry for those salespeople. The company-required visits and relationship-building were just "getting rid of them" at the terminal. When batches of salespeople take turns visiting, I find it hard to believe that visits build relationships; it's just going through the motions. Things that have become routine nationwide won't have real effect. But if you don't do them, you feel uneasy. If you do, there's no effect. 01 Every advanced method bears the mark of its era. Some advanced methods from the era of deep distribution are now becoming outdated. Unfortunately, many companies have no replacements yet. No replacements mean that those who find new methods will enjoy the innovation dividend. In the early days, whether Coca-Cola's "3A Strategy" (Availability, Affordability, Acceptability) or "3P Strategy" (Pervasiveness, Price/value, Preference), the emphasis was on "Availability" and "Pervasiveness." Therefore, distribution rate, making products visible to consumers, became a necessary condition for sales. Distribution, visits, and inventory stocking were the basic routines of deep distribution in that era, leading to the once-popular "Eight-Step Visit Method," which was standardized. The effectiveness of these routines was determined by product characteristics and marketing strategy. This was the product of the last wave of "wave-like consumption" combined with deep distribution. Wave-like consumption ended, the deep distribution era ended, and a new era has arrived. So, basic frontline actions like distribution, visits, and stocking should be given new content. 02 A friend has been in the baijiu business for many years. I call him the "Master of Deep Distribution for Baijiu," and Teacher Fang Gang is my "Master of Deep Distribution for Beer." He knows the number of stores and restaurants in a region more accurately than the business registration bureau. Because some stores are closed but not deregistered. His company imposes heavy fines for discovering a blank store. How much? I witnessed a very good region being fined over 100,000 yuan once, so the distributor set up a special team just to eliminate blank stores. In May this year, he launched a new product. I proposed a new method: Targeted distribution, rapid sell-through. Only distribute to specific stores, not focusing on distribution rate. Making rapid sell-through the core point, obviously, mere distribution and visits can hardly directly generate sell-through, so new sell-through actions are needed. He followed my method and distributed to 20% of stores. Within a few months, sales quickly rose, achieving what a full-county distribution would take a year to accomplish. Since then, he seems to have discovered a new world. His marketing thinking changed, and all frontline actions changed. 03 Earlier, I mentioned wave-like consumption. This is the premise for "pervasiveness" in distribution. Wave-like consumption presupposes undifferentiated demand. When is there undifferentiated demand? When quantity has not yet been satisfied, everyone's needs are similar. With undifferentiated demand, just distributing and building relationships can sell, so of course you can require products to be "pervasive," emphasize distribution rate, and use blind visits to build relationships with all terminals. 2013 was the year when production peaked in most FMCG industries, and also the end of the deep distribution era. Wave-like consumption ended that year. Now some say consumption is upgrading, others say downgrading. In any case, it's consumption segmentation. With segmentation, wave-like consumption inevitably ends. Uni-President's proposal of a 1 billion yuan mega product is a normal single-product sales volume after wave-like consumption. If old products still need to be "pervasive," then even increasing distribution rate, sales should decline. Decline doesn't mean abnormal; some declines are normal. But for old products meeting undifferentiated demand, you must find new differentiated demand that can grow. If new product distribution still requires "pervasiveness," then such products are better not launched. New products must be targeted, not only consumers but also terminal stores. For targeted terminals, you can talk about targeted distribution rate, not just overall distribution rate. After all, targeting also needs standards. Therefore, classified management of terminals is very important. 04 Now about visit rate. In the winter of 2013, a bottled water boss asked me to give a lecture to his salespeople. I hadn't done bottled water before, so I asked three questions. First question: What is your core work every day? They answered: Visit 40 stores daily. This was a company rule. I checked their daily route records, and indeed it was so. In the cold winter, bottled water doesn't sell well, and it was a new brand. Could such high-density visits solve sell-through? I doubted it. Second question: In winter, where does bottled water sell well? Answers: Internet cafes, spicy hot pot shops, sports venues, bath centers, etc. Third question: When do you start and end work? When are the peak hours at these places? Answers: Work from 8:30 AM to 6 PM; peak hours are from noon to around 8 PM. After three questions, the answers were clear. Visits can build relationships, but from relationship to sell-through requires conversion. Better to directly turn visits into sell-through actions. My proposed method: First, without changing total working hours, adjust start and end times to align with peak hours. Second, don't do blind visits or relationship-building; only do sell-through at core stores during peak hours. Do a round of sell-through three times to activate a terminal. Use sell-through results to influence relationships. Third, the best sell-through method is covert sales. Appear not as a salesperson but as staff. Fourth, use sell-through to bring incremental sales to stores; because they sell your water, their total bottled water sales increase. After two months, winter sales exceeded summer. Of course, the original performance was too poor. What is the best relationship? Sell-through is the best relationship. Traditional marketing actions lack this basic sell-through action. Greeting when meeting is not true relationship. 05 Regarding visits, I have new insights recently. In the past, visits were physical work; now they must become intellectual work. This is channel digitalization. In the past, it was called "blind visits," undifferentiated visits, sweeping the streets. With low labor costs and room for growth, it was effective. Now we need "precision strikes." What is precision? It means accurate targets, clear problems, going straight to the point, and solving problems. This organizational model is called "strong backend, precise frontend," the model of US special forces, with strong backend support. Channel digitalization is not difficult now. From manufacturer to distributor to terminal, everything is digitalized. After digitalization, you have vertical data; if compared with B2B horizontal data, you know which stores have problems and what they are. Salesperson visits are precise, and solutions are pre-planned. Precision strikes mean first using data to distinguish normal and abnormal stores. Sales above or below normal are abnormal. Abnormal, whether good or bad, must have a reason. If there's a reason, you must find it and solve the problem. Of course, precision visits don't completely exclude "blind visits," but the frequency should be greatly reduced. Future channel forms will all move toward the data-supported "strong backend, precise frontend" model. 06 Finally, about inventory stocking, because it relates to precision visits. Because of stocking, one-time orders are too large, data becomes distorted, and you can't know the true sell-through data for a period. Or by the time you know, it's too late. For example, if you stock a month's sales at once, by the time data comes out, it's too late; you can only find problems through blind visits. In 2015, we did an experiment with several distributors in a county. I found they only delivered 1-2 times a month, each time with large quantities, causing heavy stocking. We changed to small-batch, high-frequency delivery. Goods didn't go into the warehouse but directly to the sales floor. Because quantities were small, owners allowed them on the floor. Because goods were on the floor, when shelves were empty, they were willing to restock. What was the original situation with stocking? Goods in the warehouse, even if shelves were empty, owners wouldn't restock. Especially for quality stores, owners had been spoiled and didn't want to restock shelves. Why was stocking effective in the past? In the past, when goods arrived at the warehouse, responsibility shifted to the store owner, who felt pressure to sell. Now competition is fierce, no matter where goods are, owners feel no pressure; responsibility always lies with the manufacturer (except for a few well-known brands). If not sold, goods are returned. So now stocking doesn't shift responsibility; it's ineffective. Now, distributors' near-expiry products erode at least half of their profits, and stocking behavior bears much responsibility. Of course, promotions and grabbing funds still need to be done. Centralized ordering to grab funds; small-batch delivery to solve freshness and reduce stocking. What was the effect? While others' sales declined, these few increased. In 2015, achieving sales growth was not easy. 07 Talking about distribution, visits, and stocking is actually about tactical issues. Behind them, it's about the replacement of the entire marketing system. All salesperson problems are actually top management problems. All tactical problems are actually strategic deficiencies. The replacement of the marketing system has two aspects: first, product replacement; second, marketing system replacement. Wave-like consumption has ended. Now the most valuable consumer groups are the new middle class and the new generation. Although old products still have significant sales share, continuous decline is inevitable. Whether targeting the new middle class or the new generation, using distribution rate, blind visits, and stocking as sales methods is definitely problematic. This set of frontline tactical actions has become outdated with the times. Since products are targeted, distribution and promotion must also be targeted. At this time, new sales routines must be introduced timely. Otherwise, you can neither solve the decline of old products nor the promotion of new products. Now, the time has come for the entire marketing system to change. I "said goodbye to traditional marketing" in 2014 because old products failed. I advocate new marketing because new methods are truly effective. 08 Marketing is a competitive field, which means: methods mastered by everyone no longer generate competitiveness. So, marketing methods have no good or bad, no superior or inferior; only comparison, only difference. Comparison means: with the same method, do better than others; with a different method, do it earlier than others. Now some people still talk about how to perfect distribution rate, visit rate, and stocking. When talking about perfection, consider the input-output ratio. Or use more efficient methods to achieve perfection. For example, I've long heard that Coca-Cola's terminal coverage rate is 98%, but B2B data in a certain region shows it's actually only 78%. The 20% blank stores are hard to find with traditional methods, and the cost is high, but with B2B data, you can do targeted strikes. So, even when assessing old product distribution rate, you can't use blind visits. Product targeting → Targeted distribution → Precision strike → Targeted sell-through All tactical actions reflect precision (targeting) and efficiency (strike, sell-through). This is a new frontline tactical system. I always say marketing is a "deceptive" profession. When you become skilled, that's when the skill becomes ineffective. When you have experience, that's when experience becomes a burden. Source: Teacher Liu's Forum (ID: liuchunxiong1964) On October 23-24, during the Autumn Sugar and Wine Fair, New Distribution will host the "2018 FMCG City Distribution Logistics Conference" . We will invite industry experts, FMCG warehousing and distribution specialists, and distributors who have transformed to unified warehousing and distribution platforms, to discuss and answer questions about future trends in FMCG city distribution logistics and practical cases of distributor transformation, hoping to bring you different inspiration and thinking! The specific agenda is as follows: List of Participating Companies In no particular order Hunan Zonglan Diandan Network Technology Co., Ltd. Jingbang (Wuhan) International Freight Forwarding Co., Ltd. Mengniu Dairy Qinghai Hanxiang E-commerce Co., Ltd. Unilever Service (Hefei) Co., Ltd. Shanghai Branch Huicong Hunan Xuan'ang Food Co., Ltd. Guangzhou Tongdaoren Information Technology Co., Ltd. Qingdao 888 Trading Co., Ltd. Uni-President Enterprises (China) Investment Co., Ltd. Hunan Province Zhongxiang Gongpei Logistics Co., Ltd. Shenglong Ingredients COSCO Shipping Logistics Warehousing and Distribution Co., Ltd. Guangxi Yongpai Liquor Co., Ltd. Shangqiu Kangrong Trading Co., Ltd. Jinan Dingzhong Trading Co., Ltd. Liaoning Bimai Agricultural Technology Co., Ltd. Kunming Xiongjia Trading Co., Ltd. Shaanxi Houheng Trading Co., Ltd. Guangzhou Dingwo Enterprise Information Consulting Co., Ltd. Shaodong Jiajiale Trading Firm Boda Trading Industrial Bank Changsha Branch Wuhan Muchen Convenience Store Chain Co., Ltd. Fujian Fuxing Yuncang Logistics Co., Ltd. Guizhou Yilimi E-commerce Co., Ltd. Jiangxi Xiao Laoer E-commerce Co., Ltd. Jinshan Koufu Shanxi Taihang Yuanjing Supply Chain Management Co., Ltd. Shanxi Dezhun Supply Chain Management Co., Ltd. Shaoyang Tongdeli Trading (Xiangbang Logistics) Huanfu Tongda Express City Distribution Beijing Xinjingxiang Food Co., Ltd. Wuhan Huizhong Tianhong Liquor Co., Ltd. Changsha Paide Biotechnology Co., Ltd. Chao'an Tuqiang Guizhou Yihe Bopin Supply Chain Management Co., Ltd. Jiangxi Kang'en Industrial Development Co., Ltd. Xiangtan County Yisuhe Town Yuhua Paper Store Luoyang Yuanlang Trading Co., Ltd. Tongchuan Yaozhou District Huayuan Supermarket Co., Ltd. Hunan Yongfu Jiujiu Trading Co., Ltd. Zhejiang Chengchengtong Logistics Co., Ltd. Chongqing Kaiguo Materials Trading Co., Ltd. Beijing Xianmaixianmai Data Technology Co., Ltd. Hanchuan Qixing Trading Co., Ltd. Tongxin Jiuzhi Trading Co., Ltd. Guizhou Meiguo Guoguo Network Technology Co., Ltd. ...... Representatives of Distributor Transformation (Proposed) In no particular order Jiangsu Huashang City Distribution Network Co., Ltd. Chairman, Rong Jun Hubei Yijiaren Logistics Co., Ltd. Chairman, Wang Bo Sichuan Chengdu Xingrenxing Trading Co., Ltd. General Manager, Jiang Shuming Shandong Yunbang Warehousing and Logistics Co., Ltd. Chairman, Liu Jichen Chongqing Lingyu Consumer Goods Supply Chain Management Co., Ltd. Chairman, Tu Mingyu Guangzhou Zhongshan Wanrong Marketing Co., Ltd. Chairman, Yang Su Sichuan Bajie Supply Chain Management Co., Ltd. Chairman, Yuan Xia Hubei Pengdun Meiyitian Supply Chain Management Co., Ltd. Co-founder, Li Qiangyun Henan Xuchang Jiulegou E-commerce Co., Ltd. Chairman, Zhang Jianyong Hebei Changyi Logistics Co., Ltd. Founder, Ma Haichao Hebei (Chengde) Wulian Yuncang Co., Ltd. General Manager, Meng Yucun Xinjiang Urumqi Su'an Jinchi Logistics Co., Ltd. Chairman, Zhang Xun Jilin Sansheng Lianguo Chairman, Zhang Hailing Hebei Dunjie Supply Chain Management Co., Ltd. Founder, Qiang Huitao Hunan Damei Supply Chain Management Co., Ltd. General Manager, Liao Lei ...... -END-