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Recently, our reporter received a call from Mr. Zhang, a distributor in Jincheng, Shanxi, who complained about product backlog after trying to operate snack foods. In fact, Mr. Zhang's trouble is not an isolated case. Previously, other distributor friends also complained to our reporter that snack foods are difficult to handle, especially requiring more effort in inventory management and terminal operations. Otherwise, it is easy to cause product backlog, which in turn affects product sales and capital return, causing considerable losses to distributors.
So, what exactly causes product backlog in snack foods? And what practical and effective countermeasures exist? To this end, our reporter communicated with several snack food distributors to find solutions to the snack food backlog problem.
Characteristics, Competition, and Operations: Multiple Causes Lead to Backlog
Overall, product backlog is caused by multiple factors, and for snack foods, it is closely related to their own characteristics.
Manager Yu of Zhejiang Shangyu Qingwang Trading Co., Ltd. stated that on one hand, snack foods have many categories, and each brand has a long product line. Coupled with differences in packaging specifications among individual SKUs, this inevitably increases the difficulty of product management for distributors, especially for those who operate multiple brands. They must constantly monitor terminal inventory and display management, which requires more manpower and energy to maintain. Otherwise, once product dates age or individual SKUs are out of stock, it will directly affect subsequent sales, and product backlog becomes inevitable.
On the other hand, snack foods have an extremely fast replacement cycle. Often, a product or even a category becomes popular for a while and then quickly fades. Many distributors who initially waited and then followed up also encounter sales obstacles, having to hastily dispose of backlogged products. Additionally, domestic snack foods have developed rapidly in recent years, with a large number of products flooding the market, leading to fierce competition. Coupled with market uncertainty, when competitors suddenly make a push in a certain quarter, or a new industry "dark horse" enters, distributors often find themselves caught off guard and unable to adjust sales strategies in time, resulting in product backlog.
Besides the characteristics of snack foods and competitive pressure, distributors' personal mistakes in selection and operation are also major causes.
First, from the perspective of product selection, many distributors fall into a trap of over-pursuing novelty. They believe that some conventional snack foods are already being handled by others, making it difficult for them to stand out. Therefore, they try to represent new products, not realizing that this can easily put them in a dilemma: they cannot accurately predict product performance, and they lack the experience and strength to operate new products, leading to product stagnation.
Second, distributors are often tempted by manufacturers' preferential policies and buy large quantities at once, which is very dangerous. Once the product encounters "acclimatization" problems in the market, or their sales forecasts are inaccurate, it is easy to have large backlogs that are difficult to clear in time.
Third, many distributors keep simple records when products enter the warehouse, without detailing the types, specifications, and other details. They also record shipments to terminals in a sloppy manner. Over time, the quantities of incoming and outgoing goods are difficult to match accurately. Distributors do not know how much they have shipped or how much remains in the warehouse, resulting in large amounts of near-expiry products and losses.
Finally, many distributors believe that once goods are distributed to terminals, they can just wait for natural sales. However, they are completely unaware of the actual market performance of products, which categories are popular, let alone the sales status of specific packaging specifications or flavors. In such cases, when ordering from manufacturers next time, they still do not know how to combine products reasonably, and products are prone to stockouts or backlogs.
Strict Control in Ordering and Warehouse Management
Snack foods are prone to backlog, but there are countermeasures. In fact, as long as reasonable measures are formulated and strictly implemented at every link, large-scale product backlog can be controlled or even avoided. Our reporter contacted several snack food distributors who shared their suggestions based on their experience.
Thoroughly investigate the market before ordering. Zhu Peiyun of Nanjing Pukou Wangfujia Commercial Firm mainly represents Weigang Milk and snack foods. She said that to avoid large-scale product backlog, one must first understand the market situation and one's own resources. Market conditions mainly include the proportion of similar products in the market, the differences between competing products and one's own, brand promotion efforts, and the popularity of one's products. Own resources include one's channels, whether the outlets match the products sold, available working capital, and personnel deployment.
Ms. Zhu said that her district, Pukou, has a population of only 540,000, and she has 216 terminal stores locally. Before each distribution, she roughly understands the market situation, decides the order of distribution and promotion methods, and pushes products to the market in an orderly manner. It can be seen that fully investigating the market, understanding the current market situation, and knowing one's own strength and resources can provide sufficient preparation for product representation and sales, ensuring smooth sales in the market.
Control the order quantity. Shi Yongping of Beijing Zhongshang Boda Trading Co., Ltd. has represented brands like Crayon Shin-chan and Huikouke for over a decade and rarely has large-scale product backlog, mainly because of reasonable control at the ordering stage. Mr. Shi said that logistics is now extremely fast, so there is no need to order a large quantity like before. For example, Crayon Shin-chan, although a Fujian enterprise, has a branch factory in Tianjin, so he can order directly from Tianjin, saving time and freight. Moreover, Crayon Shin-chan has a minimum order of 1,000 boxes, and Mr. Shi usually orders only 2,000 to 3,000 boxes, ordering more when needed, like eating small meals frequently. Similarly, for Huikouke, the manufacturer is in Shandong, and the minimum order is 40,000 to 50,000 yuan, but Mr. Shi basically orders 45,000 yuan. This avoids large-scale product backlog and helps with capital turnover.
An important reason for snack food backlog is that the purchase quantity far exceeds market demand. Snack food distributors should learn from Mr. Shi's approach and carefully consider order quantities.
Strengthen warehouse and personnel management. Xu Boxiong of Guangdong Chaozhou Baixiong Subsidiary Food Firm believes that increasing investment in warehouse and personnel management can also effectively reduce the frequency of backlogged products. Mr. Xu has a 30,000-square-meter warehouse, divided among different employees, with one person responsible for 600 square meters. From product arrival, management, to shipment, the responsible person records everything in detail. After shipment, each responsible person is given a return target of only 1%, meaning that for 500,000 yuan of shipments, only 5,000 yuan in returns is allowed. If returns exceed 5,000 yuan, the amount is deducted from the responsible person's bonus. At the same time, a list of slow-moving products is made monthly, and the responsible persons can compete to sell them, with the bonus deduction compensated proportionally.
Distributors may adopt Mr. Xu's approach to warehouse and personnel management. This not only effectively digests inventory and reduces backlog but also mobilizes employee enthusiasm and helps shape a lively and positive corporate culture. It can be said to achieve multiple goals at once.
Three Major Countermeasures to Handle Backlogged Food
No matter how careful one is in the early stages of product selection, warehouse management, and sales, it is difficult to completely avoid backlogged products, especially for snack foods, where backlog is quite normal. Even so, distributors should pay attention and formulate active response plans after large-scale snack food backlog occurs to minimize losses.
Leverage manufacturer support to compensate for losses. When encountering backlogged products, it is best if the manufacturer supports returns or exchanges. Chen Lisheng of Shijiazhuang Ronghe Trading Co., Ltd. believes that cooperating with a strong and responsible manufacturer, actively negotiating with the manufacturer after product backlog, and obtaining policies for returns, exchanges, or price difference compensation can effectively solve the backlog problem. If the manufacturer does not accept returns or exchanges, one can also obtain promotional subsidies under the manufacturer's guidance, or borrow products from other regions.
Flexibly adopt various forms of promotion. Such as price reductions, discounts, activity rewards, bundle sales, buy-one-get-one-free, etc. These are common ways for distributors to handle backlogged goods.
Tao Long of Shijiazhuang Dongjia Food Co., Ltd. has also experienced product backlog. He said that as long as it is not a large-scale backlog, it can be handled through traditional methods such as buy-one-get-one-free or discounts at morning markets, night markets, or campus stores. Shi Yongping of Beijing Zhongshang Boda Trading Co., Ltd. also has his own solution for backlogged snack foods. As soon as snack food backlog reaches 150 boxes, he immediately initiates buy-one-get-one-free, or puts up POP signs at terminal stores with prices like 1.99 yuan or 2.99 yuan, and negotiates with the manufacturer to set up end-cap displays at terminal stores to attract customer attention. Through this simple method, Mr. Shi can recover losses of 200,000 to 300,000 yuan each year.
Adopt special handling methods based on product and channel characteristics. Huang Bo of Liaoning Dawanglong Trading Food Distribution Center mainly represents brands like Qinqin and Oishi. He said that although there are some general solutions for backlogged products, each distributor represents different products and has different channels and outlets. Only by adopting special methods tailored to product and channel characteristics can the best results be achieved.
For products, if they are high-value snack foods, such as imported foods, group buying can be used to handle them. Alternatively, joint promotion can be adopted, such as "strong-strong alliance" or using a strong product to drive a potential product, which is very effective.
From a resource perspective, if a distributor has good hypermarket resources, they can set up a special sales area in KA stores during anniversaries or holidays to clear products at once. If the distributor's distribution channels are very advantageous, terminals with stable customer flow such as campus stores and community stores are the best destination for backlogged foods. Distributors who started with bulk goods can completely break up backlogged snack foods and digest them through mature bulk channels. At the same time, distributors can adopt a centralized consignment method, distributing backlogged snack foods to several strong terminals for consignment with high profits. Xu Boxiong of Chaozhou Baixiong Subsidiary Food Firm once used centralized consignment to handle backlogged snack foods, and each terminal that consigned his products could obtain 50% profit through this method.
In summary, although snack foods are prone to backlog, as long as distributors pay attention to this issue, adopt reasonable and effective methods, strictly control every link from the source, and actively respond after product backlog occurs, they can maximize loss recovery and even win unexpected profits!
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