Click the image for details Editor's Note: Historically, it was enough to just keep your head down and pull the cart. But in the next phase, we must truly look up and see the road ahead. Looking up is more important than pulling: pulling is a tactical action; looking up is a strategic action. For the convenience of FMCG distributors who follow us closely, the editor has made slight modifications to the content. The author writes from the perspective of the animal protection industry, but the editor believes that the principles are universal, and this article has reference value for distributors in various industries. It is worth reading. 1 Four Stages of Distributor Development The earliest stage was the 'speculator' stage. This stage began at the start of reform and opening up. Look at the writer Liang Xiaosheng, who wrote a series of works about the Great Northern Wilderness, such as 'Blizzard Tonight,' 'Years,' 'The Return Era,' and 'Educated Youth.' Many people returned to the cities with nothing to do and eventually became 'speculators.' China's first generation of distributors came from the feed industry. As we know, the earliest distributor level in China is related to the first foreign-invested enterprise since reform and opening up, and that enterprise happened to be related to the animal protection industry—Chia Tai (CP Group). Chia Tai was the first foreign enterprise invited by senior Chinese leaders to enter the domestic market after reform and opening up. After entering China, it soon implemented a true salesperson system in the feed industry, including distributors. At that time, many distributors had some government background. They originally worked in the animal husbandry bureaus, and those who worked there were university graduates. However, these people were not favored by their leaders and had no prospects for promotion, but the leaders couldn't fire them either. So the leaders sent them to various places, gave them 20,000 yuan as startup capital, and made them responsible for their own profits and losses. Unexpectedly, a few days later, the leaders regretted it deeply. Why? Because these people became rich. This was the birth of the first generation of distributors in China's animal protection or feed industry. Later, many people noticed that local shops appeared, often opened by the wives of the animal husbandry bureau directors or deputy directors. The 'sitting merchant' stage. The first stage was the speculator stage; the second was the sitting merchant—monopolistic products, where you could sit and make big money. Because at that stage, products were scarce, feed was scarce, and veterinary drugs were scarce. Many veterinary drug products were packaged by the preparation rooms under the animal husbandry bureaus and then sold, with very high profits. The 'itinerant merchant' stage. The third stage, at the end of the last century and the beginning of this century, which was the first ten or twenty years, was the itinerant merchant stage. Distributors began to get rich, bought a car, and started traveling to the countryside every day. Not only did distributors go down themselves, but they also brought along the manufacturer's technicians, as the saying goes, 'The monk from afar chants the scriptures better.' When they went around, the distributor would introduce the technician to the farms, saying, 'This is our factory's technical teacher,' and the farms would believe it. The 'intellectual' stage. Historically, it was enough to just keep your head down and pull the cart. But in the next phase, we must truly look up and see the road. Looking up is more important than pulling: pulling is a tactical action; looking up is a strategic action. I often say this: you cannot use tactical diligence to cover up strategic laziness. 2 Four Role Definitions of Distributors Customer role. When a distributor deals with a manufacturer, the manufacturer treats the distributor as a customer, without a doubt. What is a customer? Anyone who pays money to buy something is a customer. So when you buy from the manufacturer, the manufacturer treats you (the distributor) as a customer. Actually, from a professional perspective, distributors are called channel merchants. What is a channel merchant? A person who buys the ownership of a product and earns a profit by transferring that ownership is a channel merchant. What is a true customer? A person who buys a product for their own use is a customer. But because we are used to it, in front of the manufacturer, the distributor is the customer, because the distributor is the buyer of the manufacturer's products. Competitor role. Distributors are also competitors to their peers. Operator role. Distributors are promoters of products and services. Because distributors need to sell products and promote their own services. Communicator role. Distributors are transmitters of information, passing terminal information to the manufacturer and manufacturer information to the terminal. 3 Four Major Work Responsibilities of Distributors Product distribution. Distributors take products from the manufacturer, not for their own use, but to sell them. This is called distribution. Of course, they may sell to secondary distributors or retailers, or to the terminal. In short, distributors must sell, and only by selling can they make money. Information transmission. This was mentioned above. Brand promotion. Note this: 'Channel merchants should not try to build their own brand.' Many channel merchants always want to build their own brand. I tell you, the terminal pays more attention to the product brand, never to the distributor brand or corporate brand. However, if a distributor wants to form a group or cooperate with a large group company, the corporate brand becomes particularly important. Providing services. Distributors must learn to provide services. Many distributors always think that service is the manufacturer's job, which is wrong. We find that if a distributor can provide services, that distributor generally does well. Because service, first, is speed; second, convenience; third, accuracy. No matter how accurate the service, if it is not convenient or fast, it cannot be implemented. And who can provide fast and convenient service? Only distributors can, not manufacturers. In future competition, especially around product competition, distributors themselves must know how to serve. Many distributors don't even know how to use the product or what its attributes are. When someone asks how to use the product, the distributor finishes the call and the first thing they do is call the manufacturer's salesperson to ask. Do you think the manufacturer's salesperson is smart? Many are dumber than the distributor. I say this bluntly. Then the salesperson says, 'Oh, let me ask the company's technical department.' The technical department says, 'Which product?' The salesperson says, 'Oh, our company has four or five hundred products, I can't remember.' I tell you, this is common. So distributors must learn some 'quick' services, simple services related to product use. We should do products that others haven't done, so we can become the leader. Because when your product solution becomes the leader, your position in the industry is established; once your position is established, it's easy to do any other product. 4 Five Development Strategies for Distributors Maintain good manufacturer-distributor relationships. This is very important. Whenever there is conflict between a distributor and a manufacturer, it's very troublesome. A distributor changes manufacturers today, after working hard as a 'pioneer,' clearing the way and building bridges, only to make a 'dowry' for others. You develop the market, then you have a conflict and quit. The manufacturer is happy: 'Whether you play or not, as long as the product is good, I can find someone else.' Differentiation strategy. What is the core of a differentiation strategy? As we know, differentiation means being different. Note my point: choose a product solution that doesn't exist in the market or that others do poorly, and make it different. Don't compare yourself to others as the leader in operations, but your product solution can be the leader. You need to offer a unique product solution. We distributors are used to following what others do well, and that will never get us anywhere. We should do products that others haven't done, so we can become the leader. Because when your product solution becomes the leader, your position in the industry is established; once your position is established, it's easy to do any other product. The market recognizes 'first-mover advantage.' Once there is a 'leader,' there is almost no room for a 'second' or 'third.' Everyone should have a product or product solution that is the 'leader'—that is the differentiation strategy. In terms of pressure, this means not competing with competitors on pressure. Comparing total sales is comparing pressure, but I can compete with competitors on pressure intensity. What is pressure intensity? It's simple: take a needle and prick an elephant's butt—that's pressure intensity. Build business reputation. Everyone knows this, so I won't say much. Focus on self-improvement. Note that the best way to improve yourself is to go out and learn. It takes shortcuts and saves a lot of trouble. What is a predicament? Being trapped at home is a predicament. What is a way out? Going out to learn, there is a path to follow, that is the way out. Do terminal service well. I have emphasized this repeatedly. 5 Three Essential Capabilities for Distributor Operations The first is the ability to manage the terminal well.

  1. Capital turnover capability. An important criterion for evaluating a distributor's operational capability is capital turnover.
  2. Logistics and distribution capability. Historically, this was a problem, but now it's not. In the past, distributors built their own logistics, with their own vehicles for delivery. But now, logistics is so developed that we don't need to build our own; we just need to find a logistics company.
  3. Relationship maintenance capability. You need to maintain relationships with manufacturers and local governments. This is very important. Especially at this stage, it's crucial for distributors to establish relationships with local governments. Today they inspect a product, tomorrow they take the goods away. When distributors encounter this problem, many turn to the manufacturer. Actually, distributors should reflect: if the local government keeps bothering you, your relationship with the government and regulatory authorities is too poor.
  4. Relationship with downstream, i.e., problem-solving capability. The so-called problems include various issues in operations. The better you solve them, the stronger your capability.
  5. Inventory management capability. Inventory management and capital turnover are closely related. The higher the inventory management level, the faster the capital turnover; if inventory is not managed well, capital utilization is also poor. So inventory management is very important.
  6. Terminal service capability. If you focus on terminal development for a day, there is a process and method. At this point, I ask everyone to think: How do you obtain the qualification to manage the terminal? If we want to manage small terminal shops, how do you get that qualification? How can you manage them? Why should the small shops listen to you? What conditions must you have to make them listen? The second essential skill for distributor operations is promotion and marketing capability. Our common meeting sales usually follow a three-step process. Note that this three-step process has problems, and some terminals no longer buy it. What are the three steps? First, the current popular product; second, our product sells well; third, how much you pay, how much free goods you get. Isn't that what we do in meetings with terminals? Now terminals don't buy it. Here, I ask everyone to think again: What conditions are needed for a successful promotion? The third essential skill for distributor operations is a special ability: the ability to resist temptation. There are three common temptations. The first is profit—money. The second is personal relationships—someone comes to you and says, 'Buy some goods.' The third is the scene—like the on-site promotions that companies do. Someone spends 200,000 yuan and smashes a golden egg, and you see that they won a big prize, so you follow and spend money to smash eggs too. 6 Seven Characteristics of Excellent Distributors Internal organizational coordination. That is, your (the distributor's) internal personnel are very coordinated, with few conflicts, and management is good. Business process optimization. Whoever should do a job does it. Even when the boss is away, the company operates smoothly. The worst thing is when the boss leaves and 'the sky falls.' Efficient team motivation. That is, your team is willing to work and works hard. This is efficient motivation. Stable employee team. Many people follow you and don't change jobs. Sound institutional system. Various systems and regulations are in place. Reasonable capital utilization. Capital can turn over, you have money when you want to do things, and capital liquidity is high. Stable upstream and downstream relationships. Your relationships with manufacturers, secondary distributors, or terminals are very stable. Note that you shouldn't develop the market today and then the manufacturer stops playing with you, or the downstream secondary distributor runs away. Ge Junzhen, MBA from Guanghua School of Management, Peking University; founder of the technical marketing model in the animal protection industry; practical expert in agricultural and livestock marketing management; chief consultant of Zhenmou Junlue Consulting; vice chairman of Hebei Animal Husbandry and Veterinary Society; chief advisor of China Poultry Health Network; editorial board member of 'Today's Animal Husbandry and Veterinary Medicine'; chief trainer of Egg Chicken Bridge Club. Source: Zhenmou Junlue (ID: gejunzhenygzt) Compiled and edited by: New Distribution -END-