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Since stocking up is a normal part of channel management rather than a problem, does that mean distributors' bellies (inventory) are made big by salespeople and manufacturers? Who exactly makes the distributor's belly big? It seems hard to say in one sentence. Before clarifying this issue, let me tell you a small story, and you can draw your own conclusions.
By chance, three brothers and a woman who worked in the sex industry were locked in the same cell. Before long, the woman was found to be unexpectedly pregnant. The jailer was furious—how dare someone act wild in his territory without permission? So he brought out the eldest, second, and third brothers one by one for questioning, and had the woman confront them.
The woman asked the eldest: "Did you do it?"
The eldest waved his hands repeatedly: "Don't be like that! I'm almost 60, how could I have the energy?!"
The woman asked the second: "It must have been you, right?"
The second looked even more aggrieved: "I'm gay! Gay, GAY, you know?"
The woman asked the third: "Then it must have been you?!"
The third jumped up immediately: "Damn you! Look at yourself—do you think I'd touch you? Let me go, let the jailer handle this!"
The jailer got anxious and pointed at the woman, demanding: "You're a living person—don't you know who did it?"
The woman wiped her tears, looking very wronged, and said in a sobbing, broken voice: "The good thing came too suddenly; I had my eyes closed at the time. If they all deny it, then I must have made my own belly big."
Although this is a joke, even a bit risqué, it has very real dialectical significance for distributor inventory management and stock-pushing behavior.
Let me give a real example. Promotion is a routine task for many companies, and many distributors also act according to the situation. In my training courses, I have asked distributors in the audience more than once: Do you prefer to keep money in your pocket or in the warehouse? Almost all distributors chose to keep money in their pockets, but in actual purchasing management, what is the situation?
When I further asked whether they prefer "next-month rebate offsetting payment" or "direct price reduction" for the rebate form from manufacturers, over 90% of distributors raised their hands for "direct price reduction." Since that's the case, here comes the problem!
I come from a manufacturer background, so naturally we hope distributors accept "next-month rebate offsetting payment." First, "direct price reduction" has a greater impact on the overall price system; second, the next-month rebate method can form a continuous purchasing relationship with distributors, rather than a one-off deal. On this issue, manufacturers and distributors seem to be in opposition.
But in actual operation, Chinese distributors lacking quantitative thinking show their tendency to act on feelings at critical moments. So here, I need to use numbers to show the difference in cash and inventory caused by the inflow and outflow of the two rebate forms: "next-month rebate offsetting payment" and "direct price reduction." This makes it more intuitive and stark.
For example, suppose a quarterly task of 3.2 million yuan is set for a distributor: January 1 million, February 1 million, March 1.2 million. Completing the monthly task earns a 5% rebate or price reduction. In distributor assessment, first use "purchase amount" as the assessment indicator. Let's see how the distributor's inventory and cash change under the premise of completing the task.
If oriented toward completing the 3.2 million task, comparing actual payment amounts: with "next-month rebate offsetting payment," the distributor enjoys 50,000 yuan rebates offsetting payments in both February and March, so the actual payment needed is only 3.1 million, and there is still a 60,000 yuan balance on the company's books. With "direct price reduction," the distributor must pay the full 3.2 million yuan in cash to the company to complete the task and get the 5% rebate. From a cash perspective, "next-month rebate offsetting payment" saves 100,000 yuan in cash and adds 60,000 yuan in available credit. So, which is better: "next-month rebate offsetting payment" or "direct price reduction"?
Comparing actual goods value: with "next-month rebate offsetting payment," the actual goods value under the 5% rebate condition is a solid 3.2 million yuan worth of goods. With "direct price reduction," the goods value is reduced. In January, February, and March, the actual purchase values under a 5% price reduction become 1.053 million, 1.053 million, and 1.263 million to enjoy the 5% discount, and the total goods value is actually 3.369 million yuan. From an inventory perspective, "direct price reduction" brings in an extra 169,000 yuan. So, which is better: "next-month rebate offsetting payment" or "direct price reduction"?
Okay, someone might say: "Next-month rebate offsetting payment" cannot be realized because the sales finance department doesn't have time to do the accounting. I want to tell you: if the manufacturer wants distributors to accept the "next-month rebate offsetting payment" promotion, if the sales finance can't do it, replace the sales finance. This is a management issue, not an economic one.
Someone else might say: You calculated based on purchase amount; if you switch to actual payment amount, the results would be different. Brother, if your arithmetic is fine, feel free to calculate it yourself. I can only say the results are about the same.
I appeal again: Dear distributors, if there are other options, price reduction is the manufacturer's last resort (only fools like to sell their products at lower and lower unit prices). So, those reduced-price products are either slow-moving or strategic loss items. If you hoard them, do you really think you can make money? Buyers are never as smart as sellers!
What's more frightening is that these distributors who act on feelings, while enjoying the abuse, even hand over purchasing authority to the manufacturer's salespeople, happily becoming absentee bosses. Who can they blame for their big bellies?!
So, the distributor's belly is neither made big by salespeople nor by manufacturers. Those "big-bellied" distributors are the ones who failed to watch their own money bags, warehouses, and brains. Dreaming of good things, enjoying with eyes closed, doors wide open—isn't that inviting "good things" to come?!
Of course, some make their own bellies big in a muddled way, and some, fearless, actively push themselves forward.
This is the "advanced version" of making your own belly big. There was a large distributor W from Hebei Province who hadn't cooperated with us for long. He always wanted to "hold sales to coerce the manufacturer." Before cooperating, I had heard of his "glorious deeds" from peers. It happened that we were running a promotional price reduction on strategic loss items for several large distributors. He placed an order of 8 million yuan at once. The company gave him 8.2 yuan, and he wholesaled at 7.9 yuan to his downstream. For three consecutive months, his monthly orders for loss items were over 5 million yuan. In the fourth month, he came to negotiate with me: "If you don't give me an exclusive price of 7.2, I won't place orders next month. If you don't take back my nearly 20 million yuan inventory, I'll have to dump it everywhere." When I heard that, I thought: This is hooliganism! If he gets a grip on us, we'll be toyed with! We immediately adjusted our strategy: we directly reduced the strategic loss items to 7.5 yuan and opened it up to all large distributors. As a result, W couldn't dump the goods anywhere. Soon after, the product was upgraded, and W's 20 million yuan worth of strategic loss items were completely stuck on his hands. "Those who play with fire will burn themselves." In business, follow business rules. Those distributors who try to kill the manufacturer by playing with inventory usually end up killing themselves.
To summarize, rising to a so-called theoretical level, the distributor's belly is made big in the following ways:
Acting on feelings and seeking petty gains are the subjective reasons for the distributor's belly gradually getting bigger; those who like to be absentee bosses and even hand over purchasing authority to manufacturer's salespeople are the objective reality that makes the belly even bigger.
What's the difference between those distributors who try to hold the manufacturer hostage with inventory and those silly women who secretly poke holes in condoms to get pregnant and force men to marry them? Being abandoned after having fun is the inevitable outcome.
In "A Chinese Odyssey," there is a monologue where Tang Seng pleads for Sun Wukong and persuades Guanyin. Now I think it fits the distributor's defense for a "big belly": "Wukong wants to eat me; it's just an idea, not yet a fact. You have no evidence, so what crime does he have? Why not wait until he eats me, then you have proof, and you can convict him later!"
[One of Huang Runlin's three articles on stocking up]
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