---
title: "Why Distributors Struggle to Sell New Products?"
description: "Distributors often complain about thin margins, yet new products with better profit potential fail to sell well. The core issue lies within distributors themselves, specifically in their distribution and sell-through capabilities, as well as their sales teams' limited time and incentive structures."
author: "周群"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-08-25"
language: "en"
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---

# Why Distributors Struggle to Sell New Products?

> Distributors often complain about thin margins, yet new products with better profit potential fail to sell well. The core issue lies within distributors themselves, specifically in their distribution and sell-through capabilities, as well as their sales teams' limited time and incentive structures.

********Click 'Read Original' for details********
Recently, I chatted with some distributors about their business status, and the most common complaint was no profit, no money.
Here is a conversation with a distributor who does over 100 million in annual sales, dealing in beverages and snacks.
How's business lately?
Overall, not bad. In the first half of this year, sales grew about 20% year-on-year, but profits basically didn't grow compared to last year.
Why did sales grow but profits stay flat?
The scale growth mainly came from adding some first-tier brands. Sales are okay, but margins are thin. Plus, after expanding brands, adding staff and vehicles, and various miscellaneous expenses, we basically didn't make money.
These brands launched new products this year with decent profit margins. Why can't you make money?
There are indeed many new products, but we haven't done well with them. We mainly sell big circulation products with low margins.
......
Similar situations are frequently mentioned when chatting with other distributors. Old products have small profit margins, so they can't make money; new products have large profit margins, but they don't sell well.
Many factors influence a distributor's ability to sell new products, including manufacturers, city managers, distributors, and salespeople, but the core lies with the distributor themselves. This article will break it down from two dimensions: the boss and the salesperson.
**01** **Distributor Boss: Distribution Capability & Sell-Through Capability**
Should distributors promote new products?
The answer is clear: yes, definitely.
A distributor's core profit comes from the price difference between purchase and sale. While big circulation products maintain stable sales, their profitability gradually declines. To make money, distributors need to adjust their product structure through new products.
So, what capabilities do distributors need to sell new products well?
The core is two levels: **distribution capability and sell-through capability.**
Regarding distribution capability, some distributors may wonder: since they are in the "middleman" business, they must have distribution capability.
That's not necessarily true. Distributing to stores and distributing elsewhere are completely different concepts.
Many distributors seem to have strong distribution capabilities, but they are actually "strong on the outside, weak on the inside." If you analyze their distribution channels, you'll find that their so-called strong distribution might go through wholesale or special channels, which are not suitable for new product promotion.
When I communicated with a snack distributor in Wuhan, he also mentioned that some distributors fail to promote new products because they haven't done well at the distribution level—they distribute to wholesalers instead of stores.
These distributors are aware of the problem, but the cost difference between distributing to stores and distributing to wholesalers is huge, especially in logistics. Distributing to stores increases logistics costs by almost 50%, so they are reluctant to change.
So, to be precise, **distribution capability here actually refers to the ability to cover store distribution. With this capability, you can then accurately match quality stores suitable for distributing new products based on store conditions.**
That's distribution capability. What about sell-through capability?
In a previous New Distribution article, a reader commented vividly: **Sell-through capability is "the distributor can live well without any single brand, can sell whatever they have, rather than only selling what others want."**
In the current FMCG industry, most distributors actually lack sell-through capability, even if their business is large.
**There is an intuitive criterion for whether a distributor has sell-through capability: whether they have their own independent sales team.**
The offline sales battlefield is a war without gunpowder. Sell-through is not just delivering products to stores; it's competition across multiple dimensions: distribution rate, vivid display, personnel pull, promotional activities, etc.
Sell-through actions rely on salespeople. But the reality is that most distributors are reluctant to spend money training their own salespeople and overly rely on manufacturer salespeople to run the market.
**Manufacturer salespeople do what the manufacturer wants, not necessarily what the distributor wants.**
From a market operation perspective, manufacturer salespeople mainly execute manufacturer-level requirements, rather than effectively activating the market based on the distributor's local market characteristics and needs.
Moreover, this dependence can lead to a series of problems. It seems that an independent sales team serving only one brand improves operational efficiency for that brand, but in reality, it increases labor costs, leads to repeated store visits, and focuses on order-taking as the core work, making it difficult to cultivate the market and provide good store service.
When I communicated with a distributor with over 100 million in sales, I found this problem to be severe.
This distributor represents several first-tier beverage brands, with business scale exceeding 100 million. Each brand has its own sales team, operating separately.
Originally, one region could be fully served by 15 salespeople, but the actual team was nearly 50, with very low efficiency. Traditional circulation channels were almost unprofitable, even leading to situations where "the more you sell, the more you lose."
Eventually, they had to dump goods directly to wholesalers to reduce fulfillment costs.
This brings us back to the original problem: without store distribution and sell-through capabilities, let alone selling new products.
**Distributors all know the logic of selling a product well: make the product "visible, available, and desirable." That is, do well in store-based distribution and sell-through, but it's hard to do well.**
In retrospect, when promoting new products, distributors should first diagnose their own situation to see if they truly have store distribution and sell-through capabilities.
**02** **Salespeople: Limited Time & Reasonable Assessment**
For distributors, product sales and store maintenance are done by salespeople. Whether new products sell well largely depends on the salespeople's attention and willingness to sell and maintain them.
Previously, I discussed with some distributors the question: how to get salespeople to promote new products. Most distributors mentioned that since new products have high margins, they use higher commissions (rewards) to incentivize salespeople to push new products.
From that logic, it seems fine. Higher commissions stimulate salespeople to sell more new products, salespeople earn more income, creating a positive feedback loop.
From the salesperson's perspective, selling is to make money. If they can increase their income, they will definitely be willing to actively promote new products.
The problem is whether the distributor's commission policy for new products truly guarantees the salesperson's compensation.
Although many salespeople say they are not good at math, when calculating wages, they are clearer than the boss and the accountant. In limited time, whether promoting new products affects wages is something salespeople weigh carefully.
In a previous New Distribution article, we cited survey data. In traditional circulation channels, a salesperson typically manages 150-200 stores. With weekly visits, they need to visit 20-30 outlets daily.
Excluding rest time, the average working time is only 7 hours, with an average of 15-17 minutes per outlet, of which travel, display, and relationship maintenance take about 14 minutes.
In reality, the average selling time left for the salesperson is only 1-3 minutes, so their selling time in stores is very limited.
When I visited the market and talked to some salespeople about promoting new products, the feedback was reluctance. The reason is simple: **it's hard to do a good job promoting new products in such limited time.**
When selling big circulation products, salespeople basically just discuss quantities and place orders, which takes about 1-2 minutes. But to promote a new product, they need to explain at least the following to the store:
**1) What the product is (basic info/brand endorsement)****2) Why the store should stock it (features/advantages)****3) How much money the store can make (price/profit/ordering policy/on-site calculation)****4) After-sales service (daily maintenance/return and exchange policy)****5) How to sell the product (target consumer profile/sell-through strategy)**
From market visits, explaining all the above takes at least 5 minutes, and it's hard to get large orders at the outlet. Clearly, in limited time, salespeople will think promoting new products is extremely unprofitable.
**How to make salespeople willing to allocate more of their limited time to new products is actually the key to new product promotion.**
During visits and exchanges with distributors, I saw some good practices and would like to summarize and share them.
**First, when promoting new products, distributors should make a distribution plan. During the promotion period, not all stores need to be covered; screen stores and distribute to those that can sell through quickly.**
For example, in the first month, achieve a 10% distribution rate, selecting the top 15 stores; in the second month, 15%, selecting the top 20; in the third month, 20%, selecting the top 30.
After achieving good results, summarize the experience and strategy, then do a full market launch.
**Second, in compensation and performance, use more process indicators to assess new product promotion.**
In the early stages of new product promotion, it's hard to generate large sales volumes. This means even with higher commissions, salespeople find it hard to earn them.
A salesperson's salary typically consists of: base salary + commission (dividend) + performance assessment bonus. The first two are the basic guarantee, while performance assessment can be seen as extra income.
When promoting new products, distributors can make new products the focus of performance assessment, such as rewards for distribution, display, cutting boxes, floor stacks, etc. If salespeople can earn higher performance bonuses through process actions, they will naturally be willing to promote new products.
**03** **Summary**
In the FMCG industry, new product promotion has always been a challenge and a test of distributor capability.
In the past, the market was in short supply, and distributors had more of a brand mindset, relying on brand endorsement and awareness to take goods and distribute, earning decent income.
But the current market is oversupplied, with more and more brands and intense competition. Distributors need to shift to a market mindset, from serving brands to serving stores, from "can only sell what" to "sell whatever they have," gradually developing the ability to promote and sell new products.
 _-END-_


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