01 classReasons for Distributors Being Transhipped:

  1. Unreasonable sales targets set by the manufacturer; In some markets prone to transhipping, the sales targets are detached from the actual market's absorption capacity. To meet their targets, regional agents are forced to sacrifice their peers by dumping goods at cost into other markets.
  2. Manufacturer's sales policies inadvertently encourage transhipping; Some manufacturers set prices based on order volume, e.g., a one-time purchase of 1 million units may get a 5% rebate; 2 million units may get 10%, etc. This leads to significant price differences between large and small customers, inadvertently providing conditions for cross-regional sales.
  3. The manufacturer's response to cross-regional sales is all talk and no action, or even the manufacturer's own behavior; Some manufacturers, in pursuit of immediate sales volume, or sales personnel to complete their own tasks, turn a blind eye to cross-regional sales, or even help local distributors dump goods into other markets.
  4. Your prices are set too high; In today's fast-information era, the sales policies of nearby distributors inevitably affect you. You need to pay attention to this; prices should be in line with industry-acceptable levels. It's impossible for your peers to sell cheaply while you sell at high prices, especially for well-known, fast-moving products. Excessive markups will force your customers to source from other markets.
  5. Insufficient inventory or untimely delivery; As a distributor, frequent stockouts or delayed supply can cause downstream customers to run out of stock, forcing them to buy from others.
  6. Strong products that are in high demand and must be sold; If you sell very strong, well-known products that customers insist on, and other brands cannot be represented, you may protect local dealers' interests by not shipping to other customers, but those customers will then source from outside.
  7. Retaliation from competitors; If you are transhipped, first investigate the source, then check if you have allowed goods to flow out. If you haven't managed your own salespeople or downstream customers and your goods have gone to other provinces, you can't blame others for retaliating.
  8. Unintentional transhipping; Being transhipped can also be unintentional, which is less harmful to the market than malicious transhipping. Generally, unintentional transhipping involves small quantities, not too low prices, no targeting, or barter transactions. 02 classHow Distributors Should Respond to Transhipping:
  9. Require the manufacturer to protect your interests When signing the contract, to ensure the manufacturer maintains your market interests, you should request that the prevention and management of transhipping be written as an important clause in the contract, so that when transhipping occurs, rights and responsibilities are clear, and there is a basis for action. You can even demand compensation, which will force the manufacturer to strictly control transhipping.
  10. Use softness to overcome hardness, leverage the manufacturer's power Transhipped distributors can use the factory's power to reclaim their territory and protect their interests. (1) Collect evidence: Gather specific information on receiving customers and shipping customers, such as taking photos, collecting delivery notes, prices, etc. (2) Collect details of transhipped goods: model, production date, packaging, quantity. (3) Obtain business cards of sales personnel. After collecting the above evidence, compare with the contract clauses, seek a solution from the manufacturer, and use this as a basis for negotiation. If the manufacturer has no good solution to prevent transhipping, you can request promotional support or start retaliating against the transhipping area. (But before retaliating, be polite first.)
  11. Be polite first, then strike hard (1) After collecting evidence, visit the transhipping distributor, communicate amicably, appeal to reason and emotion, and get to the point. (2) Show your strength and give a warning: clearly tell them you also have customers in their market and can easily sell into their area, using the same methods to impact their market. (3) Strike hard: if the distributor does not change their behavior, then if you say you will retaliate, do it. Identify the market and strike in batches.
  12. Fight and talk simultaneously, use both approaches (1) Visit downstream customers who have sourced from outside, make them understand your situation, communicate with them, and make them feel embarrassed to continue such behavior. (2) For downstream customers who are not persuaded, clearly tell them what measures you will take, threatening them to stop sourcing from outside. (3) Set an example by hitting hard: choose 1-2 influential customers and place your goods in the transhipping distributor's territory to attract attention from the distributor and manufacturer, and prove your strength!
  13. Lead by example, operate with integrity As a distributor, adhere to the principle of not transhipping, establish a trustworthy image in the market, and also manage your downstream customers to prevent them from transhipping outward.
  14. Build alliances, form a united front Value relationships with downstream customers, improve service efficiency, strictly implement the manufacturer's pricing and promotional policies, do not arbitrarily raise sales prices, and establish a united front against external threats. -END- The best FMCG distributor learning platform in China Focusing on providing professional, practical, and actionable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent Article Selection | 002 Distributor Market Operations | 003 Terminal Visit Management | 004 Sales Supervisor Skills | 005 Sales Improvement Techniques | 006 Channel Expansion | 007 Managing Distributors | 008 Distributor Development | 009 Distributor Internal Operations Management | 010 Team Management | 011 Efficient Distribution Techniques | 012 Sales Manager's 18 Skills | 013 KA Operation Strategies | 014 First Lesson for New Salespeople | 015 Internet, Brands | 016 Distributor B2B Transformation | [Long press QR code to follow]