Editor's Note: "Business is getting harder, and making money is becoming more difficult" is a common sentiment among many distributors this year. Due to manufacturers' increasingly refined market operations, more and more retail enterprises are closing down, and e-commerce platforms continue to erode profit margins in traditional sectors. Traditional distributors, who survive by relying on both manufacturers and retailers, find themselves in an especially tough position.
Most distributors are actively thinking and planning: How to maintain growth in existing markets? How to find new profit sources? How to break through difficulties and keep pace when the market improves? How to connect with manufacturers and retailers to form a positive interaction and achieve a win-win-win situation?
Transformation: Distributors transform into service providers; provide complete product and terminal delivery, offering one-stop services. Distributors optimize product combinations based on the needs of their cooperative clients, improving their ability to deliver complete sets, so that downstream clients can receive "one-stop service." Just like customers shopping at RT-Mart, Walmart, or Metro, they can find everything they want without needing to visit another supermarket. Due to bulk purchasing, this not only significantly reduces logistics costs but also provides downstream merchants with a complete supply of goods, so they no longer worry about not being able to get the products they need from their "upstream." At the same time, downstream distributors save on logistics costs and reduce purchasing expenses, meeting the diverse needs of downstream merchants while enhancing their bargaining power when purchasing from manufacturers.
Optimization: Clearly define product portfolios for volume, profit, and growth, and clarify the mission of each product. As operational risks increase, distributors need to abandon the previous extensive approach to product selection, management, and market operations, and have a clear definition and selection of the products they distribute. Classify the existing product range into three types: volume-driven products, profit-driven products, and growth-driven products. Use volume-driven products as the leader to quickly "scale up" during peak seasons, holidays, and other market opportunities, while combining with profit-driven and growth-driven products for complete delivery. This not only quickly generates cash flow and expands downstream clients but also achieves both short-term and medium-to-long-term market cultivation. Volume-driven products, also known as fast-moving items, maintain low or flat profit margins to drive volume, achieving cash flow and downstream customer loyalty. Capital realizes value when it circulates; volume products can quickly turn over funds and improve capital turnover rates. Choose popular items for volume products to create stickiness with downstream clients, leading to more opportunities for communication and interaction. Profit-driven products are typically high-margin items. In today's information-rich environment, making high margins from information asymmetry is increasingly difficult. Products can be easily found on e-commerce platforms like Taobao, JD.com, and Yihaodian. Therefore, the sales of high-margin products depend on two key factors: first, the customer's trust in the distributor; second, the distributor's service capabilities, such as delivery to the door, display incentives, etc. Growth-driven products should be new items with large market capacity, unique selling points, and relatively high margins. It is best to choose innovative patented products (follow WeChat account: nuanjingjin) that can contribute well to the distributor's medium-to-long-term profits. When distributing growth products, continue to pair them with volume products. Adhere to the principle of "small quantities at single points, gradual advancement, focus on details, and cover the surface from points." As the market gradually penetrates and consumer habits are cultivated, this is a good choice for distributors.
Refinement: Distributors implement fine-tuned operations at the terminal level and flatten channel structures. Because distributors have different levels of downstream clients—some are direct terminals, some are distribution links, and some are direct consumers—distributors must clearly understand the composition of their downstream clients. The three types of clients can be simply analyzed for their most prominent pain points: terminals' pain point is "service"; distribution links' pain point is "price"; consumers' pain point is "quality." Among these, the distribution link is where distributors have the weakest control. Distributors can adjust using price leverage, using volume to offset price, and winning with price; the operation method is relatively simple. In contrast, terminals and direct consumers can be fully cultivated and deeply tapped by distributors. Classify and manage terminals based on sales volume (value), allocating corresponding support resources and incentives. Apply the 80/20 principle to focus support on 20% of terminals, such as investing 80% of support resources into 20% of clients; establish deep distribution cooperation alliances with key supported clients, cooperating deeply in supply, products, and marketing; regularly hold distribution client forums and social events. Developing and managing direct consumers is a marketing model pursued by many manufacturers. By developing and controlling direct consumers, distributors can operate through self-built terminals, which will be an important bargaining chip in market competition. However, this poses a challenge to the team's capabilities and determination. Self-built terminals can be achieved using various technological means, such as developing proprietary apps, micro-distribution, SMS, phone ordering, group buying, and WeChat agent models. Due to the rapid development of the internet economy, various new technologies and new thinking are emerging, continuously shortening the distance between products and consumers and simplifying the layers of product distribution. Essentially, this is squeezing the living space of distributors. Therefore, forward-thinking and capable distributors are all flattening their channel structures, building their own terminals, and strengthening their competitiveness. In simple terms, the more thoroughly distributors study and master terminals and consumers, combined with new technologies for self-built terminals, the more they hold the secret to terminal success—like mastering a craft, making it hard not to make money.
【Distribution Tips】How Distributors Choose New Products Long press the official account (nuanjingjin) to follow and consult about patented product opportunities.
- Is there sufficient market capacity?
- Does the product have differentiated selling points?
- Is the gross margin at least 20%?
- Does the company have plans and measures to jointly develop the market?
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