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Articles by 刘华明
Browse 19 New Distribution articles by 刘华明.
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Distributors: Why Higher Sales Volume Means Lower Gross Margins, and What to Do About It
As market dividends fade and competition intensifies, many distributors work hard all year only to find they've made no money. The question is: where did the profits go? The answer lies with the distributors themselves—their control over operations and management largely determines their gross margins. This article explains how to analyze and improve gross margins from five dimensions and offers four practical methods to boost profitability.
刘华明In a Red Ocean FMCG Market, How Should Distributors Make Choices?
A beverage distributor, facing inventory pressure, plans to enter the condiment market. The article advises distributors to follow the NO.1 principle, select markets based on '细分、大、高、强' (segmentation, size, growth, strength), and choose brands with awareness and core competitiveness.
刘华明The Distributor's Three-Step Guide to Selling Goods
Distributors should not simply sell as much as possible or just meet factory targets. Instead, they must first surpass the break-even point to avoid losses, then complete factory sales tasks to secure resources, and finally achieve market leadership to maximize profits.
刘华明Three Strategies for Distributors to Make Money: Adjust Structure + Stabilize Prices + Maximize Rebates
The most discussed topic recently is that distributors are finding it hard to make money. But not all distributor businesses are failing; as Jack Ma said, 'It's not that the physical stores are failing, but that your physical store is failing.' Distributors must make clear judgments and dare to change to survive. This article shares personal views on how to adjust channel and product structure, stabilize market prices, and maximize manufacturer rebates.
刘华明Why Do Distributors Earn Less as Their Business Grows?
A survey by New Distribution shows that while over 50% of FMCG distributors saw revenue growth in 2019, nearly 70% also faced higher comprehensive costs. The article argues that many distributors mistakenly believe that increasing scale alone will boost profits, and emphasizes the importance of both increasing revenue (through price adjustments and channel expansion) and reducing costs (through rational investment and inventory management).
刘华明Is the Distributor Business Profitable?
Is the distributor business profitable? Some may laugh at this question, having been in the trade for decades, but the reality is that many distributors calculate their profits incorrectly, leading to different conclusions. The key lies in how you calculate, and this article analyzes the underlying logic of distributor profitability, emphasizing the importance of ROI and avoiding common pitfalls.
刘华明In 2020, Distributors Should First Give Their Companies a Physical Examination
In 2020, a sudden epidemic has left many FMCG distributors in trouble, with inventory piling up and cash flow drying up, making them feel they can't hold on. In fact, this epidemic is not a bad thing for distributors. It makes us stop, discover problems, and gives us a chance to re-examine ourselves. The epidemic will eventually pass, and spring will return. Recently, New Distribution, together with Liu Huaming, partner and senior consultant at Sima Consulting, launched a series of articles titled "Decoding Operations, Welcoming 20" for FMCG distributors, helping them grow with real cases...
刘华明Distributor Says: "What If We Can't Afford to Stock Up Due to Financial Difficulties?"
Case background: Dafa Trading is an important distributor under your management, having completed 49 million yuan in sales for the company last year; this year, the company requires Dafa Trading to grow by 5 million yuan, reaching 54 million. Although there is pressure, you think it can be done. At this moment, Lao Liu from Dafa Trading is anxious, saying there is no more money to purchase goods, making it difficult to complete the new sales growth. Lao Liu has been cooperative over the years and has performed well on sales targets; if it weren't for real difficulties, he wouldn't have raised it. What should you do? First, clarify what kind of problem this is...
刘华明Why Do Trading Companies Exist and Where Are They Headed?
This New Year has brought many challenges: the outbreak of the epidemic, mass quarantine, store closures, the surge of home delivery and group buying, some categories experiencing stockouts, and others oversupply. Amidst these pressures, sensational claims like 'New retail is here, the value of distributors has disappeared' have emerged. Distributors are left wondering why they still exist and where they are headed. There are many perspectives to answer these questions, but flashy new terms only cause anxiety. Sometimes, thinking through fundamental logic simplifies things. Below, we share a more basic line of reasoning.
刘华明Under the Epidemic, the 'Changes' in the 2020 Dairy Industry?
In 2020, distributors in the FMCG industry are struggling, especially dairy distributors, who face even greater difficulties. Due to the novel coronavirus, offline terminals across provinces have closed, making every day a torment for dairy distributors dealing in short-shelf-life products. Invited by New Distribution, I will discuss the market trends and marketing strategies for the dairy industry in 2020, sharing my personal views from four aspects for your reference: 1. How can distributors quickly resolve inventory issues given the severe impact of the epidemic? 2. Will consumer behavior change due to this epidemic? 3. Will the dairy industry undergo structural changes under the epidemic's influence? 4. What strategic adjustments should dairy manufacturers make in 2020 in response to market changes?
刘华明Are You Withholding Company Funds?
A sales representative confronts a distributor about a promotional expense rate that appears lower than the company's allowance, but the distributor explains the math behind the actual rate and the complexities of promotional spending, ultimately clearing his name.
刘华明Why Do Distributors Do Distribution?
A distributor explains why he continues to work with a brand despite lower margins and ROI, emphasizing the importance of comparing with similar businesses, products, regions, and channels, and the role of brand positioning in his overall portfolio.
刘华明How to Help Distributors Sell More?
In a slow-growth, competitive market, distributors face sales pressure, and declining sales can lead to reduced profits and lost share. This article analyzes distributor Lao Liu's six-step method, which boosted test store sales by over 150% and overall sales by 50% in three months, to help distributors sell more while maintaining profits.
刘华明Why Would Distributors Refuse Money?
A distributor named Lao Liu refuses to implement a generous coverage policy due to perceived risks in capital, reimbursement, sell-through, and profit. The article advises manufacturers to address these concerns through business acumen, responsible communication, and detailed planning to ensure effective execution.
刘华明Distributors Say: "We're Not Making Money with Your Business!" What to Do?
When distributors claim they're not making money, it's crucial to understand what they mean by 'making money' and how they calculate it. This article explains how to analyze the situation, calculate ROI, and respond effectively to turn the conversation into a collaborative opportunity.
刘华明How to Help Distributors Sell More?
In a market with slow growth and fierce competition, distributors generally face sales pressure, and declining sales not only affect target achievement but may also lead to reduced profits and lost market share. Therefore, it is necessary to help distributors think about how to maintain profits while selling more. Although not easy, there are still some effective methods to reference. Below is an analysis of distributor Lao Liu's approach. Lao Liu faced similar problems but was open to new methods and willing to experiment. He worked with the manufacturer to develop a plan and piloted it in his region. After three months, the pilot stores achieved over 150% sales growth, while overall sales grew by 50%, compared to only 10% growth in the region during the same period.
刘华明Distributor Says: "What If We Can't Afford to Stock Up?"
Dafa Trading, a key distributor under your management, achieved 49 million yuan in sales last year, but this year's target is 54 million, requiring an additional 5 million. The distributor, Lao Liu, is anxious about lacking funds to purchase more stock. You need to identify the funding gap and find solutions from both internal and external sources to help him overcome this challenge.
刘华明Distributors Say: "Selling Your Product Is Too Costly, We Can't Do It Anymore!" What to Do?
A daily chemical brand A frequently receives feedback from distributors that its XH category is losing money and unsellable. After calculation, the overall ROI for brand A's products is 18.1%, but the XH category is only 4.1%, far below the industry average. The reasons include lower gross margin, higher operating costs, and more capital tied up. By optimizing distributor trade terms, such as adding conditional rebates and reducing cash and inventory days, the ROI can be improved to 17.1%, making the product attractive again.
刘华明Distributors Say: "We're Not Making Money with Your Business!" What to Do?
When distributors claim they're not making money, salespeople need to understand what they mean by "making money," how it's calculated, and how to respond effectively. This article explains how to analyze the distributor's ROI, identify issues, and propose collaborative solutions.
刘华明