What about your company? Do you have great brands and brand awareness, a fantastic extended supply chain, an analytics package, tight financial control, top class HR, the best sales force, innovative marketing? If you tick all these boxes then life must be good, yes? Sadly, not always and some big-name companies frequently get the important distributor relationship badly wrong.
Blue chip companies with internal operational excellence continue to flounder when serving the Traditional Trade, particularly in D&E markets. Admittedly, this trade channel has reduced in importance over the past years but it still accounts for a sizeable portion of markets which are starting to return to growth. International Key Accounts and Local Key Accounts will continue to take share in urban areas but in a country as vast as Romania, for example they will not conquer the rural market in the medium term.
Producers need knowledgeable and reliable Route To Market partners to reach the smaller corner shop outlets and kiosks. There is no shortage of operators willing to be distributors for big name clients but how many of them are really equipped and ready to do the job properly? Producers are often guilty of placing their reputations and ultimately profits, in the hands of enthusiastic amateurs. In the sporting definition, true amateurs do not get paid for their work and distributors do not get paid by producers when they fail to meet targets.
Unfortunately, instead of doing something about the short-comings of distributors, producers proudly celebrate securing penalties or better terms through negotiating against poor performance. What is the point of doing that? Instead of carping on about how terrible are these "partners" why not get out there and help them?
You cannot build houses on sand yet producers expect distributors to swiftly dove-tail into their in-house processes, IT, style, ethics, reporting schedule etc. Yes, they probably exaggerated their capabilities and readiness during the selection pitch but you should be able to see through that or at least be ready to quickly assess capability.
Is it any wonder why so many distributors go under when they are not considered partners and in some cases, are believed to be a hindrance? Distributors do not deliberately make mistakes that lead to their own reduced income. They too are in business to make a few Euros to take home at the end of the month. However, when the penalties add up and the distributor gets into debt, that is when they need producer support and not a kick to the stomach.Producers need to look closely at the capability matrix offered by their distributors (or more importantly, potential distributors) and in most cases, this will not match up to requirements. Do something about this; build capability where it lacks and you will reap the benefits in having proactive partners going that extra kilometre to make a sale for you.
Those FMCG producers who are in tune with distributors strengths and weaknesses AND do something about the latter will be in pole position with a Ferrari while less wise competitors are at the back of the grid with a horse and cart. The route to your market can be a lot easier than you are making it!
Image courtesy of Stuart Miles at freedigitalphotos.net