The channel
Each FMCG company has multiple channels. It has a highly discounted channel where it sells products to large modern retailers and institutional accounts at prices much lower than it does to small independent retailers. Wholesale comes in here as a link between the channels. It routes stocks from the high discounted channel to the low discounted channel thereby messing up the company’s profits. So the company plays the wholesale channel directly in order to minimise this effect and gain control over the rampant flow of stocks. Now a company uses many intelligent techniques for this but the key point here is that once a company starts playing the channel directly it takes years to build a solid relationship with the channel partners i.e. the wholesalers and to overturn the connections and processes that have been for years entrenched in the market. Companies like ITC and Britannia have had a wholesale channel for decades and are still learning how to play it more efficiently. The company I worked for started officially playing the channel only a year before I joined and the market was chaotic to say the least.
The project
Although my project didn’t involve concerning myself with the broader strategic issues inherent for the company while playing the channel, I could not help but get pulled into this. The salesmen I worked with had to battle between wholesalers who wanted to deal with the company’s stock in the old ways and had the wherewithal to do so, the distributor who did not appreciate the disruption but had to reluctantly reel under the company’s pressure and the boss who unrelentingly pushed for a change, a change that had to overturn decades of entrenched processes and links in the market. It was exciting this channel. Everything was always moving. People were always shouting and complaining which made my actual project that much tougher to execute. But what was my project!? My project wasn’t nearly as exciting as the channel was for the company but it was amazing nonetheless. I was involved in crafting a strategy to activate new outlets.
Put simply, I had to locate wholesalers who were not involved in the business of carbonated soft drinks, find out why they weren’t involved in it and convince them to be involved in it. I actually had to close the sale, right from making first contact, pitching, taking the order, delivering it and getting the money in hand. I did this across an entire state, visiting wholesalers across 7 cities. From my experience in activating outlets I had to single out key patterns that could help the company activate outlets more sustainably over the long term.
Timelines?
So I had research and technical internships before, where things mostly went according to a well defined plan in my head but this was nothing like that. Things came at me from everywhere, new information, new people and new dynamics that totally changed, time and again the scope and shape of my project. In retrospect I should have probably grappled with this issues with a more level headed view of the two month timeline I had, but that would have been no fun and I wouldn’t have learned nearly as much as I did. So I just screwed the timelines over and went out there to learn and to get confused.
Week one: be confused because the channel is so freakishly confusing and there aren’t any set processes
Week two: try to get a bit less confused, work the market, and try desperately to find a method in the madness
Week three: get depressed when you find out there is no method to the madness, yet
Week four: get back up on your feet, start travelling the state to get a macro level feel for the channel
Week five: finally start the actual project, prepare a pitch and go out there and sell some soft drinks!
Week six: pitch like crazy all over the place only to find a lot of glitches including the fact that most of the people you thought didn’t keep soft drinks do actually keep soft drinks
Week seven: regress back into the conflicts and confusions of the channel because you think its messing with your project
Week eight: panic like crazy; sell like crazy to close as many accounts as you can!
What Mr X thinks of me two months down the line?
Before: So this new guy just comes in and thinks he can understand the things I do and judge me for them? He thinks he can step into my shoes and feel the pressure I do? I don’t think so!
After: So this new guy isn’t that bad. He spent time with me in the market. Spoke to distributors, wholesalers, my bosses. He didn’t complaint about me (too much). He understood my dilemmas and that I have to sometimes play the system in order to ease in the change. What’s more! He was interested in me! He asked about my family, about how I worked, why I worked and he even gave me a chocolate for my kid at the end of it to see me off and thank me for taking the time out of my busy schedule to teach him something.
So what did I learn anyway!?
I learnt a lot of things! I learnt:
The business: it’s all about managing the sales structure, the distribution and the channels to maximise your sales, your share and your profits!
The conflicts: there will always be conflicts between channel partners, you need to setup processes and slowly work towards them becoming the norm so that a certain amount of stability and predictability builds into the system
The market: the market is god. What happens there is the ultimate truth. You can theorise all you want in your cubicle but unless you’re on that bike actually testing the hot sun, selling, talking, breathing and moving you won’t know what’s really happening to your business.
But most of all and perhaps this is the single most important thing I learned in my life
The people: it’s a people’s business. A lot of trust is involved in the entire distribution chain and managing this trust is not easy. Your salesmen are your men but you need to pressurise them and at the same time expect them to tell you the truth. It’s a bit like continuously slapping your best friend in public and expecting him to remain your best friend. If you learn to carry forward the trust all the way towards the end where the retailer sells your product to the consumer, you win.
The saga of sales
As I type the company’s name in the search box on my contact’s list today I find a 127 results. That’s salesmen stretching across the 5 level sales force hierarchy, distributors of ITC, Britannia, Cadbury’s and of course the company I worked for, retailers, wholesalers and even a CEO! The saga begins and ends with the people I spoke to in my time there. Mr X!! You will be missed!
-Anonymous
-IIM Indore
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