How do SMEs borrow from the sea?
As a small or medium-sized enterprise, it's often wise to "borrow the ship to sail." This means smaller businesses can partner with larger distribution networks, which helps save time and resources. For instance, instead of hiring many salespeople, managing a large team, or opening multiple branches, you can simply integrate an interface and let the other party handle the rest. This approach allows you to focus on your core business while leveraging the strengths of established channels.
On the flip side, larger companies might seek out smaller distribution partners to maintain control over their supply chain. They need to make decisions themselves, ensuring that their products are properly represented and managed.
At the start of a business, the channel is often more critical than the brand itself. When you're just starting out, the priority is to get your product in front of customers. Once you have a foothold, building a strong brand becomes more feasible. One effective strategy is to use high-margin pricing for your products but offer low-margin sales to your distributors. This ensures they have enough profit to be motivated to sell your products effectively—something the clothing industry has mastered well.
Human resource promotion is also key. If a partner asks you to send someone to assist with promotions, do it. It’s cost-effective. Sending one person might cost tens of dollars a day, but the return in sales could be much higher. Plus, this gives you direct insight into the performance of your partners and the overall health of the channel, helping you make better business decisions.
Innovation in sales channels is crucial. Don’t settle for just one customer or one channel. Focus on making one channel successful before expanding to others. The international market, for example, is significantly larger than the domestic one, with growth rates of 30-40% annually. Exporting offers faster growth and fewer complications, like payment issues, since transactions can be secured through letters of credit.
However, exporting isn't without challenges. Foreign customers are often picky about quality, delivery times, and prices. But this allows you to focus more on production and less on marketing. Attending international trade shows or exploring platforms like Alibaba’s English site can help you find new export channels.
A great example comes from a Shandong-based meat company. Instead of targeting big retailers like Walmart or McDonald’s, they focused on street vendors. By setting up a clean, organized stall that mimicked a supermarket layout, they saw a dramatic increase in sales. What used to be a small vegetable stand now generates 2000–5000 yuan daily.
Another idea: a car repair shop owner noticed people often bought drinks while waiting for their cars. He added a drink station, and sales quickly increased. Even Coca-Cola’s president once sold tea eggs at a street stall, believing that such places represent the future of retail. His slogan “everywhere and at your fingertips†reflects this philosophy.
For any company, increasing customer contact points is essential. The more touchpoints you have—whether through ads, retail locations, or online presence—the more sales you’ll generate. Industrial products can benefit from trade fairs and exhibitions, which are vital for reaching buyers and building brand awareness.
In the past, there were only three main sales channels: specialty stores, department stores, and direct mail. Today, there are over 20, with more specialized options emerging. While the number of channels increases, trends show that specialization is key. Professional stores and chain outlets like Gome are becoming more important, and in the future, every product will likely have its own dedicated store.
Department stores are shrinking, while chain specialty stores are growing. SMEs should understand these trends when choosing their distribution strategies.
Zhang Xuekui advises entrepreneurs to find and create new marketing channels. A good channel can multiply your reach exponentially. Chain and export channels are especially powerful, as they allow rapid customer acquisition.
SMEs often face challenges in human and financial resources, but breaking into major channels is crucial. To do so, first ensure your product has clear value and meets consumer needs. Then, research competitors thoroughly, understand their strategies, and surpass them. Find reliable distributors who can help you expand, and give them enough margin to stay motivated.
Don’t forget to build an e-commerce presence. It’s an affordable and effective way to promote your brand.
Finally, remember that finding the right channel is like choosing the right boat—it leads you directly to success. Whether it's supermarkets, dealers, or export markets, the goal is to multiply your sales by entering fast-growing channels. Sales is simple once you break through a channel; the rest follows naturally.
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