Marketing channels for small producers
If a small producer can’t get into the big chains, what can he do? Work with their peers. Establish your own system of distribution and sales. I’ll list the channels of sales, which should begin to grow.
If you are a small producer, your place – the markets. There is no other option. Any manufacturing company starts with the small stuff. In addition to markets, it can be their own small outlets. But these should not be outlets for the sale of your goods, but retail outlets in general, where your goods are no more than 10%. The retail strategy is to work on a small margin and sell only hits. The manufacturer’s strategy is to maximize margin on a unit of product and a limited assortment. If you go with this difference in strategies, you have a chance to survive from a production standpoint.
A small part of your work should happen with “small chains” and distributor wholesalers. I put small chains in quotation marks because there are virtually none. Those who call themselves “networkers” are 99.9% not actually network companies. After all, what is a network? It is not the same sign. Signage can be different. It’s not the same legal entity that you discount your product. Networks are first and foremost about networking technology. The key things are centralization of purchasing, centralization of returns, centralization of payments, centralization of assortment, universal assortment at the points. Nevertheless, you can and should work with this segment. What is the main thing in negotiations with retail? Not the price, as many people think. The main thing is the cost structure.
When you come to negotiate, you must have a table with the following 13 points.
1. Introduced range (a list and the planned volume of sales).
2. Price (shelf price, selling price, cost price).
– compensation (tickets);
– volume growth (retro bonuses);
– opening of new stores;
– logistics and centralization;
– write-off/return of rejects;
– deferred payment;
– annual promotional activity;
– new product introductions;
– product rotation;
– planograms (product layouts).
Price – is an integral indicator that should be able to fluctuate. Retail says: “We need such-and-such a price and such-and-such a volume of sales. You have to be able to adjust all the other parameters so that at such-and-such sales volume you will have such-and-such marketing activity, and at a such-and-such price, you may or may not make transport, warehouse, and picking logistics. If you change one of these parameters you have to be ready to change the rest and talk it through competently.
As long as our government has not “put its hand” on Internet commerce, it makes sense to keep a small online store. But there is a serious problem here – logistics. It is an illusion that online is cheaper than offline.
The first thing you stumble into is the cost of the courier. The income of couriers is now close to the salaries of top managers in Western companies, and they don’t want to work, not only that, but they steal. So you are likely to have to run yourself and keep the delivery on your own.
Second: online cannot exist without offline. Online is when an order is opened and closed online. For example, selling train tickets. The customer chooses a train and a seat pays with virtual processing, receives the product under the conventional name of barcode, arrives at the train station, and receives the service without contacting anyone. If the customer gets a flyer, looks at the website, compares the price with other sellers of a similar product, and then calls, it’s not online, it’s a Yellow Pages directory. After the customer has placed an order, he gets a call back from a girl who ruins everything – either by her incompetence or her inability to communicate. Then a boy comes along who ruins everything for good because he arrives at the wrong time or with the wrong product. I’m exaggerating a little bit, but that’s the general situation. .
Let’s say we somehow fixed this problem. The polite girl called back 10 minutes after the order was received. The boy brought the goods on time. Now let’s talk about costs. Imagine that you are selling milk and I am buying this milk. The quantum of delivery is 12 units in a package. I ordered 2 units of the product. You have a storage quantum of 12 in your warehouse, where you have a storage quantum of 10 on the pallet. You bring in and I take one unit instead of two. After that, you form a 12, a 10, and a 1. When you have another customer order 2 pieces, you can’t make him one returnable unit: it’s already rolled back and forth, and you can tell by it – the customer can refuse. This returnable unit is written off, and instead of one offline storage space, you end up with at least three, or even four.
When you start thinking about logistics – transport, storage, and kitting – it becomes clear what a huge cost. We had two online stores, and we closed them for precisely this reason.
I know more than a dozen companies that have tried to deliver products: “It didn’t take off”. For example, the company Utkonos. I’ve known these guys for 17 years. The teams change, but “it didn’t take off”. They opened offline stores as distribution points. They closed offline stores and built a $40 million warehouse. “It’s not taking off.” Back when we were building Pyaterochka, the vice president of communications and I did the math: it only “takes off” if the delivery cube costs more than $3,000. There can be expensive lingerie, electronics, durable goods. Everything else, especially food, “doesn’t take off. The costs are too high. Perhaps the uberization of the economy and unemployment will bring the cost of couriers down, and then food can be delivered. For now, this is a distant future.
There is another problem that is very difficult to solve. The site must be linked to your accounting system, your employees must work in it, otherwise, the balances do not work. There are 2 units of goods in the warehouse, and 10 units on the Internet. It is very difficult to make sure that the balances correspond to reality. Standard situation. A car came to the store, the goods from the warehouse have already been written off. At what point does he put it on the balance: an hour later? a day later? The buyer ordered the item, in terms of balances in the store it is there, but physically it does not – it is not inventoried, or in transit, or in the factory. And lastly, it’s hard to defragment the audience on the Internet – it’s not clear who’s who.
Budding entrepreneurs usually have high hopes for social media. I have to disappoint. Unfortunately, it’s ridiculous to talk about the mass market. You can make a page “VKontakte” and get 1500 subscribers. Of these customers will be 100. People who sit on the Internet, do not pay money – they only bang on the keys and post the likes. The maximum output from the social networks is 1,000 buyers.
One guy, very famous on the Internet, the owner of the Dining Room 100 chain, is a great text writer. He has a lot of traffic, high traffic, recognition, hashtags, reposts. I know this case study a little bit from the inside, and I can tell you: there is no relevance between online and offline. The customers who go to his establishments have no idea who the owner is, and the guys who are liking, reposting, and commenting are dining at completely different establishments. You shouldn’t neglect this marketing channel, but you shouldn’t bet on it, either.
I regard this marketing channel with suspicion because it is pure sectarianism, but it has a right to life, and you can use it. I will put it this way: there is no bigger hustler who organized MLM, but there is a no bigger idiot who joined it.