MYPRODUCT5 Distribution Model. Win or Lose?

1.Situation

For three years I have commercially supported the Rhone Vet team, a company responsible for the distribution and sales of Merial’s veterinary products in Hungary. The company had a small commercial team, the sales model involved massive collaboration with sub-distributors, the Rhone Vet team focusing more on presenting and promoting Merial’s ranges and less on direct sales.

2.Task

A major objective of my collaboration with Rhone Vet was to increase the share of direct sales with implications in resizing and professionalizing the sales team but also carrying out other related actions and projects.

3.Action

Beyond specific easy to deduce activities such as hiring new sales agents, sales training sessions, sales speech and many other initiatives to which I will refer in the following MYPRODUCT articles, a significant impact at the level of developed actions was represented by the analysis of the industry distribution model in Hungary.

In Hungary there are two major wholesalers who work with all manufacturers and distributors on all companion and production animal products: feed, veterinary medicines, equipment, nutritional supplements, cosmetics, etc. No manufacturer or importer or distributor can ” avoid ” collaborating with these ‘’whales’’ that have a formidable bargaining power and an operational structure that guarantees as delivery standard the same day or the next day at the latest.

Direct consequence: clients with easy access to multi-sources and very fast deliveries do not over stock and prefer multiple acquisitions.

In this context, analysing the distribution model in that market, I concluded that regardless of the company, the sales agents in the field do not have the time to cover their areas and take direct orders from clients. Consequently many orders are taken by companies via other channels: telephone, internet.

Looking for information about competitors, I found surprisingly that over half of the commercial teams were in fact telesales agents, not field agents.

4.Results

In this context, beyond the resizing and professionalization of the sales team, we started the process of setting up a new department within Rhone Vet in order to immediately facilitate the proactive client approach and generate orders: the telesales department. With small steps, we started direct sales done by the commercial team contributing in this way to the gradual reduction of Rhone Vet’s dependence to its sub-distributors.

5.Key Leanings

Aligning the distribution model to market demands is always a necessity. In a market in which you act as a challenger, it is advisable to look at the big players, to understand the distribution models and the benefits they deliver to their customers.

To quickly adapt to these requirements if you want to keep your relevance in the market or to innovate if you want to go in front line.

Thinking about Romania, I notice Floria’s business and distribution model: they took the flowers from street flower shops to online, becoming the largest flower shop from the country. An avant-garde approach in their industry, scalable by franchising model and in line with new consumer habits and acquisitions behaviour that rely more on online buying and less on offline traditional acquisition.

Notification: MYPRODUCT reflects my real professional experience and expertise as well as my subjectivity. I do have a profound respect for all the companies I collaborated to and for all the people I worked with. It is not my intention to approach any sensitive, confidential or offending information related to companies, projects or people.If you the reader deduct or recognise companies, projects or people in my examples, I kindly ask you to respect MYPRODUCT and my professional and ethic approach and to not share any detail, information, situation, name, company.