‘Why can’t I use retail distribution when I’m in direct selling?’

Q: we’re in direct selling of herbal supplements in tablet and juice form. We have been doing well, in fact quite well. We’re thinking of distributing via supermarkets, convenience shops and health stores. But our direct sales agents were literally up in arms when we hinted at it in one of our weekly sales meetings. One friendly supermarket also told us it’s not good for them to have “dual distributorship” for our products. But how come FERN-C is doing well in dual distribution?

Please help us think this through and tell us what’s a better way to present the idea to our sales agents.

A: We want to start with a quick correction. Fern -C is a product and one of the brands of the network marketing company you’re referring to. Fern is the company name. It stands for Filipino Entrepreneurs & Resource Network. FERN practices “family branding” as you can see from its other brands like FERN-Slim, FERN-Coffee and so on. These are in addition to FERN-C, a non-acidic vitamin C supplement, which is FERN’s largest revenue generator—and a phenomenal billion peso brand.

And now to your question. You should have guessed that your sales agents would object. And because you didn’t prepare them and also did not think through the proper way to present the idea, they objected violently.

Preparation and anticipation is key. You now know what to anticipate. But from the question you asked, you don’t know yet what exactly to prepare for or you’re not sure. Well, prepare for how to effectively handle your sales agents’ objection so that you will know how to reverse the assumed negative consequence of your going dual distributorship. Your sales agents are assuming that if you also distribute your supplement line in retail stores like supermarkets, convenience stores and health shops, their sales record will suffer or else at least slow down but eventually fall.

You pointed out that this seems to have not happened to FERN, which went retail in addition to its unilevel network distribution set-up. For FERN, going retail was started with Watson followed by being in other health stores, and in convenience shops like 7-11. What you need to understand is how come FERN’s network sales dealers did not rebel. Once you have this understanding, you will know how to effectively handle your own sales agents’ objection and how to reverse it.

Good for all

Start by challenging the assumption that your going retail will not be good for your sales agents and even for the retailers. The FERN case is proof that this is not necessarily always the case. How did this happen?

First of all, the distinction between direct selling, on the one hand, and retail distributing, on the other, is a largely artificial differentiation. Direct selling is just another form of retail marketing—if you see retail marketing as selling direct to your buying consumers. If you think about it, from the shopper’s perspective, they are no different from distributing your product via supermarkets, convenience stores, health shops and other retailers.

Next, consider the way Retail Marketing frames the buying consumer behavior as it takes place here. Who is that buying consumer? Obviously, it’s the consumer who wants to buy your supplement in either tablet or juice form. Now, that very same consumer can choose to buy from a supermarket, a convenience store, a health shop or from a sales agent of yours. In most cases, that consumer must have bought from 1, 2, 3 or from all 4 of these sources.

Let’s appreciate this in the setting of a more familiar case. Suppose you want to drink Coke? If you happened to be in the office and the urge to drink Coke occurs during a snack break, you probably won’t go to the supermarket to get your Coke but instead go to the office canteen or the vending machine or a Jollijeep outside or the “direct sales agent” rationing snacks or lunch meals at your office. But during the weekend, when family members ask that you include Coke in your shopping list as you leave for the supermarket, then you will buy your Coke pack or case in the supermarket.

Habituation

So, depending on the purchase and consumption setting, the same buying consumer will participate in different purchase segments. And that’s typical of most purchase segmentation of the market. Therefore, it logically follows that your making your supplement available at the traditional retail outlets in addition to your direct selling agents is making your supplement available at places where your buying consumers may feel the need to obtain it. That effectively creates more buying occasions for your product and over time “habituates” your consumers with your supplement brand. Remember that it is habituation that leads consumers to repeat purchase and therefore loyalty. That’s loyalty to your brand and product and NOT to the distribution outlets.

So assure your sales agents that your going retail will not kill the purchase segment that your direct selling distribution system serves and will continue to serve. As a matter of fact, the consumer habituation leading to more frequent buying will enhance this purchase segment’s market size. And that’s in favor of your and your direct sales agents’ mutual money-making interest.

Keep your questions coming. Send them to us at [email protected] or [email protected]. God bless!