NVC lighting "escape" building materials supermarket

Abandoning the building materials supermarket channel, NVC Lighting has become the largest lighting company in China by advancing the strategy of first-tier dealer specialization.

After entering the lighting industry, NVC Lighting's founder, Wu Changjiang, did a few years of earning business and making money, but the company encountered real difficulties in 2005.

The lighting manufacturers did not have a good day at the time. NVC Lighting's agents in one area competed with each other for price competition. The profits were almost reduced to zero. The engineering departments of their respective subsidiaries were also competing with each other, and many of them were distributed. Businesses are no longer willing to take responsibility for NVC's products—selling profits not only in one region, but it is a headache for Wu Changjiang that many NVC areas are facing problems in channel management.

Under the premise of little difference in lighting product lines, to survive in the fiercely competitive market, NVC must regain the dealership.

Since April 2005, NVC Lighting has selected large-scale channels for integration among hundreds of dealers nationwide, supported local distributors with ideas as investors in operation centers, and established 36 operation centers. Different from the past, the role of the operation center is no longer just a first-level dealer, but is responsible for all product sales, marketing, logistics, distribution, and after-sales services within its jurisdiction—just like an independent branch company. It is an independent operation that is responsible for its own profits and losses. What Wu Changjiang has to do is to make more than half of his profits.

"If there is a profit of 100 yuan, I let the dealer get 60, I get 40, the dealer to make money is real." Wu Changjiang said, but this move attracted the dissatisfaction of the other two founders , Withdrawal of shares, disassociation, "The payment of 160 million shares in a month to redeem the purchase of gold" requirements almost made NVC lighting bankruptcy.

At present, this lighting company has more than 3,000 stores and stores cover 80% of the county's domestic cities. Compared with peers, the main revenue comes from ODM and export business. NVC Lighting's main revenue comes from the channel. In 2009, 74% of NVC Lighting's total domestic revenue came from distributors. In 2010, sales revenue increased by 54% year-on-year to RMB 3.1 billion, and gross profit grew by 63%.

In the early days of NVC development, various support was provided to brand stores all over the country. For eligible franchisees, not only did they not receive the initial fee, but instead gave a 30,000 yuan subsidy to each store as a decoration and sample display fee, and gave The clerk sends the basic salary.

After the market expansion, in order to avoid competition with the first-line lighting brands, NVC hopes to support a group of “owners” and use the local contacts to develop the local market, while the headquarters can focus on product manufacturing, R&D and brand management. "We have focused on those young distributors who may not have the strongest financial strength, but they are ambitious and willing to fight," said Shi Yongjun, director of NVC brand center. At that time, NVC was willing to provide 10% financial support for dealers. It recovered one year later and did not participate in dividends during the period, but only on the condition that it could only be used for NVC's products.

This seemed like a bold decision at the time.

In 2005, most dealers did not have the so-called management experience in the market that relied heavily on the distribution of credit sales. The mentality everyone was holding was to “make money and sell more goods.” As for the manufacturers’ brands, almost all of them are Not much attention, the only thing that will be valued is the profit of the product. After Wu Changjiang announced the completion of the channel change at the dealers' conference in Nanjing, some dealers expressed pressure on the spot and may not be as profitable as the past.

In order to allow the channel to proceed smoothly, NVC withdrew all large-scale building materials supermarkets in the same year. In addition to taking into account the entrance fees and maintenance fees for various festivals, Wu Changjiang does not want to be “brought away” by the stores, because at that time, it was unable to meet the sales requirements of the stores and had to pay for their own purchases to complete the store’s requirements. Sales.

Since then, Wu Changjiang has put one-third of his time on channel visits. He hopes that he can fully understand the terminal market, and at the same time requires that offices be set up in all operation centers to assist the operation center in managing dealers and specialty stores.

NVC, on the one hand, hopes that county-level dealers will become active. On the other hand, it will try to transform channel providers to specialized companies through personnel subsidies and training. There will be a large number of training courses every year to help operators and distributors improve them. Operating capacity.

NVC has seven regions in the Sichuan Operations Center. The company has 4 to 8 regional managers for distributors in each region. The scope of responsibility of the regional managers is divided into functional divisions. The operation centers allocate sales tasks to the regional managers, and then they are assigned to the areas they are responsible for. Regional managers need to undertake tasks such as sales, network development and personnel training.

Feng Chunchun is the general manager of the Sichuan Operations Center. In order to develop the county-level market, he and his colleagues ran more than 100 counties and cities within 2 months to win over dealers. County dealers can get goods directly from the operation center, and get lower prices than dealers at the local level. Regardless of the amount of orders, the quantity of products, as long as the order is placed within the scope of distribution, the operation center will deliver.

Feng Spring said that the order center of the distribution center handles more than 3,600 orders per month, with only 3-4 orders for errors. Even if an error occurs, the service center's after-sales service department will accept almost any form of product return and return at its own risk. NVC Sichuan distributors grew from 39 in 2006 to 174 in May 2010. The total annual sales increased by 5 times from 2006 to 2010.

The operation center will also provide training such as “retail skills” or “opening and maintenance of outlets” to dealers. Like in the “opening training”, NVC will choose the topic from the date of renovation of the store to the opening date, and the publicity plan before the opening of the business. From the day of the opening of the promotion, the production of the posters to the specific products involved in the promotion activities, specific proposals have been drawn up.

However, execution is the biggest challenge for NVC's strategy. In 2009, NVC found that the performance of the regional market in Zhejiang is always on the upswing, complaints and complaints in the second and third-tier market stores are more. After the investigation, it was discovered that the Zhejiang Regional Operation Center did not provide any service support to the second- and third-tier stores, and even sold other products.

"NVC will first negotiate with the operation center in the region. If it can not be convinced, no matter how big the dealer will be replaced. To adjust, I sent a team in the past, lest the original entire team will leave with one person. I went to talk about policies first and explain the reasons,” said Wu Changjiang. So far, there have been 5 to 6 operations centers successively replaced, including the largest one at that time in Zhejiang.

The bosses of the "investors" operation center were also regarded by Wu Changjiang as "retrofitting" objects. NVC and Shanghai Jiaotong University set up the "NVC Business School" to open 1 to 2 presidential classes each year. Each quarter is taught by the person in charge and distributor of the National Operation Center, each for 5 to 7 days. "The main thing is to ask experts to talk about some courses from the financial and management point of view." Shi Yongjun said.

NVC Lighting began its management adjustments in 2006. In its adjustment strategy, it included the adjustment of operation centers and the adjustments of corporate executives. In the same period of time, NVC introduced a number of professional managers from the outside, such as Xia Lei, former president of TCP China, and Zhang Qingyu, former director of lighting sales of Philips. They have successively filled and replaced some senior executives. At that time, Wu Changjiang spent a considerable amount of time and energy, and he talked with the original executives one by one, setting the pros and cons. “For a senior executive, there must be a smooth transition. If there is a hard landing, the risk is even greater.”

"The difficulty of channel management is the distribution of benefits. Manufacturers are strong, they will maximize the use of channel resources, occupy channel funds, barbaric pressure on the goods, and the channel is strong, they will not follow the command." Wu Changjiang said.

NVC has always adopted the cash delivery model, even in the worst years of the market. "This will ensure cash return and cargo security, but also restrict channels for rational market expansion, purchase on-demand, reduce inventory, and stimulate the dealer's passion for sales." Wu Changjiang hopes to make the channels of logistics and funds through this way The speed of circulation becomes faster.

In order to solve the dealer’s financial problems, NVC provides credits to dealers according to the bank's credit card management system. The credits cover 36 operating centers, more than 3,000 brand stores and more than 1,500 dealers in the country, including cash and goods. . After Nissei advances a certain amount of credit, the dealer must be repaid as scheduled as a credit card. If it does not pay on schedule, the dealers will lose their credit, and they will no longer be able to "swipe the card first" as they once did. Moreover, NVC will also charge dealers a certain amount of interest, and dealers also face the trouble of losing credibility. In addition, NVC also handled CITIC Insurance's payment insurance. In the event that the dealer refuses to repay the loan, NVC will obtain the accounts payable by the dealer through the insurance company, and the insurance company will apply for the legal agency of NVC.

In the past, NVC faced directly with thousands of dealers. Shipments and collections were handled personally by employees at the headquarters. Even dealers with small sales volumes had to manage them in a superfluous manner, which took a lot of energy. Now the operation center takes care of the operation and management of the entire region, and the effect is good. The headquarters can also use the operation center to realize the functions of warehousing, distribution, and management.

However, there are also views that NVC's sales power is concentrated in the hands of 36 dealers, which poses great risks. This special system, whether Philips or Op, has not followed suit. The industry generally believes that problems such as poor control over the channels and difficulty in managing the prices of end products are in place.

In Wu Changjiang's view, the investors in the operation center now only have control over the company's stock holdings, and they are not industrialists. The product operation is still handed over to NVC, and it insists on the dispersion of the shares. In fact, it is also sharing its own risks. After listing in Hong Kong, NVC Lighting began to consider participating in the operation center. Wu Changjiang often instilled in the dealers, "Whoever does well and who manages well, I will come to the stocks to purchase your channel."

Wu Changjiang’s next plan is even more challenging – he hopes that the “mom and pop shop” in the village will also be able to achieve the corporate transformation of channel companies and grow into a professional company with systematic market development capabilities. In the face of competitors such as Philips and Samurai Aurora who have not entered the township market, NVC's strategy is to grow faster. Of course, this also implies more new risks.