When tyre distributors purchase and store tyre products, in order to ensure a complete range of products, they receive products provided by tyre manufacturers without screening, which will inevitably result in uneven tyre products. However, tyre products are unmarketable due to price, quality, style, grade, and other reasons, which ultimately leads to product backlogs, occupying warehouses and funds.
Next, distributors either "sell at a breakdown price" or ask to return the goods to manufacturers. The former is likely to cause tension in the counterpart relationship, and the latter is likely to cause the breakdown of the relationship between manufacturers.
Many tyre distributors always take a sound network, considerate service, and solid strength as a "blockbuster", and want to conquer the world on their own. They believe that their own sound tyre network can ensure smooth channels; considerate tyre service can make customers faithful to them; powerful strength can provide customers with credit support, but the market operation still fails.
Why? Some forklift tires manufacturers that have not cooperated with tyre product manufacturers will not be able to exert the power of "1+1>2".
Just imagine, does the tyre distributor know the selling point of the product better than its manufacturer? Is the positioning of the product more accurate compared with its manufacturer's? These are the most critical factors related to decision-making. If they can obtain the guidance of the manufacturers in formulating strategies and the support in kind in promotion, wouldn't tyre distributors be powerful and invincible when running a business in the market?
The management methods of tyre distributors lag behind the development speed; some China wholesale tire distributors have already embarked on the road of intensive development of large groups, but the management model has not kept up; some private and family-owned enterprises have begun to take shape and strength in their operations, but with "small workshop" style management, their further development is hindered.
Distributor management methods are ahead of the speed of development; some distributors hold high the banner of "being benefit from management", regardless of the actual situation of the company's strength, scale, and business volume, and aggressively introduce "advanced" but "unsuitable" management ideas and tools. In the end, the imported advanced tools and equipment are not used, so they have to be put into the warehouse.
For their own benefit, tyre manufacturers will inevitably consider many tangible (such as raw materials, personnel salaries, etc.) and intangible (such as brand value, equipment depreciation, formula, etc.) factors when calculating the cost of tyre products, for example, drive tires on tractor. For tyre distributors, this is an increase in purchasing costs.
The requirements of distribution customers on tyre distributors are becoming more and more "stringent": in addition to the requirement for layups and minimum supply prices, distributors are also required to deliver goods to their doors, which increases the logistics and transportation costs of tyre distributors.
As tyre purchase costs increase, product added value decreases, and a series of "complications" such as high pricing is brought about, it is difficult for tyre distributors to form an advantage in product prices to attract distribution customers; the increase in tyre transportation costs leads dealers' profit margins to shrink, so tyre distributors begin to lament that "business is getting harder and harder to do."