Restructuring the sales distribution of scooters

A manufacturer of scooters needed to strengthen the sales distribution network in its home market in light of new market entrants. The ongoing problems included the following:

 

  • some dealers and sub-dealers were operating at small sales volumes
  • a number of dealers were experiencing decreasing margins
  • a few dealers were operating at a loss
  • the distribution network was at risk of dealers defecting to the competition

Critical issues included preserving solid national coverage, minimizing decrease in sales volume, reducing sub-dealer sales, and minimizing defections.

We restructured the dealer network.

 

  • Reduced the number of dealers from 483 to 346
  • Maintained sales volume (from 288,252 units to 286,495 units)
  • Minimized dealer defection
  • Increased average dealer margins by $56,000
  • With a leaner distribution network, reduced distribution costs to the manufacturer by 10%
  • With a leaner distribution network, reduced the company’s sales force
  • Increased the company’s EBIT by $2.2 million

Restructured the dealer network for a leaner configuration and re-organized the company’s sales force accordingly.

 

Reduced the number of dealers from 488 to 346

  • Shifted all company product flow to 269 distributor dealers
  • Shut down 5 non-performing dealers
  • Restructured 210 dealers
  • Repositioned 73 tactical dealers
  • Merged 158 marginal dealers with strong dealerships

Restructuring improved dealer economics as follows

  • Increased average dealer sales volume by 38%
  • Increased average dealer net margin by $56,000

Given a leaner distribution network, re-organized the company’s sales force

  • Reduced the company’s national sales force from 108 to 57 FTEs
  • Cut sales force costs by 48%

The impact of restructuring the distribution network and re-organizing the sale was as follows:

  • Erected a stronger line of defense against new market entrants
  • Improved dealer economics by increasing dealer net margin by $56,000
  • Minimized dealer defection
  • Maintained sales volume (from 288,252 units to 286,495 units)
  • Reduced distribution costs to the company by 10%
  • Improved the company’s EBIT by + $2.2m (+7%)