Greetings, I am Yuan Lai from New Distribution. Since 2023, I have annually summarized and organized key insights into distributor businesses. This year marks the third year. In March (Chengdu) and August (Shanghai), we held the 4th and 5th China FMCG Distributor Conferences. From January to September, we also organized Tower Alliance members for offline seminars and study tours in Shanghai, Luoyang, Xi'an, Hefei, Zhengzhou, Quzhou, Dongguan, etc., totaling 6 sessions. Additionally, we conducted special management-level channel transformation sharing sessions and empowerment training for core distributors for brands such as Haitian Flavoring, Yumeijing, Huishan & Yuexiu Dairy, Qiaqia Food, Southern Black Sesame, and Pepsi Beverages. All in all, I visited dozens of cities. Though I haven't counted precisely, I believe I have met and talked with at least 150 distributors offline. Based on my exchanges with these 150 distributors, I have summarized the 10 most critical business insights. Although some content lacks complete data support, these are genuine observations from the front lines, and I hope they can offer food for thought and inspiration to industry practitioners and distributor owners.

1. Business Has Become Harder: A Consensus The current distributor community indeed faces business difficulties. Let me share two stories. First story: A post-90s distributor owner sent me a message last month. She said she was attending a training conference organized by the manufacturer. Usually, during such events, distributor owners chat casually. Two years ago, the topics were: how to make money, how to do product promotion well. But this year, the conversations are all about: how to save money, how to minimize losses, how to handle near-expiry products. This is not an isolated phenomenon; I think many distributors are experiencing this reality. It's not about earning more or less, but about how to sustain the business at all. Second story: In August, we released the "2025 Distributor Business Status Report," with two sets of data: In the first half of 2025, 41.3% of distributors saw revenue growth, while 39.3% saw revenue decline. In terms of profits, only 26% of distributors saw growth, while 53.6% saw profit decline. I sent these two data sets to a distributor owner with annual revenue exceeding 1 billion yuan, and he told me: "This data is too optimistic. For trading companies of our size, maintaining revenue is already good; profits are bound to decline 100%." He also shared a final thought: "Now distributors must face the era of meager profits; no one can escape!" Today, the challenge for distributors is no longer about earning more or less, but whether they can still make money and how to sustain operations.

2. Instant Retail: Opportunity and Challenge With Alibaba and JD.com heavily investing, instant retail, represented by flash purchase, has seen another explosive growth. In the past few months, many distributors have proactively asked me whether instant retail presents opportunities and if I have relevant resources to introduce. Many distributors even treat instant retail as an opportunity similar to the B2C e-commerce of Taobao and JD.com a decade ago. Indeed, instant retail has significant future potential. Among the distributors I know, some have nearly doubled their business by engaging in instant retail, especially in May, June, and July this year, with year-on-year growth of over three times. Regarding instant retail opportunities, I believe the following three types of distributors have opportunities: First, distributors with the capability to organize category assortments, not just those distributing a few brands. For example, distributors capable of organizing 2,000-3,000 SKUs in daily chemical categories. For instant retail flash warehouse stores, a single store has 7,000-8,000 SKUs, spanning nearly twenty first-level categories including beverages, alcohol, snacks, condiments, daily chemicals, personal care, household goods, and adult products. Flash warehouses do not seek distributors by brand. Second, distributors in provincial capital cities. Currently, the supply for flash warehouse formats is still disordered, with uneven product quality, mainly supplied by Pinduoduo and 1688, and local direct sourcing for beverages and alcohol. But in the future, driven by platforms and leading system operators, it will move towards "orderly supply," and upstream brands will also actively participate. With brand guidance and supply efficiency considerations, leading flash warehouse operators will cooperate point-to-point with systems (e.g., Legouda, Kuaikeda, Panda Busy), while mid-tier and tail-end flash warehouse systems will likely achieve orderly supply on a provincial basis. Third, distributors with community group buying supply experience. If they have previously supplied and operated for community group buying platforms like Meituan Select, Duoduo Maicai, or Xingsheng Youxuan, although there are model differences, they will find it easier to get started than traditional distributors, with post-90s distributors having the most advantage.

3. Distributors Have Transitioned from Individuals to Companies Although the mainstream distributor business scale remains at 10-20 million yuan, we find more and more distributors exceeding 50 million or 100 million yuan. They appear in ordinary prefecture-level cities and dominate the market share changes of a certain category or even a brand locally. I believe there is already a group of distributors in various cities with independent operational capabilities and market expertise, becoming important influencers in local FMCG distribution. Today's distributors are no longer the "small traders" that people commonly perceive, merely acting as transporters for brand capital, warehousing, and delivery. Distributor operations are increasingly leaning towards corporatization, specialization, and scale. In today's market environment, the larger the distributor, the stronger their resilience to risks. According to incomplete statistics, there are about 200,000 distributors nationwide, with an average of 600 distributors per city across 334 prefecture-level cities. We believe the future will not need that many distributors; an average of 60 distributors per city can adequately support local goods distribution.

4. Don't Get "Obsessed" with B2b Platforms Local B2b supply chain platforms have gradually become familiar to distributors over the past two years, and they are now on the path of practice. To date, New Distribution has recorded nearly 100 B2b platforms. Although many distributors are already practicing, my overall feeling is: Distributors are still quite aggressive in doing B2b, rushing to scale and profitability quickly. Some even abandon their original trading business to focus solely on B2b platforms. I have always emphasized: B2b supply chain is a slow but correct path; don't rush, take it slowly. Also, B2b is not the only way out. Don't become obsessed with B2b.

  • Snack category operators
  • Condiment category operators
  • Daily chemical category operators
  • Instant retail O2O channel operators
  • Core suppliers for KA systems
  • Gift box customization operators
  • ...... There are many business opportunities; don't hang yourself from one tree.

5. Distributors Must Understand Retail Discount supermarkets completely bypass distributors; Supermarket remodeling eliminates small, poor, and inefficient distributors; Instant retail does not cooperate with mainstream distributors who represent only a few brands. These three are the hottest retail topics and have varying impacts on distributors. Facing offline retail transformation, my insight into distributor business is: In the past, distributors played the role of "promoters" for brands, but in the future, they must become "buyers" for retailers; retailers will be the first customers of distributors. All distributors must transform into operators, with core capabilities not in selling products but in selecting and combining products within their categories, and designing category structures based on retail store types. All distributor owners may not understand warehousing, finance, or management, but they must understand retail.

6. Become Core Suppliers for Local or Regional Supermarkets Remodeling has become a consensus for the sustainable development of supermarkets everywhere. Besides internal organizational culture, the most important aspects are optimizing product structure and adjusting the zero-supply model. We believe that in the future, all supermarket systems will establish their own core supplier systems. In the past, suppliers relied on representing a certain brand and could enter supermarket shelves through entry fees, barcode fees, display fees, etc. But future supermarket distributors must establish close partnerships with downstream supermarkets. Only by helping retailers select products and expand category capacity can they sustain operations in retail stores. Of course, in building core supplier systems, many distributors will inevitably be eliminated because they lack professionalism and category management capabilities at the retail store level. Eliminating, optimizing, and integrating distributors, and changes in zero-supply relations, we believe will be core measures in regional supermarket reform in the next one to two years.

7. Three Mainstream Distributor Models for the Future The mainstream business models for future distributors are three: regional category operators; retail channel operators; B2b platform operators.

  1. Regional category operators: Simply put, they go deep into a specific category, providing product selection, assortment, pricing, promotion, and display for different local channels (retail types).
  2. Retail channel operators: They focus on a specific retail format, operate across regions, combine their professional capabilities in advantageous categories, help that type of retailer with "whole-store output" for some categories, and even go deep into production for OEM development, deeply linking production and sales.
  3. B2b platform operators: They provide one-stop FMCG standard product supply chains for local mom-and-pop stores and community small supermarkets. Strictly speaking, B2b platform operators should also be considered a type of retail channel operator. I list them separately because many local large distributors are trying this path. They are familiar with local mom-and-pop stores, especially distributors of beverages and snacks.

8. Establish a Supply Chain Management Company All large distributors should consider establishing another supply chain management company. This is a viewpoint I derived from visiting daily chemical distributors. Why establish a supply chain management company? In the past, distributor business was more about seizing store resources according to the manufacturer's market logic, investing money and people in promotions; but now that doesn't work. Store business is declining, foot traffic is decreasing, and distributors must now consider how to grow category capacity together with retail stores. The way to grow category capacity is simple: reduce prices of best-selling standard products, eliminate inflated prices to make consumers feel the value; introduce trendy and niche products and price them the same as e-commerce platforms. Following this approach, upstream manufacturers may not agree. Also, upstream manufacturers expect distributors to increase the brand's shelf share and sales proportion. Growing brand sales and growing category sales are contradictory. The best way is to establish a new supply chain management company to do category collective procurement based on wholesale logic. Provide supermarkets with more diverse and cost-effective products, doing business based on consumer demands for categories.

9. Short Videos Are an Important Tool for Distributors to Acquire New Customers This year, I have heard no fewer than 20 distributors talk to me about short videos. For this, New Distribution has also produced several special reports. A distributor owner from Putian gets 20% of sales from online traffic conversion; another post-95s distributor, over two years, used 536 short videos to attract 2,000+ new customers and activated 42% of old customers to repurchase, with new product sales growth reaching 150%. Regarding short videos (WeChat & Douyin), I believe the following three types of distributors must do them: First, distributors with multiple categories and multiple SKUs must do them. Second, local leading distributors must do them. Third, distributors covering diverse downstream retail must do them. Nowadays, short videos have become a low-cost, high-efficiency promotional tool. They increase company exposure, open more cooperation opportunities with upstream and downstream industry players, and shift from going to customers to show products to customers coming to you to buy.

10. Spend Time Thinking About Business Growth Paths Where were the growth points for distributors in the past five years? Was it from category expansion, or the addition of a retail format (like instant retail), or deep-diving into a specific retail format (like community supermarkets)? Where bosses spend their time, attention, and energy, growth happens there. To see if a distributor owner is truly thinking and studying the business, judge from these points: Look at what's on his desk. If there's not a single product in his office, it's hard to believe he can be a store product selection expert or category operations expert. Look at what's in front of his computer. Store data, product data, personnel data, sales revenue, gross profit, even net profit. Without these data on the computer, it's hard to believe he clearly knows where the business is. Look at what he talks about in daily meetings. The content of meetings is the core manifestation of the distributor owner's business cognition. Does he talk about stores, products, or displays? Of course, he might also talk about upstream manufacturer tasks and targets. Where time is spent, results come from; this is the simplest truth.

In Conclusion Over the past decade or more, distributors have grown continuously due to demographic dividends, store expansion dividends, and product demand dividends. With people, vehicles, and products, they could make money. But now, with the diversification and fragmentation of retail formats, increasing competition, and some retail bypassing distributors, the value distributors deliver locally is being diluted or even replaced. The distributor business has entered an era of meager profits. In daily operations, a slight carelessness can lead to no profit or even losses. Finally, my strong feeling today is: All distributor owners must do "professional" business, not "resource" or "relationship" business.