---
title: "2017: The Perils and Opportunities for Distributors"
description: "In 2017, distributors face both dangers and opportunities. The dangers include business decline, blind expansion, management chaos, and financial disorder, leading to cash flow breaks and even 'running away'. However, the rise of FMCG B2B platforms presents a chance for transformation, and distributors who adapt can thrive."
author: "赵波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-02-04"
language: "en"
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# 2017: The Perils and Opportunities for Distributors

> In 2017, distributors face both dangers and opportunities. The dangers include business decline, blind expansion, management chaos, and financial disorder, leading to cash flow breaks and even 'running away'. However, the rise of FMCG B2B platforms presents a chance for transformation, and distributors who adapt can thrive.

**Click 'Read the original' for details**
**Perils**
At the end of last year, I heard almost every week about distributors across the country 'running away'. Besides a sigh, I couldn't help but feel for the industry. Why are there so many distributors fleeing? In summary, besides the biggest issue of cash flow breaks, there are several deeper reasons:
1. Business decline
2. Blind expansion
3. Management chaos
4. Financial disorder
Except for the first, which is due to the macro environment, the rest are self-inflicted. But this also shows that the macro environment is indeed making business harder for distributors. Management can't keep up, labor costs keep rising, sales aren't growing, but profits keep declining.
In such difficult times, manufacturers and big stores both delay payments, while bank loans become harder to get... When a distributor's cash flow breaks, running away might be the only desperate choice.
Of course, running away is an extreme case; most distributors can barely survive. But doing better is indeed getting harder.
**In 2016, a term was mentioned a lot: consumption upgrade. As I wrote before, the internet has made this upgrade different. Consumers don't just want better food; they want different food.** For example, what beat Master Kong instant noodles wasn't Uni-President, but Meituan and Ele.me; what beat Coca-Cola wasn't Pepsi, but bottled water. Consumers now have more alternative choices, making it hard for traditional manufacturers to rely on deep distribution and mass distribution for sales growth. Many manufacturers have realized this and can no longer rely on salespeople as infantry. The marketing and e-commerce departments have been elevated to important positions, combining land, sea, and air forces—missiles, planes, and aircraft carriers together. They are shifting from quantity-based growth to quality-based growth, no longer pursuing sales volume one-sidedly but focusing on channel quality and product profit.
This shift also imposes new requirements on channels: data-driven, transparent, integrated, efficient, low-cost precise distribution. These new distribution demands pose great challenges to distributors' own model transformation. If distributors still insist on having their brothers charge bayonets and block gun barrels to meet manufacturers' performance targets, heavy casualties will be inevitable in the future.
The rise of FMCG B2B in 2017 is an unstoppable trend. **Platforms' efficiency from large-scale order processing and precise distribution supported by big data are exactly what manufacturers dream of for new product distribution.** Distributors and B2B are not even in the same competitive dimension. Comparing old and new models, the outcome is decided: it's not that the internet defeated distributors, but that high efficiency will always replace low efficiency.
**Opportunities**
Of course, any industry transformation, while eliminating traditional models, will see the rise of new models. Currently, there are over 150 platforms involved in FMCG B2B in China, with over 2,000 companies in related fields. These include industry giants like JD New Channel and Alibaba Retail Link, as well as new players like Zhongshang Huimin, Zhanghe Tianxia, Diashang Interconnect, Yijiupi, Dianda, and Xingaoqiao. Of course, many distributors are also trying to enter this industry, and many have done well. **During the Spring Sugar Fair, our official account organized the 'Empowerment·Evolution 2017 FMCG + Internet Conference', inviting distributors who have successfully transformed to B2B to share their insights. Interested friends can come to the scene to learn. (Click 'Read the original' to register)**
2017 is a watershed for China's FMCG industry. Many manufacturers and distributors that cannot adapt to the new consumption upgrade under the internet will see sales continue to decline until they are eliminated. Similarly, a group will seize this opportunity, leverage the internet and B2B to overtake on curves, and quickly build new business barriers before others see clearly.
**As a distributor with certain strength locally, don't cling to outdated practices. In the new market environment, actively try transformation. Enter this industry through franchising, self-building, transforming into logistics or retail, or starting from niche segments. Of course, as the first to eat crabs, this path is full of flowers and thorns.**
How to avoid detours and pitfalls? My advice is for distributors to go out more, see more, and interact with distributors nationwide. Through exchanges with peers, visits, and learning, gaining deeper industry insight is the best way to reduce mistakes.
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