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In recent years, discussions about how distributors should develop and transform have been ongoing. However, based on my market research, many distributors are confused by the plethora of new concepts and ideas, unsure where to start. Watching others succeed with unified warehousing and distribution or regional self-built platforms, while their own companies still have a pile of unresolved issues, they can't help but feel disheartened. In fact, distributors need not be overly anxious; they should focus on the present and adjust according to their own circumstances.

As the saying goes, "To forge iron, one must be strong oneself." Facing changes in the market environment, distributors discussing development and transformation must first consider their own resource allocation. What resources and strength you have determine what you can do. Today, I will discuss upgrade paths for various types of distributors from the perspective of different sales scales.

01 Distributors with sales of 10-20 million yuan and below

Distributors with sales below 10-20 million yuan are mostly entry-level. They have limited financial strength and terminal outlets, non-standard operations, and lack management systems. At this stage, distributors may be agents for first- or second-tier brands in a certain area or distributors covering a limited region, typically represented by workshop-style individual traders.

Typical characteristics: Limited strength, small scale, but low operating costs.

Upgrade strategy: The transformation of the distribution system and industry trends may seem distant for these distributors. Regarding trend changes, you can observe how larger distributors are transforming. It is recommended to focus most of your time and energy on business growth.

1) Add people and vehicles

The core purpose of adding people and vehicles is to increase sales opportunities. By increasing the number of people and vehicles, you can achieve depth and breadth. In depth, increase the visit frequency to existing outlets, enhance terminal relationships, and expand product display effects. Also, seize good outlets and increase service efforts. Typically, good outlets have sales three times or more than average outlets. In breadth, adding one more outlet means one more sales opportunity. Developing new outlets is urgent. Additionally, always be on the lookout for "new outlet" opportunities. Last month, during a survey in Nanjing, a young distributor told me that a certain convenience store chain was entering the Nanjing market. Knowing the background of this chain, he immediately contacted the purchasing department to discuss entry and eventually secured cooperation.

2) Choose "good" products

Choosing good products does not mean first-tier products, but potential, high-quality products. From a macro perspective, consumer demand is becoming diversified, niche, and personalized. In the future, brand owners will no longer pursue "big and comprehensive"; "small and beautiful" is the core direction in a highly saturated market. Keep an eye on new product information in real-time, and don't reject visits from "unfamiliar" business managers. Stay informed, make bold assumptions, and verify carefully.

02 Distributors with sales of 20-50 million yuan

Distributors with sales between 20-50 million yuan are the most common in the FMCG distribution system, belonging to medium-sized distributors. At this stage, distributors have overcome the basic hardware (vehicles and people) pressure, and their development difficulties stem from capital, business awareness, and management level. They have a certain market foundation and influence locally.

Typical characteristics: Average strength, medium scale, constrained by personal business awareness.

Upgrade strategy: The core issue is internal. It is recommended to prioritize improving internal management mechanisms, appropriately use tools to enhance operational efficiency, and for the distributor personally to engage in moderate learning. Pay periodic attention to industry trends.

1) Improve internal management mechanisms

The core of management is people, especially the management and motivation of frontline sales staff. At this stage, distributors already have a considerable number of stable terminal outlets, so sales staff can achieve decent sales even without "trying hard," lacking drive and challenge, and doing repetitive basic work.

Improving internal management mechanisms involves two aspects: First, in performance appraisal, refine the assessment. Many distributors still calculate commissions based on "per piece" or "per amount" without breaking down to individual products or items. Second, in business capability, enhance skills. Frankly, the current capability of frontline sales staff depends entirely on their personality, attitude, and effort. Those with extroverted personalities and social skills often have higher sales, but their obvious drawback is "talking nonsense." Distributors can consider organizing weekly or monthly sales skills training, with factory regional managers or city managers helping to teach.

2) Use tools to improve operational efficiency

The purpose of using tools is to "increase revenue" and "reduce costs." In terms of increasing revenue, use third-party field service software to manage daily work of frontline staff, ensuring standardized work; in terms of reducing costs, use inventory management software to strengthen product management. In fact, many distributors have inventory software but haven't truly utilized it, merely using it as a "plus/minus" tool for purchase volume, sales volume, and sales amount. Perhaps 90% of the functions of an inventory software are never used.

3) Plan product line structure

Unlike entry-level distributors, this stage distributors already have some core products, but their product structure lacks scientific and reasonable planning. Simply put, there is no three-tier product line structure (volume products, profit products, and potential products). At this stage, distributors have basically completed coverage of their regional outlets and resource matching. Optimizing the product line can maximize the use of outlet resources and people/vehicle efficiency, improving benefits. At the same time, maintain the operational vitality of distributors at the terminal level.

03 Distributors with sales of 50 million to 100 million yuan

Distributors with sales between 50 million and 100 million yuan have basically bid farewell to the "individual" and "workshop" style, belonging to large distributors. At this stage, distributors are more standardized, with systematic management and operation mechanisms, breaking through the bottleneck of boss personal management and moving towards corporate management. However, the bottlenecks and ceilings are also very obvious: market capacity saturation and limited market potential.

Typical characteristics: Management and operations are on track, facing the ceiling of market capacity.

Upgrade strategy: At this time, the distributor boss's energy is divided in half: 50% of energy should still be spent on strengthening internal management and optimizing product structure, as this is the foundation for survival. The other 50% should focus on trends and directions in the FMCG industry and distribution systems, considering long-term planning, with a focus on FMCG warehousing and distribution and B2B.

1) Alliance with distributors, unified warehousing and distribution + B2B

At this stage, distributors are not suitable for building a B2B platform alone. If interested, consider cooperating with several like-minded distributors with consistent concepts to jointly establish an independent company and invest in unified warehousing and distribution and B2B. The specific paths and implementation measures for this direction have been elaborated in previous articles by New Distribution, so I won't detail them here.

2) Professional brand service provider

In fact, apart from first-tier brands, most brand owners do not have offline promotion service capabilities. Distributors can consider focusing on product promotion and activity planning. By outsourcing warehousing and distribution, they can reduce costs and operational energy, concentrate on product promotion around terminals, and even help B2B platforms with regional ground services.

Frankly, at this stage, the business model and profitability of distributors have taken shape. At this time, distributors must deeply think: What do I want to do, or what do I not want to do? If continuing to pursue scale, distributors must consider their agency category structure, not product structure. If expanding horizontally, distributors must be clear that this might be another business. Although your "users" are the same, the business model has changed.

04 Distributors with sales above 100 million yuan

Distributors with sales above 100 million yuan are already leading in their local area (with slight differences between high- and low-tier cities), forming corporate operational standards. They belong to super-large distributors. Within the regional market, they may have a monopoly position in certain brands or categories. The development of "pure" trading companies has basically reached its peak.

Typical characteristics: Corporate operations, agency distribution model gradually hitting the ceiling.

Upgrade strategy: At this stage, distributors should focus on industry trends and directions and make decisions on how to change and transform.

Additionally, I have seen distributors at this stage, having completed the accumulation of initial capital, jump out of the "distributor circle" to expand into other industries such as finance, retail, industry, engineering, etc. This path is not within the scope of this article.

1) Lead unified warehousing and distribution, even independent operation (matchmaking + self-operation)

At this stage, distributors can consider independently operating a B2B platform, adopting a self-operation + matchmaking model. Alternatively, they can ally with other distributors to lead unified warehousing and distribution + B2B platforms, integrating local FMCG categories with unified warehousing and distribution, and transform their role with platform and service provider thinking, serving other distributors and terminal outlets.

It is worth noting that unified warehousing and distribution + online B2B has become a hot topic among FMCG distributors, and currently, it seems to be the best path for scale distributors to transform. Regarding how to do unified warehousing and distribution well and correctly, New Distribution will continue to share successful transformation cases of distributors in the future.

The above are my thoughts on upgrade paths for distributors of different sales scales. Strictly speaking, distributors below 50 million yuan are advised to focus on their own trading agency business and strengthen themselves; distributors above 50 million yuan must think about direction and even formulate transformation paths.

New Distribution would like to know your thoughts or different opinions on the above upgrade paths. Welcome to leave a comment below to discuss with us.