---
title: "A 30 Million Yuan Business, Distributors Bogged Down by Trivialities, Stuck in a Rut"
description: "During a recent field visit, the author interviewed several distributors with annual revenues of around 20-30 million yuan, a common scale in the FMCG distribution sector. The article reveals common problems these distributors face, including rising revenue but falling profits, excessive inventory, demanding customers, and team management difficulties, leading to stagnation."
author: "张雨薇"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-01-09"
language: "en"
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# A 30 Million Yuan Business, Distributors Bogged Down by Trivialities, Stuck in a Rut

> During a recent field visit, the author interviewed several distributors with annual revenues of around 20-30 million yuan, a common scale in the FMCG distribution sector. The article reveals common problems these distributors face, including rising revenue but falling profits, excessive inventory, demanding customers, and team management difficulties, leading to stagnation.

During a recent field visit, I focused on interviewing several distributors. These distributors all have revenues of around 20-30 million yuan, which is also the mainstream in the current commodity circulation field.
Through in-depth communication and comparison, I found that distributors of this scale currently face some common problems, and also generally face growth bottlenecks, with their business stagnating.
This article will share with you what I saw and heard during the visit, and discuss the current situation and problems faced by distributors at this level.
### **Revenue Growth Without Profit Growth, Business Running at a Loss!**
**"Making money is getting harder and harder."**
Recalling the past year's operating conditions, more than one distributor boss sighed.
A distributor surnamed Wang (pseudonym) who does daily chemical products in a county town said that business has been difficult in the past two years. When peers communicate, they often mention losses of millions, and people around them are gradually withdrawing. In this market environment, his own operations are also under great pressure.
"Sales volume hasn't changed much this year, and even increased slightly, but when you calculate it, **profits have actually dropped by about 20%.** "
On the one hand, supermarkets are not performing well, store sales are declining, but costs are getting higher and higher; on the other hand, market prices are becoming more and more transparent, and the profits given by manufacturers are constantly being compressed.
According to Wang, his region is a nationally famous distribution and wholesale market, where cross-regional selling and price chaos are common. Basically, all products available on the market can be found in the wholesale market, with prices so low they have no lower limit. This also emboldens downstream customers in negotiations—**after all, as long as you are willing to run around, you can find any product.**
**"I used to think no one would be stupid enough to sell at a loss, but this year I really saw it!"** Wang sighed, "Customers are comparing prices. If the price of one product isn't met, other products may be removed from the store."
Facing this situation, if you hold the bottom line, you may lose customers; if you choose to follow, **if you lose 5 products, someone else will lose 10 products.**
"Business is becoming less and less interesting, but I have no choice but to follow the trend, because if I don't supply this time, there may be no chance for cooperation in the future."
### **Many Ineffective Products, Large Inventory, Difficult Sales!**
**"In the past, we were forced to stock up due to pressure from manufacturers; now we are forced to find goods everywhere by stores!"** When talking about inventory, a distributor complained.
"At peak times, there were over 10,000 SKUs in the warehouse, **and after streamlining, there are still 5,000.** " What's even more shocking is that **such an astonishing number of barcodes supports a business of only about 30 million yuan.**
It is understood that this distributor's business covers supermarkets, small stores, CVS, e-commerce, etc. Because they operate in many channels, they need to match different products according to different channels. In addition, **local supermarkets have chaotic management and encourage vicious competition among suppliers**, which is also a reason for the distributor's bloated inventory.
The distributor further revealed that **many township supermarkets, under the guise of "adjustment and reform," are squeezing suppliers in disguised forms.** Not only him, but all distributors dealing with supermarkets are having a hard time.
In the past, cooperation with supermarkets in the form of package deals was like paying rent to buy shelf space, but now in some stores, **the "rent money" only buys an "entry qualification ticket." After getting the "entry qualification," how much shelf space you can get depends on your own ability.**
For example, a certain category only has two sets of shelves, but these two sets may be competed for by four or five suppliers at the same time. Supermarkets first make demands on brands; if you don't have an agency, you have to source externally; after having the brand, they make demands on display space, such as one barcode can only be displayed on two faces, and whoever has more products can get larger shelf space. **In order to occupy a larger display area, distributors can only continuously expand their product range.**
"Originally, when one supplier supplied, they could have a sales guide, but when several do it at the same time, no one can afford a sales guide, so they can only regularly adjust goods, but with so many stores, it's hard to take care of them all!"
The final result is that **store shelves are severely crowded, and most products don't sell; distributors' warehouses have many ineffective SKUs, high inventory management pressure, and many products are near expiry or even expired.**
### **Demanding Both Price and Service, Customers Are "Hard to Please"!**
**"Today's customers are not easy to 'serve.' They want low prices, good service, and a full range of products. We earn two or three hundred yuan but have to spend several hours in the store."**
Distributor Li (pseudonym) introduced that many stores are old customers, and prices have already been pressed very low, but **there are always lower-priced products on the market, and customer relationships cannot withstand the test.**
For example, a few days ago, a county store that had been cooperating for seven or eight years originally supplied at a net price of 4.5 yuan and sold at 5 yuan. After a parallel importer approached them several times, the boss insisted on a supply price of 4.5 yuan, otherwise they would no longer cooperate. After two hours of negotiation, the boss wouldn't budge, and they had to reluctantly compromise, but even so, the store owner said, **"After this delivery, don't come again!"**
Another distributor had the same feeling, adding that now they not only have to compete with peers on price, but also provide good service to stores. Even for small stores, they have to handle shelving and inventory management. **"When there are many goods, delivering to one store takes at least an hour."**
In addition, during the research, I found that in some regions, **some channels that were originally relatively "worry-free" have also somewhat "changed."**
A distributor told me that last year they learned that new channels like snack stores and flash warehouses were expanding rapidly, so this year they quickly supplied goods when they had the chance, but found that doing well is not easy.
Some small flash warehouses in the region are operated by former mom-and-pop stores under a new sign. To save costs, some goods don't go through the main warehouse but are supplied by distributors, requiring point-to-point delivery to the store. **"A box of goods has a profit of 5 yuan, but point-to-point delivery costs more than 20 yuan in freight!"**
At the same time, some cash customers have also started to demand longer payment terms in their cooperation with distributors.
There are two main reasons for this phenomenon: first, some customers purchase in small quantities but frequently, and to save communication and accounting costs, they adopt unified settlement; second, because the distributor's scale and product share in the store are too small, they lack bargaining power in negotiations, **so they can only exchange payment terms and services for cooperation opportunities.**
### **Hard to Recruit and Even Harder to Retain, Team Management Is Difficult!**
"Fewer and fewer people are willing to do FMCG. I want to expand, but I simply can't recruit people!"
For distributors who don't want to give up, the talent shortage is the most headache-inducing problem.
The existing team is familiar with the market, but their thinking is fixed, their ability growth is limited, and it's hard for them to keep up with market changes. And if they want to expand, open new channels, and new stores, they can't recruit anyone!
"Many people disappear after learning about the job content and salary." A daily chemical distributor sighed, but he can also understand the mentality of these job seekers. **"Distribution is a tough business, with limited growth space and complicated work, so it's hard to attract young people!"**
The team has been through thick and thin together. **In the past, they could rely on experience, but with more people, management problems become prominent**—without digital transformation and standardized work processes, even if they recruit people, it's hard to retain them. **"Looking at a warehouse full of goods, anyone would be confused!"**
Another distributor said that **recruiting is hard, but retaining and managing people is even harder!**
"There are many old employees, which seems stable, but once there's any disturbance, everyone's mind starts to wander."
He revealed that in the first half of the year, to motivate the team to expand the market, he offered 30% of profits as business commissions, but unexpectedly, these employees who had been with him for many years, when payments couldn't be collected, actually collected payments privately or even ran away with the money. This had a bad impact on the company's image and customer relationships.
Fortunately, it was discovered and handled in time, but it also made him lose confidence in reform. "To this day, I still can't figure it out. These are people who have worked with me for many years. When profit is at stake, they leave without even saying goodbye."
In addition, with a medium scale, distributors often hold multiple positions, such as purchasing, business, and even finance. **It's not that they don't want to delegate, but they are used to doing everything themselves and don't know how to let go. In the end, they are bogged down by trivialities, with constant phone calls, stuck in a rut.**
**Final Thoughts
After this round of visits, a word comes to mind to describe the current state of distributors with 30 million yuan in revenue: **internal and external difficulties.**
The cause of "internal and external difficulties" is more from within—when talking about business difficulties, many distributors are used to looking outward, attributing declining sales to the external environment, while avoiding looking at themselves for reasons.
There are indeed some problems in the market, and declining sales or revenue growth without profit growth are real, but at the same time, **hesitating in internal management** is also a key reason for this situation.
For example, the recruitment, retention, and management of business personnel, the improvement of daily systems, the density of distribution in outlets, and the tiered management of products and stores. If these are not done well, even if you encounter good opportunities and have abundant resources, it's hard to grasp them effectively.
What do you think about the state of 30 million yuan distributors? Feel free to discuss in the comments.
Note: The distributors and stores mentioned in this article are only what the author saw and heard during market research, with a certain regionality, for reference only.
**【New Order · Symbiosis】**
**The 10th China FMCG Innovation Conference**
**Time: March 17-19, 2025**
**Location: Chengdu, China**


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