---
title: "A 40 Million Yuan Business, Yet the Distributor Sees No 'Way Out'"
description: "During a recent market survey, a distributor in a county with a population under 800,000 had built a paper and hygiene product business to 40 million yuan, yet when asked about 2024 plans, he said, 'We'll take it step by step; we're still looking for a way out.' This reflects the widespread confusion and anxiety among distributors, especially those with mid-sized operations, as they face declining sales, difficult collections, high factory targets, and chaotic pricing."
author: "张雨薇"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-02-15"
language: "en"
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---

# A 40 Million Yuan Business, Yet the Distributor Sees No 'Way Out'

> During a recent market survey, a distributor in a county with a population under 800,000 had built a paper and hygiene product business to 40 million yuan, yet when asked about 2024 plans, he said, 'We'll take it step by step; we're still looking for a way out.' This reflects the widespread confusion and anxiety among distributors, especially those with mid-sized operations, as they face declining sales, difficult collections, high factory targets, and chaotic pricing.

Recently, during a market survey in first-tier markets, I visited some distributors and chatted with them about market changes and operational pain points in recent years.
Among them, one distributor's words left a deep impression on me. This distributor had built a paper and hygiene product business to 40 million yuan in a county with a population of less than 800,000. By all accounts, he was doing well, but when asked about his 2024 plans, he seemed helpless, saying, **"We'll take it step by step; we're still looking for a way out."**
At some point, confusion and anxiety seem to have become the main theme for distributors. Especially for those with mid-sized operations, lying flat? They're unwilling; changing? They don't know where to start. "Taking it step by step" has become the sentiment of many small and medium distributors.
This article shares my observations and insights from market visits, discussing what happened to distributors in 2023.
**Declining Sales, Harder to Make Money**
**"Making money is getting harder and harder."**
**Most distributors have this feeling. The three years of the pandemic brought great uncertainty to business. After finally getting through the pandemic, business didn't go as smoothly as expected.**
A county-level daily chemical distributor said that since October last year, there has been a noticeable decline in sales. Previously, a certain brand's products could stably ship 800,000 yuan per month, but now it's difficult to achieve an average monthly shipment of 500,000 yuan, nearly halved.
**He analyzed two reasons: first, during the pandemic, consumers stocked up heavily on daily consumables like paper and hygiene products, and they haven't used them up yet; second, the impact of e-commerce is increasingly severe, as consumers have shifted to online shopping.**
The distributor revealed that e-commerce platforms like Douyin and Pinduoduo now offer much greater discounts than offline. In a village with a population of less than 700, the Cainiao station's peak inbound packages can exceed 100 per day.
Another distributor told me that in the past, product distribution into stores could only be done by distributors. As long as distributors kept expanding the market and selling goods, they could increase sales and profits. But in recent years, they've found that even after opening many new distribution points, sales haven't increased.
The reason is simple: **online diversion is too strong, and offline stores simply don't move products! Even if some stores see increased product sales, after deducting various expenses, profits are pitifully low.**
**Difficult Store Payments, Credit Sales Dragging Down Distributors**
**Poor market feedback means distributors aren't making money, and stores are also struggling. In a long-term credit sales environment, downstream payments have become a difficult hurdle for distributors.**
Facing stores that can still move products but are unwilling to settle payments, distributors feel like their soft spot is being squeezed. A careless move could lead to threats from stores: **"Take your goods back; we won't sell them."**
In such situations, to protect so-called "top-selling stores," most of the time they have to passively compromise, and payments are delayed again and again.
**For stores with poor sales and no money to settle, there's only one word: "wait."**
One distributor revealed that **the usual credit period given to stores is 50 days, but there are still many July payments outstanding.**
In the current market environment, for such stores, normal supply risks snowballing debts, but completely cutting off supply is unrealistic. They can only ensure products are on the shelves, thinking that as long as the store is still open, they can make an effort during the Spring Festival and eventually get paid.
But some are not so lucky. Another distributor at a wholesale stall told me that this year's market is bad, and many stores have closed. One supermarket with good customer relations had its owner run away owing him over 200,000 yuan in payments.
**High Factory Targets, Still Pressuring Inventory**
**The external environment is cold, but factory performance can't be cold, so the pressure shifts to distributors.**
During in-depth conversations, one distributor complained: "This year, some factories have set targets requiring 30-50% growth, but **in the current market environment, it's simply impossible to achieve. Maintaining the status quo is already good.** "
As we talked, the warehouse manager came in to report that a factory had delivered another batch of goods. The distributor explained that there was still over 100,000 yuan in inventory, but at year-end, the factory offered many attractive conditions. Considering the annual target, he thought it over and decided to put it into the warehouse.
**Even if the terminal market responds slowly, in the eyes of most factories, this is not a reason for distributors to refuse target growth or refuse to take inventory.**
Especially as CNY approaches, seizing distributors' warehouses has become the most direct thought and action for factories. Round after round of goods are pressed down, and distributors suffer greatly. Besides inventory pressure, old packaging products are also a headache.
A county distributor reported that product updates are now very fast. In the past, updates occurred about every three months, but now the average iteration cycle is only half a month, resulting in a large backlog of old packaging products in the warehouse. For such products, factories have further restricted channels, such as prohibiting small-size old packaging products in large stores. But if they're not placed in high-traffic large stores, these old packaging products are even harder to sell.
**Terminal demand is diverse. To maintain market position and secure brand agency, distributors can only agree to factory inventory pressure again and again.**
**Chaotic Pricing, Widespread Cross-Region Dumping**
During the survey, I noticed that the same product had significant price differences across different stores, so I contacted a local distributor.
The distributor explained that apart from normal promotions, the low prices we saw were often due to cross-region dumping or special prices that brand agents had to offer to stores to counter dumpers seizing the market.
**Some dumpers, seeing well-selling products, proactively approach store owners with malicious quotes, providing small quantities of goods at prices far below the distributor's net price.** For example, a product's factory price is 7 yuan, with about 18 points in rebates, making the net price 5.94 yuan, but some stores supplied by dumpers sell it for only 4.9 yuan. Faced with customers being lured away by such low-priced goods, distributors are helpless.
Additionally, **the chaotic market pricing system has caused some stores to lose trust in brands and distributors. After distributors quote prices, stores will also check wholesale market prices or compare online. Even worse, some store procurement has become like bidding at a mall, with multiple quotes and pure price competition.**
**In a Dilemma, Distributors Still Searching for a Way Out**
**When discussing 2024 plans, "stability" was the most mentioned word.**
Apart from personal capabilities, the problems in the market cannot be solved overnight. Behind "stability" lies the dilemma distributors face.
According to the "2022-2023 China FMCG Distributor Operating Conditions Survey Report" released by New Distribution, among 279 distributors surveyed, only 23.7% achieved their brand sales targets for the first half of the year. The average target achievement rate for distributors in the first half of 2023 was 85.4%.
Among them, 60.6% of distributors reported a decrease in revenue compared to the first half of last year, with 31.9% seeing a decrease of more than 20%; 51.7% reported a decrease in profit compared to the first half of last year, with 16.9% seeing a decrease of more than 20%.
It can be seen that **failing to meet sales targets, with both revenue and profit declining, was a common situation for distributors in 2023. And this situation may continue.**
Facing the equally uncertain 2024, can business still be done, and where should it be done?
We believe that, given the current environment, for 2024 and a long time thereafter, the work focus for distributors should be: **survive, outcompete peers; go out, expand your survival radius.**
When facing business confusion, looking inward often doesn't provide answers and may lead to more involution; looking outward, observing the thoughts and practices of excellent large distributors, may bring you different inspiration and thinking.
**From March 14-16, 2024, during the Spring Sugar Fair, the Second China FMCG Distributor Conference, organized by New Distribution and Zhoupu Data, will be held in Chengdu.**
On March 15, a closed-door private sharing session for distributors will be held, titled "Low-Price Impact, Factory Direct Control, Declining Foot Traffic: What Are the Options for Distributors?" It will feature one-on-one dialogues and discussions with excellent large distributors, sharing experiences, exploring business opportunities, and discussing era dividends.
At the same time, we will also invite 16 national benchmark distributor owners and relevant industry executives to share their latest thoughts on distributor business. We hope to provide some direction and set up a lighthouse for distributors in today's rapidly changing environment, at least ensuring that business direction is not blurred or confused!
The Second China FMCG Distributor Conference is not only an ideological feast of knowledge, cases, and methods, but also a conference that leads the future development of distributor business!
************This conference will focus on the theme **"Supply Chain Revolution"**. Over three days, there will be one main forum, one China FMCG Hard Discount Conference, one China FMCG Distributor Conference, more than ten sub-forums and closed-door exchange sessions, and the first major debut of the [Extreme Supply Chain] Brand Factory Direct Procurement Fair. It will bring together thousands of FMCG brand owners, distributors, retail transformers, and industry service providers from across the country in Chengdu for continuous brainstorming, discussing the challenges and opportunities, changes and ways out in the era of supply chain revolution. In this era of supply chain revolution, a new business era will be born. We hope every participant will still have a place in this wave, and we believe this will be a conference worth attending! For conference business cooperation, please contact:
**🔺Scan code for ticket consultation🔺******


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