Click to read the original text for details. Yesterday, during a market survey in Henan, I met several distributors. In a county market with a population of 200,000, annual sales of 5 million yuan are mainstream for distributors; in a prefecture-level city, a distributor with annual sales of 50 million yuan is considered top-tier locally. The core difference between a 5-million-yuan distributor and a 50-million-yuan distributor, besides the brands they distribute, lies in their assets. Distributors below the 10-million-yuan level have their core assets as warehouses + trucks + drivers. The market is developed by the manufacturers, and everything follows the manufacturers' arrangements. In the office next to a 5-million-yuan distributor's warehouse, when I asked about his plans for business development, he blurted out, "Find products to sell." I followed up, "You don't have salespeople; it's all the manufacturer's staff. Other manufacturers won't let you be their agent either, right?" He replied, "Once I find the products, I'll definitely hire people. But hiring now without products is too costly..." His explanation made sense, but I couldn't help thinking it seemed like a false proposition. Without people, manufacturers won't cooperate with you. Without cooperating manufacturers, distributors won't add staff. It's a chicken-and-egg problem that I can't figure out. I heard from surrounding salespeople that this distributor had previously represented several products, but seemingly with bad luck, none succeeded, and he's waiting for the next opportunity. But when will the next opportunity come? In essence, the fundamental issue of the chicken-and-egg is—no profit. Distributing first-tier brands, a distributor with annual sales of 5 million yuan has a net profit of only around 200,000 yuan. With a profit level of 200,000 yuan, it's unrealistic to expect the distributor to have the capability to operate the market and do terminal promotion. Now, looking at a distributor with annual sales of 50 million yuan, you might think that being top-tier in the local market means profits are quite good. Not necessarily. Previously, I met a distributor for a dairy beverage brand with annual sales of over 100 million yuan, 40 million yuan in working capital, but an annual profit of only 1 million yuan. Such returns are worse than putting money in a bank wealth management product. How should distributors make money? In a course, Mr. Hua Shan from Hua & Hua Consulting said, "For an enterprise to earn profit, there is only one path: innovation." Some might ask, some enterprises don't innovate, yet they still have profits, just meager ones, struggling year after year. That's not really profit; it's the 'manager's wage' society pays them. For example, if you produce paper cups without innovation, but if society doesn't leave you a thin margin, no one will produce cups next year. So, it still has to leave you some profit. You can't die, but you can't thrive either. This is the law of market competition: prices always approach costs infinitely. Only when you innovate and your products are incomparable to others' can you obtain profit. You might understand that whether it's 200,000 or 1 million yuan in profit, it's actually the manager's wage given to distributors by manufacturers on behalf of society. If you don't do it, maybe no one else is willing. Frankly, the term "innovation" is unfamiliar to distributors. Because the products aren't made by me, how can I innovate? I'm just selling and delivering goods; how can I innovate? Who says selling and delivering can't be innovative? The internet giant JD.com is essentially selling and delivering goods. From distributing 3C digital products to full-category distribution, it has become a diversified, comprehensive group. Of course, this is not entirely replicable for a regional distributor. But what I want to express is that any business has room for innovation; the key is whether you have that innovative mindset. Regarding innovation, many people have misconceptions, thinking it must be something unique that no one else has. But that's not the case; the foundation of innovation is replication and imitation. For distributors, replication/imitation + own business characteristics = innovation. Distributor innovation essentially means distributors proactively seeking change. Where exactly to change? First, change in organizational management; second, change in business model. One is internal, the other external. Internal change is about upgrading organizational management to make the existing scale larger. Many distributors have been in business for over a decade, growing from the initial two or three people to the current ten to twenty, or even fifty to sixty. They added people step by step, continuously optimizing performance assessments. Eventually, they formed the current business organization and management system, but whether it's the best is questionable. Frankly, after over a decade of distribution business, distributors have formed a huge organizational inertia. "We've been doing this for so many years; how can it be wrong?" Yes, but why do you only have tens of millions in sales while others have hundreds of millions? Regarding external change, it's about upgrading the business model to bring in more business. In the past two years, New Distribution has reported on some excellent distributors. When discussing next year's plans or expected sales, they rarely mention 10% or 20% growth. Many say they'll double compared to last year. More often, they mention growth of 50% or so. Some distributors even say they'll proactively lower profits next year, feeling that reducing market investment brings a sense of crisis and unease. Therefore, the core of business model upgrading is moving from single-brand distribution to multi-brand, even multi-category distribution. Single-brand distribution is relatively easy; one sales team focuses on one brand. But multi-brand and multi-category distribution, with multiple teams for terminal promotion, poses a huge bottleneck for distributors. Many distributors with single brands, even those with annual sales of 50 million yuan, cannot break through to 100 million yuan, mainly because they don't know how to design their business model for multi-category distribution. Success with one brand doesn't mean you can simultaneously operate 10, 20, or 50 brands. How can distributors break the 'seal'? As mentioned, innovation = replication/imitation + own business characteristics. Replication and imitation mean looking at how other good distributors do it. From August 20 to August 23, at the "2019 China FMCG Conference" hosted by New Distribution, we set up three distributor-specific sessions, with core topics on internal organizational management and external business models. Of course, that's not all. On the evening of the 22nd, we specially invited four excellent distributors for face-to-face discussion and exchange. This is a completely closed-door distributor exchange meeting. See how other distributors do it and innovate. Shaanxi Baihui Trading is a practitioner of innovative organizational management with a platform + small organization (autonomous business unit) model. (Note: Shaanxi Baihui Trading is a comprehensive trading company with 6 branches, mainly covering daily chemicals, oral care, general merchandise, and alcoholic beverages, with over 3,000 SKUs.) We invited Mr. Nie Biquan, General Manager of Baihui Trading, to talk about how he does organizational management. Chongqing Wanhe Food has exceeded 300 million yuan in annual sales, gradually transforming from a single supermarket channel to omni-channel. This trading company, focusing on snacks, maternal and infant products, and grain and oil, achieved organizational innovation through business groups. We invited Mr. Guo Liang, General Manager of Wanhe Food, to talk about how he innovates. Dunjie Supply Chain Management Co., Ltd. Before November 2017, Dunjie was just a traditional second-tier distributor. It took only 6 months to overturn its original business model, and now Dunjie has become a well-known local FMCG B2B platform. We invited Mr. Qiang Huitao, founder of Dunjie Supply Chain, to talk about how he innovated his business model. Of course, in organizational management, Dunjie is also completely different from traditional models. Dunjie's business organization doesn't call staff salespeople but merchandisers. Nearly a hundred merchandisers, 80% of whom are women—how did he design that? Chengdu Rongcheng Yigou, in 3 years, jumped from a "small merchant" with annual sales of 20 million yuan to a "big merchant" with annual sales of 200 million yuan, focusing on snacks and currently expanding into beverages. What can be learned from Rongcheng Yigou's model? We invited Mr. Qin Xian, founder of Rongcheng Yigou, to share his experience.