In 1995, Carrefour entered China, marking the start of the first 30 years of the offline FMCG economy. Now, as 2025 arrives, the second 30 years have officially begun. Facing challenges from new retail formats such as snack stores, e-commerce, and instant retail, how can traditional distributors escape the fate of being mere 'porters' and move from 'surviving' to 'thriving'?

At the 5th Distributor Conference on August 21, Mr. Yang Bofan, founder of Bofan Consulting, delivered a keynote speech titled 'A Practical Guide to Business Improvement for Distributor Upgrading and Breakthrough', sharing real-world data and case studies with the audience.

The following is an edited transcript of Mr. Yang Bofan's speech, compiled by New Distribution for our readers.

At the Crossroads of Two 30-Year Periods: The Past and Current Predicament of Distributors

In the first 30 years, the survival logic for distributors was simple: 'rely on brands to make a living.'

Back then, when visiting supermarkets, buyers would ask, 'What do you do?' and we would say, 'I handle Dove' or 'I handle Xizhilang.' The brands we represented were our labels. The sales team was more like 'porters'—delivering goods to supermarkets, settling accounts, and placing orders, and the job was done.

Thanks to brand dividends and simple distribution efficiency, many distributors could easily turn a profit.

But in the second 30 years, everything has changed. Hard discount stores, chain snack stores, community e-commerce, instant retail... New channels are emerging endlessly, and traditional distributors face three fatal challenges: brands are directly connecting with end retailers, bypassing us; e-commerce platforms are intercepting traffic and stealing profits; and labor, logistics, and warehousing costs keep rising, causing a 'cost collapse.'

Many distributors complain that 'traditional business is hard to do,' but have you ever wondered: why do end retailers across the country prefer to source from Bairong rather than local distributors?

The answer is simple: your product strength and service cannot meet the upgrading needs of end retailers.

Distributors at Bairong will proactively ask, 'Boss, which supermarket do you run? Which category do you handle?' while many local distributors are still 'selecting products based on experience' in their offices.

In the next 30 years, to survive, distributors must first do three things: go out to enhance cognitive ability (learn more, attend more conferences, absorb new information), upgrade product strength (shift from 'representing brands' to 'understanding product assortment'), and build sales capability (transform salespeople from 'porters' to 'profit-generating individuals'). This is the foundation for survival and the starting point for breakthrough.

Seeking Survival First: Three Practical Actions for Distributors to Stay Alive

Many distributors say, 'I want to survive, but I don't know where to start.' Based on our experience serving clients with 30 billion yuan in revenue, we've summarized three core actions.

1. Fight for Fees: Don't Let 'Cost Ratio Cuts' Eat Your Profits

When negotiating with manufacturers, have you encountered this: last year's target was 300,000 yuan, and you could get 20 points in fees; this year, the manufacturer says, 'You can only achieve 200,000 yuan, so the fee ratio drops by 5 points.' If you agree, you'll likely lose money in 2025.

Because when brand sales decline, your fee ratio should not drop but rise—with fewer sales, fixed costs are spread over each item at a higher rate, and cutting the fee ratio only squeezes your profit margins further.

Distributors should proactively communicate with manufacturers to secure reasonable fee support, such as warehousing subsidies, logistics rebates, and promotional fees, to alleviate cost pressure through cost sharing. Remember: don't give up a single point of fees you can fight for—it's your 'cash flow guarantee' for survival.

2. Cut Products: Use 'Quadrant Charts + Labels' to Eliminate Inefficient Products, Don't Let Slow-Movers Occupy Your Warehouse

'I have a lot of products, so why aren't I making money?' This is a common confusion among distributors. The problem lies in 'ineffective SKUs.' Let's look at two sets of real data:

In the best traditional supermarket in a county town, out of 1,537 SKUs, low-margin, low-sales products accounted for 47.56% but contributed only 15.37% of sales—meaning nearly 48 out of every 100 products are 'occupying warehouse space without making money.'

In the Guangdong flagship store of a leading domestic snack chain, out of 3,160 SKUs, high-margin, high-sales star products numbered 820, accounting for 25.95%, yet contributed 54.6% of sales—fewer but better products naturally lead to stronger profitability.

Distributors should learn to use 'product quadrant charts' to screen products and also label them: Category 1 (never out of stock), Category 2 (generally not out of stock), Category 3 (occasional stockouts allowed), Category 4 (eliminate, do not purchase), and Category 5 (new products within three months).

At the beginning of each month, conduct a data review, decisively clear out Category 4 products, and only bring in Categories 1, 2, and 5, so your product structure is 'light and agile.'

3. Master Product Promotion: Use 'Customer Quadrant Charts' for Precise Matching, Boosting New Product Success Rate by 49%

'I always fail when promoting new products, so I'm afraid to try again'—this is a common anxiety among distributors, but in fact, 'not promoting products' is more dangerous, as you lose value to both customers and brands. Failed promotions are not because 'you shouldn't promote,' but because 'you didn't promote the right way.' Using 'customer quadrant charts' can solve this problem.

We divide customers into four types: star customers (high margin, high sales), volume customers (low margin, high sales), profit customers (high margin, low sales), and rectification customers (low margin, low sales). Product promotion should follow three principles:

Prioritize selling new products to customers in the first and second quadrants (star and volume customers), as these customers have strong purchasing power and high repurchase rates, leading to the highest success rate for new products.

Star products in the first quadrant (high margin, high sales) should be sold to all customers to maximize profitability.

Volume products in the second quadrant (low margin, high sales) should be promoted mainly to customers in the third and fourth quadrants to enhance customer loyalty.

For example, Sitong Guofa, a company I previously served, used this method to achieve a 49% success rate for new product promotions in 2024. Another distributor in Xiaogan saw a 10-fold year-on-year increase in store sales through precise product promotion. Following this model, without changing anything else, you can increase sales by at least 15%.

From 'Surviving' to 'Thriving': What Should Distributors Do?

'Surviving' is just the first step. To 'thrive,' distributors must break through cognitive boundaries, with the core being to enhance 'information capability.' Cognitive ability is your brain; information capability is your heart. When the heart pumps enough blood, your hands and feet can move. Specifically, do three things:

1. Restructure Product Mix: The 433 Structure Is the 'Profit Code,' Don't Blindly Pursue Private Labels

In the past two years, 'expanding categories boosts performance' worked, but why not this year? Because you haven't understood 'product structure.' Thriving large distributors share a common feature: the 433 product structure.

40% new products: New products bring fees and incremental growth, serving as the core source of profit. For the snack food distributor we serve, new products account for 40% of sales, with profits 15% higher than peers.

30% traffic drivers: Used to attract customers and capture channel share, keeping the ratio within 30%—snack stores can even achieve 20%, significantly improving profitability.

30% private labels: Many distributors want to 'make big money' with private labels, but 90% end up losing money. Think about it: if you can't successfully promote products made by others, how can you succeed with your own labels? First, do well with new products and traffic drivers, then consider private labels.

2. Enhance Information Capability: From 'Looking at Reports' to 'Using Data,' DSS Is Your 'Chief Information Officer'

99% of distributors still understand 'information capability' as 'using ERP and WMS systems,' but these are only digitalization 2.0—ERP manages processes, WMS manages warehousing and distribution, and in the end, you get a pile of reports, ranging from hundreds to thousands, and you don't know which ones are useful.

What Bofan Consulting does is 'help you understand reports and prescribe solutions': through DSS (Decision Support System), we extract key information from BI's vast data—such as 'which products need restocking, which customers should be offered new products, and which channels need more distribution'—and turn it into actionable decisions.

For example, when a salesperson visits a supermarket, they open ODSS (Operational Decision Support System), enter the supermarket's name, and it shows: 'This supermarket needs 3 new products within 90 days, 30 first-quadrant products are not yet distributed, and you need to select 5 this time.' It even reminds, 'Last time you sold slow-moving products here; this time, don't place another order.'

We also give products an 'ID card.' For instance, a certain small gluten snack has the ID '1-1-21': the first '1' is the product label (never out of stock), the second '1' is the product quadrant (high margin, high sales), the third '1' is the channel label (key for supermarkets), and '21' means low distribution rate (2) and high repurchase rate (1)—seeing this ID, you know to increase distribution in supermarkets, and sales and margins will naturally rise.

3. Business Model Positioning: The Future Super Distributor Is an 'Ecosystem-Level Distributor'

When you reach annual sales of 300-500 million yuan, it's time to think about 'what type of distributor I want to be in the next 5-10 years.' There are three core roles in the future:

Brand operators: Replace the brand's sales department, do omnichannel operations, and shift from 'selling products' to 'building brands.'

Supply chain service providers: Offer 'one-stop' full-category supply to end retailers, solving their 'difficulty in finding products.'

Terminal service providers: Act as the 'outsourced operations brain' for retail, helping millions of small stores with product selection, display, and marketing, becoming the support behind them.

The future super distributor is not 'the largest distributor' but 'an ecosystem-level distributor with chain-like growth'—possessing brand operation capabilities while providing supply chain and terminal services, forming their own business closed loop.