---
title: "A Wholesaler with Only a 500-Square-Meter Warehouse Achieves 30 Million in Turnover"
description: "Lao Qin, a typical shrewd businessman, runs a wholesale business with annual sales exceeding 30 million yuan, operating from a storefront of less than 100 square meters and a warehouse of less than 500 square meters. He achieves this through strict inventory control, focusing on small and new brands, and leveraging his flexibility as a secondary distributor, arguing that such middlemen will persist due to market imperfections and human nature."
author: "黄润霖"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-09-20"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/JMtzII2f5W4McySIA0XyBQ"
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---

# A Wholesaler with Only a 500-Square-Meter Warehouse Achieves 30 Million in Turnover

> Lao Qin, a typical shrewd businessman, runs a wholesale business with annual sales exceeding 30 million yuan, operating from a storefront of less than 100 square meters and a warehouse of less than 500 square meters. He achieves this through strict inventory control, focusing on small and new brands, and leveraging his flexibility as a secondary distributor, arguing that such middlemen will persist due to market imperfections and human nature.

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Lao Qin is a typical businessman: shrewd, capable, and always coming up with ideas. Starting from a small storefront, working hard from scratch, he now runs a shop with annual sales turnover exceeding 30 million yuan.
Lao Qin's role is more like a "profiteer" from the early reform era, buying low and selling high, but he is not an "official profiteer" but a "private profiteer." Because of this, many manufacturers define him as a "secondary distributor."
**His business has three characteristics:**
First, he doesn't aim for scale; he doesn't stockpile large quantities to get lower prices. More often, he sources goods from large channel players to take advantage of secondary policies.
Second, he avoids major industry brands, focusing instead on product categories and sales trends. His partner outlets rarely face harassment from manufacturers investigating cross-regional sales or price undercutting.
Third, he excels at cost control, especially warehouse costs. With a team of only 8-9 people including warehouse staff, storefront, and drivers, operating from a storefront of less than 100 square meters and a warehouse of less than 500 square meters, he achieves annual sales turnover of 30 million yuan with profit margins above 10%.
Lao Qin says that with only 500 square meters of warehouse, he can achieve 30 million in turnover, with inventory turning over three times every two months on average.
How does he do it? He has several strict rules for the warehouse: total inventory growth must not exceed 5% of the previous year-end inventory; if there is a risk of overstocking, he would rather give up sales than break the 5% limit; the warehouse can only store mature products, and monthly purchases must not exceed the previous month's purchases; if they do, he must approve it; for new products, initial stock must not exceed 20% of the total order quantity.
For 80% of new product orders, orders are confirmed with long-term downstream outlets before placing the order. Many new products are transferred directly to outlets for distribution upon arrival, which is called "new products don't touch the ground." If a new product doesn't sell well at the terminal, Lao Qin can stop quickly and clear inventory.
I asked him where the 5% and 20% figures came from. Lao Qin chuckled and said he made them up, but having standards is better than having none.
The offline distributor community can be roughly divided into three categories:
One is channel distributors focused on outlet development and brand maintenance. They have a solid sales team and market maintenance and expansion capabilities, making them the type favored by manufacturers.
Another is store retailers focused on terminal sales, relying on store location, consumer promotions, and in-store sales skills to increase sales.
The third is Lao Qin's type: either vaguely defined in corporate customer management systems or completely outside the system, acting as middlemen who buy and sell to dominate the market.
But Lao Qin never thinks this approach will become outdated. The internet only changes how information is transmitted, not human nature. As long as the domestic market is not fully standardized, his kind of "middleman" will always have room to survive.
**01**
Now there are FMCG B2B models being tested on a large scale. Even if building materials follow suit in the future, local warehousing won't beat him.
Not to mention that these platforms use subsidies to attract users, hiding many costs. In terms of attack strategy, these platforms will definitely target major brands to enhance their credibility.
If they start with small brands, they won't be as familiar as he is. Even if platforms become established, they can't unify procurement for all brands because once a monopoly forms, platform operators will raise prices, and small brands will be the first to leave.
In wholesale, you must seize small and new brands. As long as Chinese manufacturing doesn't transform into Chinese creation, patents aren't fully protected, and the environment for small enterprises isn't thoroughly improved, imitation and copycat products cannot be eliminated.
In an unregulated market, small and medium enterprises can only use short-term tactics like pricing to impact the market, so channel development can't follow the 4P model. The result is broad but shallow coverage, with opportunities for those who know where to fish. This is the wholesaler's opportunity.
**02**
Demand for low- and mid-end products persists, especially in counties, towns, and villages.
As long as the state doesn't fundamentally solve urban-rural and wealth disparities, in a market as deep as China's, there will always be room for secondary distributors. Now the slogan "consumption upgrade" is everywhere, but we need to clarify whose consumption is upgrading? Is it the elite white-collar workers in first- and second-tier cities, or the townships below third- and fourth-tier cities?
Even today, China's urbanization rate has just passed 50%, and full urbanization will take considerable time. In a market as layered as China's provinces, cities, counties, townships, and villages, the further down you go, the more you need secondary distribution.
Small and new enterprises can only reach the prefecture level at best; most expand through provincial operations. Can a provincial distributor cover townships? You can imagine how that works.
**03**
Wholesalers can make money doing the work, but platform companies doing the same work may not. There's an issue of "owner absence" or the "magic of the boss mentality."
Secondary distributors can operate irregularly, but platform companies can't risk big losses for small gains, nor do they have the ability to exploit loopholes. The individual operator style of secondary distributors is flexible and agile. The internet changes information equality but not human nature.
Secondary distributors can use local rules to reduce costs in various ways, while platform companies find it hard to cross corporate bottom lines to compete on equal footing.
Platform companies must pay the cost of promoting market standardization, and that cost is borne by themselves. Secondary distributors are the most resilient under chaotic rules. They like irregular markets and excel at urban guerrilla warfare and swamp attrition.
In my view, the wholesaler tier will remain resilient in our distributor system.
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**Agenda**
09:00-09:30 Registration
09:30-09:35 Host opening
09:35-10:05 2016 China FMCG Industry Trend Analysis Report - Zhao Bo
10:05-10:25 FMCG Enterprise Transformation Strategy and Path - Liu Chunxiong
10:25-10:45 Opportunities and Challenges from FMCG Channel Reform - Field 365 CEO Liu Zhao
10:45-11:25 Alibaba Retail Link Full Empowerment - Alibaba Retail Link Guo Kunkun
11:25-12:00 Roundtable Forum - Brand Transformation: Improvement vs. Reconstruction? (Guests TBD)
12:00-13:30 Lunch
13:30-14:00 Distributor Transformation: City Distribution Trends - Weijie City Distribution CEO Wang Qi
14:00-14:30 Roundtable Forum - Why Should Distributors Transform into Logistics?
14:30-15:00 Detailed Explanation of Zhongshang Huimin's One Machine, Two Wings Strategy - Zhongshang Huimin VP Su Xiaoxin
15:00-15:30 Detailed Explanation of Zhanghe Cloud Factory Strategy - Zhanghe Tianxia Yang Lixiang (Content TBD)
15:30-16:00 Supply Chain Finance as Lubricant for B2B Driving Traditional Business - 51 Order CEO Chen Xian
16:00-16:30 2B Investment Principles and Approaches - ZhenFund Founder Xu Xiaoping (Guest TBD)
16:30-17:00 Small Retail, Big Opportunity: China's Retail Transformation and Upgrade - Yurun Group E-commerce GM Wang Jianfeng
17:00-17:30 Roundtable Forum - Who is the King of FMCG B2B Models? (Guests TBD)
18:00-20:00 Dinner
For manufacturers and friends considering transformation, this grand event is not to be missed. Interested friends can long press the QR code below or click "Read Original" to register.
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