---
title: "Another Round of Boring 'Cutting Out the Middleman'"
description: "The first is the 'bare procurement + private label' model represented by Sam's Club and Pangdonglai, which will sweep offline retail in the coming years and become the mainstream for large retailers. This imposes new requirements on upstream suppliers, whether manufacturers or distributors. The second is instant retail, as the last big piece of the e-commerce pie, which will also enter a rapid growth phase. For example, Meituan's fastest-growing business segment will likely be Xiaoxiang Supermarket, which follows a model similar to Sam's Club, also using 'bare procurement + private label'."
author: "苗庆显"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-06-03"
categories: "Brand Marketing, Dealer Operations, E-commerce & Instant Retail, Retail Formats"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/5lQtIux5wU9RSu_mhQDy4A"
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citation: "苗庆显. “Another Round of Boring 'Cutting Out the Middleman'.” New Distribution, 2025-06-03. https://xinjignxiao.com/en/articles/another-round-of-boring-cutting-out-the-middleman-d0c08081/"
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---

# Another Round of Boring 'Cutting Out the Middleman'

> The first is the 'bare procurement + private label' model represented by Sam's Club and Pangdonglai, which will sweep offline retail in the coming years and become the mainstream for large retailers. This imposes new requirements on upstream suppliers, whether manufacturers or distributors. The second is instant retail, as the last big piece of the e-commerce pie, which will also enter a rapid growth phase. For example, Meituan's fastest-growing business segment will likely be Xiaoxiang Supermarket, which follows a model similar to Sam's Club, also using 'bare procurement + private label'.

**Source** | Laomiao Tears Marketing

The first is the "bare procurement + private label" model represented by Sam's Club, Pangdonglai, etc., which will sweep offline retail in the coming years and become the mainstream for large retailers. This imposes new requirements on upstream suppliers, whether manufacturers or distributors.

The second is instant retail, as the last big piece of the e-commerce pie, which will also enter a rapid growth phase. For example, Meituan's fastest-growing business segment will likely be Xiaoxiang Supermarket, which follows a model similar to Sam's Club, also using "bare procurement + private label".

You see, whether online or offline, there is a tendency: retailers go directly to manufacturers. The original distributors are being abandoned again.

Thus, another vigorous round of "disintermediation" has begun, which is quite—boring.

This is already the third round of disintermediation.

The first occurred in the late 1990s and early 2000s, with the rise of large international KAs, local KAs, and other chain stores such as Gome, Suning, Carrefour, Walmart, Suguo, Laobaixing, and Dashenlin.

At that time, many retail enterprises required direct contracts with manufacturers and direct supply. If manufacturers couldn't solve distribution, they would find a local distributor responsible only for delivery, with everything else handled by the manufacturer.

Many manufacturers established KA departments to directly interface with large retailers, but much work still required distributor assistance, achieving a division of labor balance.

Back then, the internet was not developed, so that round of disintermediation didn't cause much public outcry and transitioned smoothly. Manufacturers, retailers, and distributors each got what they needed, barely a win-win.

The second round of "disintermediation" occurred after 2013, and this time it was more confrontational:

The rapidly developing e-commerce platforms turned the table, claiming to eliminate middlemen and completely destroy distributors' livelihoods.

Distributors trembled for five or six years, only to find nothing happened. First, the bulk of social retail is still offline, which is the foundation; second, after catching their breath, distributors realized they could also play online and do it well, so there was nothing to panic about.

Due to the development of e-commerce platforms, a large number of distributors specializing in e-commerce emerged, with further subdivisions into cross-border, livestream, and private domain distributors.

In fact, after the second round of "disintermediation", the number of distributors in the market greatly increased, at least several times or dozens of times. In 2024, there are over ten million livestream hosts, each essentially a distributor, though their business models differ greatly from traditional distributors, with some retail functions and mostly small scale. Additionally, there are millions of stores and merchants on platforms like 1688, Taobao, Tmall, and Pinduoduo.

Now the third round of "disintermediation" has arrived, different from the previous two, causing many distributors to panic again, and the public discourse is heating up. It's necessary to discuss this.

Laomiao's first feeling is boredom. Why boring?

Because focusing on "disintermediation" is the wrong focus. If your focus is wrong, your strategy will be wrong. It's not that the market will eliminate you; you'll doom yourself.

Whether distributors are the evil middle link deserving punishment, or the mainstay that is irreplaceable, are both false propositions.

The essence of these three rounds of so-called disintermediation is not "reducing intermediate links", but **changes in commercial infrastructure leading to a reorganization of the supply chain from functions to structure**.

Look at this flowchart: doing business involves three things: logistics, capital flow, and information flow. The so-called business structure is the flow structure of goods, funds, and information.

Five marketing flows in marketing channels

In the first "disintermediation", large supermarkets rose rapidly. They are closest to consumers, have greater information leverage, and want asset-light operations, so they transfer capital pressure and operating costs upstream as much as possible. Distributors are generally small and unstable, so manufacturers must be brought in.

That's the essence of the first round of "disintermediation". Of course, the result was not disintermediation but an increase in distributors specializing in supermarket operations.

It also promoted the development of deep distribution, indirectly spawning a large number of county-level distributors and township-level wholesale-retail integrated stores.

The second round of "disintermediation" is familiar to everyone because of the rise of e-commerce platforms. Adding the platform service link directly created a big middleman.

Although manufacturers can do B2C directly on e-commerce platforms, the scale is small and cannot grow large. More often, they distribute through e-commerce channels.

So the result was that while some traditional distributors were eliminated, the platform link was added, giving birth to more distributors of more types. Channels became more fragmented, and the number of distributors expanded many times.

That's the essence of the second round: internet platforms intervened, and products went from store to home.

What is the essence of the third round of "disintermediation"?

Both offline and online retailers are gradually abandoning the "selling shelf space" and "selling ads" models and returning to being the main retail entity. Their requirements for "asset-light" and "expansion" are lower, but their requirements for "high turnover", "profit margin", "return on investment", and "customer experience" are higher.

So retailers seek cooperation with manufacturers. The product structure brought by the original real estate retail—many and messy barcodes, many suppliers—can no longer match current retail requirements.

Therefore, a large number of products will be delisted and eliminated.

Originally, large supermarkets with tens of thousands of barcodes only need a few thousand; B-class supermarkets with thousands of barcodes only need seven or eight hundred.

**Eliminating over 90% and adding 10-20% will be routine in the coming years**.

Instant retail is the same. Whether online or offline, once you abandon real estate retail and advertising retail and return to the trade area you can cover and the people you serve, your product structure will be completely different, and the number of products will drastically reduce.

So the essence of this round of "disintermediation" is: **the return of the true retail entity from real estate retail and advertising retail, causing a huge adjustment in product structure and supply chain supply forms**.

Old man Kotler said that the form of retail doesn't matter; what matters is function.

Other channel links are the same. Don't look at form, don't look at whether it's "disintermediation" or an increase in middlemen. **Look at function.**

**New structures will definitely re-match functions. The functions of each link in the channel chain will be re-divided. Those who cannot take on new functions and cling to old ones will naturally be eliminated**.

Let's look at the nine functions of traditional middlemen:

  * Information flow management: information collection, communication and dissemination, negotiation, promotion
  * Goods flow management: order tracking, product ownership transfer, product storage and transfer
  * Capital flow management: bearing payment and advances, facilitating transactions and collections

When new retailers no longer seek rapid expansion and don't need advances, the traditional distributor's function in capital flow is weakened.

When retailers don't need as many products, procurement is more planned, and they even start deploying front warehouses, the traditional distributor's logistics function is weakened.

When retailers regain retail functions, master customers, understand trade areas, and even use data to operate customers, then most traditional distributors' promotion and information functions will be instantly crushed.

When a traditional distributor loses its place in the "three commercial flows" and has no standout among the nine functions, it will inevitably lose its position and be eliminated.

A few days ago, I communicated with a big name in the distributor circle, Brother Bao (Fan Zhongbao): in the future, over 90%, even over 95% of traditional distributors will be eliminated. It's not disintermediation that eliminates them, but their loss of function and competitiveness in the new business structure.

So is this round of "disintermediation" only terrifying pressure and no opportunity? Is it just continuously clearing out products and distributors, without giving distributors new opportunities?

If you look at it from a functional perspective, everything is clear.

As mentioned earlier, the essence of this change is the return of large retailers' retail functions. In goods management, warehousing and distribution, payment, consumer communication, and product promotion, large retailers take on more functions, inevitably compressing suppliers' functions and thus their living space. The opportunities that arise include:

1. Large retailers can take on many functions, but some convenience stores and mom-and-pop shops cannot, yet the market demands the same from them. So distribution, technical services, and goods management assistance for small stores become a big business.

Currently, same-city unified distribution distributors are developing rapidly nationwide. But such distributors need scale effects; they are still in the early stage, and there will be many mergers in the future, similar to the pharmaceutical distribution field where the top four occupy half of the national market share.

Distributor friends in this track have a long way to go.

2. Large retailers doing bare procurement can improve efficiency for products with high sales volume and fast turnover. But for small-category products, long-tail products, and other special products, direct procurement by retailers is not efficient. Regional market operations for such products still need to return to distributors. Just as specialized supermarket operation distributors emerged before, there will be distributors specializing in operating for Sam's Club and Pangdonglai.

These are **specific retail operation distributors**.

3. Some special products require a high degree of professional market operation. Retailers handle many products; for fresh produce, daily necessities, and ordinary food with lower professional requirements, efficiency can be improved. But for special products like festival products, baijiu, and high-end nutritional products, more professional teams are needed to assist, which is also an opportunity for distributors.

These are **specific category distributors**.

4. Some specific channels, such as large group buying, category killers, private domains, and livestream e-commerce, are not covered by general large retailers or instant retail platforms. These are also future battlegrounds for distributors.

These are **specific channel distributors**.

5. Look at whether the supply chain becomes longer or shorter after retailers take on more functions.

Many people think that retailers bypass middlemen to go to manufacturers, so it must be shorter.

But the correct answer is longer.

Retailers bypass distributors because distributors didn't perform that function well, not because the function is discarded. The work still needs to be done; retailers just do more.

If you don't believe it, check how many employees Pangdonglai has in one store compared to a similar-sized Auchan store in the past.

The longer part is that the original customer-to-store has become product-to-home, the distribution chain is longer, adding links like goods transfer warehouses, community distribution, and home or parcel station delivery. Who does this work? We see delivery riders or platforms doing it, but behind them are business entities.

Meituan alone has over 7 million riders, most of whom belong to outsourcing companies, with thousands nationwide. The largest has already gone public on Nasdaq.

Their function is actually a type of distributor distribution function. The difference is that distributor salespeople drive cars or tricycles to deliver goods to terminal stores, while outsourcing company riders deliver goods to homes.

This distributor network built by Meituan through outsourcing is one of Meituan's core competitive advantages. While traditional distributors have been lamenting in recent years, Meituan's distributors have made a fortune with Meituan's rapid growth, but those who make money don't talk.

Meituan's outsourcing companies also assist with ground promotion and technical services besides rider management.

These are **specific service distributors**.

Of course, the opportunities generated by the new supply chain structure are far more than the above. Others include finding specific product operations, operating around a specific expertise, and trend product operations, all of which will bring new opportunities.

Look at the market by essence, look at what's behind the changes, and don't keep staring at whether distributors are eliminated or not.

This boring disintermediation will have a fourth and fifth round; they are all superficial. If it impacts your business, don't be anxious; if it doesn't, don't be complacent.

Otherwise, whether or not the middle link is eliminated, you will be eliminated.


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## Citation metadata

- Publisher: New Distribution
- Author: 苗庆显
- Published: 2025-06-03
- Canonical: https://xinjignxiao.com/en/articles/another-round-of-boring-cutting-out-the-middleman-d0c08081/
- Original source: https://mp.weixin.qq.com/s/5lQtIux5wU9RSu_mhQDy4A

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