Let me start with an unpopular statement that will surely become a consensus in the future: distributors will not disappear, but the number of distributors will definitely decrease significantly. Not just a little, but a lot. This judgment carries no emotion; it simply reflects that the world of China's FMCG has changed. Many distributors have already felt it—working from dawn to dusk running terminals, chasing payments, and pushing inventory, yet the decline cannot be stopped, and profits remain elusive. More and more distributors are beginning to understand that the path of exchanging hard work and diligence for growth has reached its end. Everything now is involution, but competitors won't be the first to be rolled up; instead, it's your profits, your cash flow, and finally your family wealth that get rolled up first. This is not an article to dissuade you, nor does it peddle anxiety. Let's calmly and rationally explain three questions:

  1. Why will the number of distributors inevitably decrease?

  2. Which distributors are suitable to exit, and which are suitable to continue?

  3. How to exit in an orderly manner to preserve the fruits of our hard work over the years? Finally, leave a door open: exiting the trade is not exiting life. How should the wonderful second half of life begin? Why will the number of distributors inevitably decrease significantly?**** Many attribute the reasons to new retail, live streaming, e-commerce, and instant retail. These are all correct, but insufficient. They are more phenomena, superficial causes, not the essence. The true essence is: transactions become lighter, fulfillment becomes more standardized, and retail becomes more concentrated. When these happen simultaneously, distributors as the middle layer will inevitably be compressed. We can understand the changes over the past forty years until today in a very simple way: In the past, the market expanded rapidly, consumers were many, goods were insufficient, and information was opaque. At that time, distributors had high value—whoever could distribute goods faster could make money. But today is the opposite: oversupply, brand surplus, product surplus, and channel surplus. The market no longer rewards "who can distribute more" but "who can manage better, calculate better, and stabilize better." Moreover, in terms of daring to engage in involution, capital, as the party with "the most money," is certainly beyond the reach of traditional distributors. 1. The information asymmetry advantage distributors had in the past is now just a default feature of internet platforms**** One of the biggest moats distributors had in the past was information asymmetry. In this regional market, only you knew which single product might rise, which channel was good, which terminal could absorb volume, and which manufacturer's policy could be negotiated for space. But today, with platform-based transactions, digital ordering, direct factory procurement, and price transparency, information is just a public resource. As long as you pay a certain cost, anyone can access this information. When information asymmetry is no longer scarce, the middle-layer distributors must create new scarcity: operational capability. This is why more and more distributors are frustrated: "I know quite a lot, but I earn less and less." 2. Fulfillment capabilities are standardized and scaled; fast delivery is no longer a skill of the few**** In the past, distributors had warehouses, vehicles, and routes, which meant efficiency and barriers. Today, integrated warehousing and distribution, unified warehousing and distribution, localized fulfillment, instant delivery... have turned part of "capabilities" into "infrastructure." What are the characteristics of infrastructure? It levels overall efficiency upward, spreads costs, and raises barriers. When delivery is no longer the patent of a few, distributors must transform from movers to organizers: organizing categories, services, terminals, and sell-through. This is the harder and more valuable part. 3. Retail concentration and terminal evolution: the middle no longer needs so many "repetitive hands"**** Retail is becoming more concentrated, chains are getting stronger, and direct factory procurement is increasing, so the market naturally rejects multi-tier structures. Because the more tiers, the higher the cost, the more chaotic the pricing, and the lower the efficiency. You will see a trend: the middle-layer distributor group will not die out, but it will differentiate—numbers decrease, capabilities upgrade. The distributors that remain will either become true operators or become more segmented, professional service providers. Those still stuck in the old playbook of "pressing inventory + distributing + rebates + credit terms" will inevitably be abandoned by the times. So the decline in the number of distributors is not a pessimistic view, but a structural transformation, upgrade, and repositioning of this group. Suicidal involution is meaningless: Those who should exit, exit; those who should advance, advance**** I have always believed that the biggest tragedy for distributors is not exiting. It is when they are clearly not suitable to continue charging forward, yet they still force it; when they should defend the city, they are still fighting a war of attrition. That state of being unable to retreat and unable to advance is the most damaging—it hurts profits, cash flow, and finally family wealth. So, the second half for China's FMCG distributors is inevitably a diversion. 1. Those suitable to continue are operational distributors**** The core of a systematic distributor is not scale, but capability. Can you make a business more stable, more controllable, and more replicable? Every distributor boss can use the following five dimensions for a self-test:

Do you have the ability to create a category structure, rather than relying on a few big single products to survive?

Can you use data to manage inventory, expenses, and sell-through, rather than relying on gut feeling?

Do you have the ability to promote new products, so that stores are willing to push, salespeople are willing to explain, and consumers are willing to repurchase?

Can you systematize warehousing, distribution, replenishment, and turnover, rather than relying on manual labor?

Do you have organizational capability, so that the sales team doesn't rely on the boss personally supervising? If you can fill these gaps, you should not exit. What you need to do is upgrade from a distributor to a regional operator: fewer but stronger, refined and stable, replicable and sustainable. 2. Those who can't keep up with involution, don't want to, and have other options are suitable for orderly exit Exiting is not failure; exiting is a form of maturity. Especially when you find that continuing to roll up doesn't roll up others, but rolls up your own fruits of victory. What signals are most dangerous? When profits no longer depend on capability but on luck, such as betting on a brand or getting a big policy; When growth increasingly relies on overdrawing, such as pressing inventory, credit sales, advancing funds, and extending credit terms; When the company increasingly relies on the boss personally stepping in to stabilize the situation; When the balance sheet becomes increasingly fragile, such as high inventory, high receivables, low cash, and risks on the verge of breaking out; When the boss worries every day that if prices collapse or payments break, the whole plate will flip; If these situations occur, then continuing to advance is no longer bravery, but a gamble of fate. At this point, the dignified and wise choice is to exit in an orderly manner, finding ways to preserve the fruits of years of hard work. Orderly Exit Is a Battle of Asset Preservation and Interest Transfer**** The hardest things about exiting are two: one is reluctance, and the other is not knowing how to exit. Many want to exit but fear it, so they drag it into chronic blood loss, and when they finally cut, it's even worse. I suggest that distributor bosses who want to exit must treat it as the most important project, with goals, rhythm, and a handover checklist. Step 1: Stop the bleeding first—don't use meaningless actions to prove you're still fighting.**** The most common mistake during the exit period is: unwilling to give up, so you continue to increase investment. Distribute more, do more promotions, push more sales... The feeling of "I'm trying" brings a false sense of fulfillment. But in the era of stock, some efforts become investing the most precious cash flow into a war of attrition. The core of stopping the bleeding is just one sentence: convert all actions into cash flow; if it doesn't improve cash flow, try not to do it.**** Step 2: Clear the accounts—inventory and receivables are the two biggest black holes for exit losses.**** The real battlefield for exit is not the market, but the books. What you need to do is not "press more goods in," but "extract the risks out." Inventory should be layered: fast-moving items, realize cash as soon as possible; slow-moving items, negotiate exchanges, buybacks, or discounts to clear; dead stock, handle it once and for all, don't let it drag into a bigger pit. Receivables should also be layered: those that can be collected, rather give up profit for cash; those hard to collect, use goods, rebates, or resource swaps; bad debts, institutionalize loss-cutting, don't let sentiment drag you down. During the exit period, remember one sentence: cash is more important than face, certainty is more important than fantasy.**** Step 3: Handle the team—switch the organization from "offensive" to "handover" mode.**** Exiting is not a one-size-fits-all layoff, but switching the organization from combat mode to handover mode. You should retain at least three capabilities: financial settlement, risk control, and customer handover. Core backbone should be given a way out, the business team should be packaged around customer handover, and support positions should be contracted as early as possible. The worst thing about exiting is "hearts scattered, customers lost, payments broken," then it's not an exit, it's a collapse. Step 4: Monetize market position and influence—don't treat it as a favor, treat it as an asset.**** The most regrettable thing for many old distributors is that after years of building channel networks, they never cashed in a penny. In fact, it can be monetized:

  1. Business transfer, such as packaging and handing over customer and terminal networks;
  2. Business merger and restructuring, exchanging for equity, dividends, or consulting fees; transforming into a service provider, operating self-built and self-purchased warehouses, offices, vehicles, and other assets;
  3. Establishing a category project company, transforming into a light-asset project, such as changing from a distributor to a service provider in your advantageous category. The highest level of exit is not disappearing, but switching from heavy-asset fighting to light-asset rent collection. Exiting the trade is not lying flat It's just dividing the battlefield of life into two halves**** The first half for distributors is won by courage, diligence, and expansion; The second half for distributors is won by investment, monetization, and risk control. So orderly exit is not "I quit," but that you are finally willing to accept that life doesn't need to prove itself in the hail of bullets of frontline entrepreneurship forever. Distributors should learn to divide the battlefield into two halves—one half continues to operate, the other half protects the balance sheet; one half fights, the other half defends the city. So, what should bosses do after exiting? When you no longer charge personally, how should wealth be arranged? What new opportunities deserve attention? How to preserve and increase the value of the fruits of victory, so that the second half of life for bosses is still wonderful? In the next article, we will specifically write—after exiting, how distributors switch from a "business brain" to an "asset brain." Bidding farewell to youth and involution is not the end. It just puts your strength into a place that is more long-term, more certain, and more likely to win new victories. At the same time, I want to tell you in advance one more important thing: during the 6th China FMCG Distribution and Retail Conference in Chengdu in March 2026, we will specially hold a closed-door session on "Distributors' Personal Wealth and Asset Allocation"! When the industry moves from expansion to differentiation, from scale competition to capability competition, from the price difference era to the efficiency era, every distributor must face an increasingly clear but long-avoided question:
  • Can the assets you've accumulated over a decade of hard work be preserved in the future?
  • How should your cash flow, inventory, real estate, warehouses, vehicles, and floor funding be allocated?
  • Should you continue to charge forward, or stabilize the basic plate? Where is your true safety line for family wealth? To make the answers truly actionable, we will invite practical distributors, financial and legal experts, risk and asset restructuring experts, and successful transformers to discuss and provide actionable paths, so you can avoid pitfalls and detours, truly live more steadily, and go further! Ticket consultation: Zhu Xiaoqing