---
title: "Big Distributors Planning to Expand Channels? Hold On! Even with Strong Strength, Take It Easy!"
description: "Big distributors are the elite in the distribution sector, with annual sales typically above 10 million yuan, even exceeding 100 million. They have strong financial resources and channel control, but expanding into new channels without adequate preparation can lead to failure. This article uses two cases to illustrate the risks and provides advice on how to expand channels more prudently."
author: "刘雷"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-10-07"
categories: "Dealer Operations"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/big-distributors-planning-to-expand-channels-hold-on-even-with-strong-st-32c62788/"
markdown: "https://xinjignxiao.com/en/articles/big-distributors-planning-to-expand-channels-hold-on-even-with-strong-st-32c62788.md"
original_source: "https://mp.weixin.qq.com/s/dn3u5ApdxRfJQ3XT8UiPTA"
translation: "https://xinjignxiao.com/zh/articles/%E5%A4%A7%E5%95%86-%E5%87%86%E5%A4%87%E6%89%A9%E5%BC%A0%E6%B8%A0%E9%81%93-%E5%88%AB%E5%BF%99-%E5%B0%B1%E7%AE%97%E5%AE%9E%E5%8A%9B%E9%9B%84%E5%8E%9A%E4%B9%9F%E8%A6%81%E6%82%A0%E7%9D%80%E7%82%B9-32c62788.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/big-distributors-planning-to-expand-channels-hold-on-even-with-strong-st-32c62788/"
citation: "刘雷. “Big Distributors Planning to Expand Channels? Hold On! Even with Strong Strength, Take It Easy!.” New Distribution, 2016-10-07. https://xinjignxiao.com/en/articles/big-distributors-planning-to-expand-channels-hold-on-even-with-strong-st-32c62788/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Big Distributors Planning to Expand Channels? Hold On! Even with Strong Strength, Take It Easy!

> Big distributors are the elite in the distribution sector, with annual sales typically above 10 million yuan, even exceeding 100 million. They have strong financial resources and channel control, but expanding into new channels without adequate preparation can lead to failure. This article uses two cases to illustrate the risks and provides advice on how to expand channels more prudently.

**Formerly "FMCG Distributor Professional Management Consulting" renamed to New Distribution**
**Click "Read Original"** to register.
30+ industry experts, 100+ B2B platform founders, 800+ manufacturer friends, gather in Fuzhou to discuss the Internet transformation path of the FMCG industry.
Big distributors are generally the best in the distributor community, with minimum annual sales of over 10 million yuan, and some even exceeding 100 million. They are the leading players in their local industries, even famous across the province or the whole country. Such distributors handle multiple first-tier brand products, and some even monopolize a category. They have strong financial resources and strong channel control, thriving in their familiar channels, and are also occupiers of limited resources.
Some distributors, relying on these resource advantages, are tired of the repetitive and dull operation of old categories, and have successively tried new high-margin industries or trend industries. Some are just dabbling, some are investing blindly without direction, and some are seriously disrupting the market. New channels, new models, new rules of the game, everything starts from scratch. Once they fail, at the least they lose money and exhaust their resources; at the worst, the expansion fails disastrously and their foundation is shaken. Of course, many big distributors, through mature operation and promotion, have successfully completed channel expansion and ushered in the second spring of their careers. The key is: are you ready? If not, take it easy!
**It's All Impulse's Fault**
**Case 1:**
In Province A, there was a distributor of maternal and child products who was quite large. The company's leader, General Manager Zhang, was well-known in the prefecture-level city, with annual sales of over 20 million yuan, and almost monopolized the maternal and child store channel. As the company grew and its reputation increased, many manufacturers came to visit. General Manager Zhang was also a person of temperament, bold in action. Last year, unable to resist the "praise" of a sanitary napkin company's director, he cooperated to operate a new sanitary napkin product in the supermarket channel.
The new product was a brand-new brand in the industry, but it had a second-tier celebrity endorsement. The company's regional manager encouraged Zhang: "With your thinking and drive, and the strength of your excellent team, you've managed the maternal and child channel so well. What's there to fear in a small supermarket? Besides, our company supports you with some supermarket expenses. You're so big, you need channel expansion, otherwise it's hard to achieve greater growth. Modern channels are the trend; if you don't seize them now, it will be harder later." Zhang was tempted. Additionally, after a business trip to Beijing for study, he heard many peers in the industry trying new channels. Not wanting to be outdone, after two rounds of negotiations, Zhang decided to invest 800,000 yuan in special funds to operate the sanitary napkin product in the supermarket channel.
For the new channel, new professional staff had to be recruited. Because he didn't anticipate the difficulty in recruiting sales staff for the new team, and because they weren't very professional, the recruitment, supermarket negotiations, and entry processes exhausted Zhang. After more than three months of struggle, the new product finally entered some channels, but over 200,000 yuan had already been spent on supermarket expenses. Staff came and went, and after three months, things were still not smooth. After half a year, product sell-through was mediocre. At this point, another manufacturer also in the supermarket channel told Zhang that it's better to do a product portfolio than a single product. Zhang, deeply involved, wanted to "gamble again," but ended up trapped again. Finally, due to various deficiencies, weak supermarket relationships, lack of assistance from the manufacturer's manager, irresponsible stocking, and the threat of being delisted from supermarkets, Zhang had to retreat in embarrassment. Meanwhile, his original maternal and child channel saw sales decline by 20% due to reduced attention.
**Case 2:**
A distributor in a city in Zhejiang, operating a famous milk brand, had successfully developed a prefecture-level city market and earned a certain profit, which was gratifying. To advance boldly and occupy more regional channels, he obtained the distribution rights for a neighboring prefecture-level city through "connections," firmly believing that as long as the brand could be distributed, sales would not be a problem. He invested 6 million yuan in the new city and reorganized a new team to enter the new region for channel expansion. Because the new team was not familiar with the local market, many early supermarket operations were loss-making. The easy-to-enter supermarkets didn't make money and still required investment. Township stores and milk stations, with relatively low costs, were profitable, but the channels were almost entirely bought out by competitors, making entry difficult. Displays and relationships were suppressed by competitors, resulting in poor sell-through, and handling expired products became the main task. Market progress was difficult, and after nearly two years of struggle, there was no real progress or hope, with losses exceeding 2 million yuan, so he hastily closed down. Fortunately, the company's background was a business with hundreds of millions in scale, so it could afford the loss. But it paid a heavy price, losing industry prestige and greatly reducing its reputation.
**The above cases are negative examples, mainly because the distributors were not prepared for channel expansion!**
**How to Do It More Steadily?**
Maintain a clear mind and a zero-based mentality. When big distributors have achieved initial success in the industry, they should keep a clear mind and a zero-based mentality. Every decision should be rational and serious, not swayed by external temptations, and not relying on their business foundation to think they are invincible. The distributor in Case 2 thought that with a strong brand, strong financial support, and a strong team, he could be invincible, but the problem may not be that simple. Keep a clear mind and a zero-based mentality when entering new channels. In addition to essential factors like capital, manpower, and brand, you also need rigorous sales strategies and feasible execution plans for fine cultivation and promotion of terminal channels to win.
Stop being stubborn and consult with core cadres in decision-making. The management of big distributors is generally of high quality and has strong insight into the front line. It is recommended to hold decision-making meetings for analysis, allowing the team to discuss together. If 80% of the team approves a project, it is likely to succeed, and they will participate more and work harder. If the team opposes a project, participation will be low. If the distributor boss sets up a separate team with all newcomers, the labor cost, time cost, and integration cost are high, which is unwise. Decisions reached through consultation are more reliable.
Respect competitors; new channel expansion requires "professional players." Before selecting a new channel, distributors should have the mentality of "respecting competitors and fully estimating." Don't only see others as small players or lacking funds. Everyone has their expertise; if others have achieved something in a channel, they must have their strengths. The channel expansion in the neighboring region in Case 2 was blind confidence, underestimating competitors, and lacking thorough research on the market and competitors. Because they were big and wealthy, they looked down on everything, and suffered losses.
Align with strategic layout; team capabilities must be sufficiently supportive. If it's a strategic layout, and the company aims to achieve listing or extend channels for new products, with long-term strategic planning, accumulated experience, and sufficient market research and battle plans, then planning to enter a new channel is good! Regarding the team, it needs an elite force matching the professionalism of the new channel, with strong development capabilities.
Impulsive decisions based on gut feeling or being easily swayed, and underestimating new channels, are absolutely not allowed. In Case 1, General Manager Zhang thought he was wealthy and was incited by others, but he didn't have a professional team reserve to enter the new channel, so failure was not surprising.
Ensure a healthy capital chain and that the main industry is not constrained. When big distributors invest in new channel sales, they must fully calculate the overall cycle investment of the new channel, mainly channel construction costs, personnel, turnover rate, return on investment, etc. If the investment in the new channel is large and may occupy funds affecting the original main channel's operation, channel expansion is not recommended. If the occupied funds are relatively small compared to the overall cash flow, it can be operated. In Case 1, General Manager Zhang didn't calculate the capital investment carefully, and many hidden costs were not accurately estimated, leading to careless investment, a large amount of funds being locked into new channel construction, resulting in poor management and also constraining the operation of the old mature channel, which was not worth the loss.
"Easily getting what you want" may be a trap. When big distributors test a new project or new channel, they should fully investigate the product's suitability for the channel, especially for brand-new products. Why is it easy to get the distribution rights for a good brand? Why did the manufacturer's salesperson boast so much that such a good brand fell to me? For safety, it's still necessary to conduct detailed research on the cooperative project, the company's current situation, product status, previous market foundation, and reasons for failure, especially for projects with large capital and manpower investment, and be more cautious. The distributor boss in Case 2 obviously didn't realize this, trying to "copy the success model," but a successful model also needs to suit local conditions, and there are many cases of being unsuitable.
Liu Lei, new practical marketing young marshal, founder of Meng Calligraphy, author of "The First Book for FMCG Marketers," and practical marketing consultant for many famous enterprises and private enterprises.
**WeChat: supaiyingxiao**
**Weibo: Liu Lei - New Practical Marketing
**Scan the QR code below to add as friend and interact happily with the author.**************************
New Food Era · New Distribution
—— 2016 China "FMCG + Internet" Summit Forum ——
**This is a grand event focusing on how the FMCG industry channels will transform under the trend of Internet+ transformation**
**Agenda**
08:00-09:00 Registration
09:00-09:05 Host opening
09:05-09:35 2016 China FMCG Industry Trend Analysis Report - Zhao Bo
09:35-10:05 FMCG Enterprise Transformation Strategy and Path - Liu Chunxiong
10:05-10:35 Opportunities and Challenges Brought by FMCG Channel Reform - Liu Zhao, CEO of Waiqin 365
10:35-11:05 Reconstructing Distribution Channel System, Promoting Urban Retail Upgrade - Tian Yuan, General Manager of Alibaba Retail Link Backend
11:05-11:25 Channel Efficiency in the Internet Era - Fu Xiaoyun, Vice President of Benlai Holding
11:25-12:00 Round Table Forum - Brand Transformation: Improvement vs. Reconstruction?
Guests: Liu Zhao, Liu Chunxiong, Fang Gang, Chen Feng, Shi Zhengchuan, Deng Xia
12:00-13:30 Lunch
13:30-13:50 Distributor Transformation: City Distribution Trend Development - Wang Qi, CEO of Weijie City Distribution
13:50-14:20 Round Table Forum - Why Distributors Should Do Logistics in Transformation
Guests: Zhao Bo, Wang Qi, Liu Zhongmin, Tang Guangliang, Wang Cheng, Sheng Yan
14:20-14:40 How FMCG Enterprises Leverage the Internet to Take Off - Wang Hui, E-commerce Operations Director of Xijiu
14:40-15:00 Detailed Explanation of Zhongshang Huimin's "One Machine, Two Wings" Strategy - Su Xiaoxin, Vice President of Zhongshang Huimin
15:00-15:20 Category Value and B2B E-commerce Development Strategy - Wang Chaocheng, CEO of Yijiupi
15:20-15:40 Supply Chain Finance as Lubricant for B2B Driving Traditional Business - Chen Xian, CEO of 51 Order
15:40-16:00 Zhanghe Cloud Factory Helps Upgrade FMCG Supply Chain - Yang Lixiang, CEO of Zhanghe Tianxia
16:00-16:30 Integrating Small and Micro Retail, Reconstructing Business Ecology - Miao Dong, Vice President of Quanshi
16:30-16:50 B2B Investment Principles and Thinking - Zhao Mingwei, Vice President of Junlian Capital
17:00-17:30 Round Table Forum - Who is the King in FMCG B2B Models?
Guests: Fu Xiaoyun, Zhuang Jianzhong, Jiang Tao, Zeng Weiqin
17:30-19:30 Dinner
For manufacturers and friends who want to transform, this grand event is not to be missed. Interested friends can long press the QR code below or click "Read Original" to register.
**Registration: Long press the QR code below or click "Read Original"**
↓↓↓ Click "Read Original" [Register]


---

## Citation metadata

- Publisher: New Distribution
- Author: 刘雷
- Published: 2016-10-07
- Canonical: https://xinjignxiao.com/en/articles/big-distributors-planning-to-expand-channels-hold-on-even-with-strong-st-32c62788/
- Original source: https://mp.weixin.qq.com/s/dn3u5ApdxRfJQ3XT8UiPTA

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671