---
title: "Can Distributors Transform into Logistics Providers?"
description: "A direction for transformation: The previous article summarized several models for distributor transformation. The first is 'strengthening the body', which means not transforming but upgrading, improving operational efficiency, reducing waste, and increasing business capabilities to outperform local competitors. The second is 'persisting while waiting', maintaining business while waiting for a reliable new organization to acquire you. The third is 'challenging new opportunities', transforming into a platform-based enterprise, becoming a service provider or logistics provider. Undoubtedly, the third model is the most appealing to most distributors. However, whether becoming a service provider or a logistics provider, the transformation is undoubtedly difficult. First, each company's growth foundation is different. Today, we will discuss distributors who transform into logistics providers and what they should possess."
author: "麦得邻徐永刚"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-05-30"
language: "en"
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---

# Can Distributors Transform into Logistics Providers?

> A direction for transformation: The previous article summarized several models for distributor transformation. The first is 'strengthening the body', which means not transforming but upgrading, improving operational efficiency, reducing waste, and increasing business capabilities to outperform local competitors. The second is 'persisting while waiting', maintaining business while waiting for a reliable new organization to acquire you. The third is 'challenging new opportunities', transforming into a platform-based enterprise, becoming a service provider or logistics provider. Undoubtedly, the third model is the most appealing to most distributors. However, whether becoming a service provider or a logistics provider, the transformation is undoubtedly difficult. First, each company's growth foundation is different. Today, we will discuss distributors who transform into logistics providers and what they should possess.

**A Direction for Transformation**
> The previous article summarized several models for distributor transformation:
>
> The first is 'strengthening the body', which means not transforming but upgrading, improving operational efficiency, reducing waste, and increasing business capabilities to outperform local competitors.
>
> The second is 'persisting while waiting', maintaining business while waiting for a reliable new organization to acquire you.
>
> The third is 'challenging new opportunities', transforming into a platform-based enterprise, becoming a service provider or logistics provider.

Undoubtedly, the third model is the most appealing to most distributors. However, whether becoming a service provider or a logistics provider, the transformation is undoubtedly difficult. First, each company's growth foundation is different. Today, we will discuss distributors who transform into logistics providers and what they should possess.

**I. Can They Transform?**
In reality, transforming into a pure third-party logistics provider is rare. More often, it involves expanding the distribution positioning, not only being a distributor for certain brands but also undertaking distribution services for other brands' products, finding new profit growth points, which is a 'hitchhiking' model.

The reason is that distributors and third-party logistics providers are vastly different business formats, requiring very different core competencies.

The mainstream marketing model in the FMCG industry is distribution rather than direct operation. Therefore, distributors leveraging their agency brand and network advantages to expand distribution business for other brands is a beneficial supplement. If the sideline eventually surpasses the main business, it would be a pleasant surprise.

Here, we must emphasize the importance of warehousing and logistics for distributors. We do not have many advantages in controlling product quality or brand, and the terminal stores at the lower end of our supply chain are even harder to control. The real advantage lies in logistics.

**II. How to Transform?**
**1. Become a KA Logistics Distributor**
Manufacturers' direct operation with KA (Key Accounts) is a trend. Since KA has higher requirements for distribution and prefers more concentrated distributors to simplify operations, agents specializing in certain brands for supermarket channels have taken the lead, cooperating with other brands (including but not limited to food) as their distributors, with distribution fees typically 5%-8%.

There are many such cases in reality, for example, Beijing Chaopi provides third-party logistics services for other brands.

**2. Become a Regional Cold Chain Logistics Distributor**
Fresh food has high logistics requirements, and there are transformation opportunities in this direction. A successful case is Beijing Kuaixingxian Food Logistics Co., Ltd., which was spun off from Dingdian Commerce. In 1996, it began distributing frozen products such as Wanchai Ferry, Synear, and Sanquan. In 2003, it established a logistics company. At that time, 80% of logistics distribution served its own enterprise, and 20% served third-party enterprises. By the end of 2011, the company's distribution amount reached 1.2 billion yuan, with its own enterprise distribution accounting for only 5%. This is a case where the sideline surpassed the main business. This Beijing company was originally a distributor, and its successful transformation and growth are attributed to its decision-makers.

**3. Become a Comprehensive Township Network Distributor**
Every county has distributors for food, beverages, daily chemicals, etc., who have cultivated township markets for years, typically operating multiple brands and completing township distribution on fixed schedules and routes. Some second- and third-tier brands, due to low sales volume, are not favored by distributors, but there is demand in townships, which provides soil for the emergence of 'comprehensive township network distributors'. However, this is not third-party logistics; it remains distribution and sub-distribution.

There are such cases in townships. Distributors going to rural areas are actually like general merchandise distributors. They ask small shops what they lack, then procure on their behalf and deliver, at reasonable prices.

Of course, if you are interested in urban and rural markets, you should act quickly, as JD.com's layout is already underway.

FMCG distributors expanding their positioning to logistics distributors is a beneficial supplement to their existing positioning, a 'hitchhiking' model. But no matter which type of transformation supplement, it requires gradually improving the core capabilities as a logistics distributor, that is, how to achieve 'more, faster, better, and more economical', which requires persistent investment in hardware and software.

**Source: Efficient Operation of Distributors**
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