---
title: "Case Study | A Distributor Lost 1.8 Million Last Year, But Profited This Year—See How He Did It!"
description: "A recent article about an Yili distributor losing 16 million yuan sparked industry sighs—are companies too domineering, or distributors too weak? In 2016, distributor revenues generally declined, with most making little profit and some suffering heavy losses, but a small group still profited. How did they do it? One distributor friend of mine, Mr. Zhang of Shunxing Trading, is a case in point."
author: "宁小朕"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-01-20"
language: "en"
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markdown: "https://xinjignxiao.com/en/articles/case-study-a-distributor-lost-1-8-million-last-year-but-profited-this-ye-f4bb7469.md"
original_source: "https://mp.weixin.qq.com/s/1HhnOT2hQqlH3Z7jjZ5SGg"
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---

# Case Study | A Distributor Lost 1.8 Million Last Year, But Profited This Year—See How He Did It!

> A recent article about an Yili distributor losing 16 million yuan sparked industry sighs—are companies too domineering, or distributors too weak? In 2016, distributor revenues generally declined, with most making little profit and some suffering heavy losses, but a small group still profited. How did they do it? One distributor friend of mine, Mr. Zhang of Shunxing Trading, is a case in point.

A recent article titled "[Shocking] The Truth Behind Yili Distributor's 16 Million Yuan Loss" sparked a collective sigh in the industry—are companies too domineering, or distributors too weak?

In 2016, distributor revenues generally declined. Most distributors made little profit, a small portion even suffered heavy losses, but a niche group still managed to be profitable!

I mentioned earlier that some companies are profitable; attentive friends may have noticed this. So how exactly do they make money?

One distributor friend of mine is Mr. Zhang of Shunxing Trading. **In 2015, Shunxing Trading lost 1.8 million yuan. After settling accounts at year-end, Mr. Zhang had a fight with his wife!** Mr. Zhang said: "That New Year was like passing a hurdle. After a hard year's work, not only was it exhausting, but we lost so much that we couldn't even pay the bank interest. On New Year's Eve, people came to our door demanding payment. I felt like hanging myself. I stayed home for days without going out and lost over ten pounds."

Mr. Zhang of Shunxing is an old friend of many years. He is very strong-willed, has keen insight, and never admits defeat. He has an excellent reputation in the industry and is very eager to learn—one of the reasons we get along well!

"Rise where you fell!" I said to Mr. Zhang. **After consolidation in 2016, Shunxing Trading achieved gratifying results, staging a remarkable comeback. Revenue grew 20% year-on-year, with profit margins reaching 8%, setting an example for the industry.** During this period, Mr. Zhang and I communicated frequently. His thinking differs greatly from other distributors in the industry—he combines risk with prudence, and impulsiveness with a confident, bullish spirit. He took a gamble.

Based on Shunxing's experience, I summarize the following three points:

**Deep Cultivation and Resource Integration**

Mr. Zhang conducted a thorough survey of distributor peers in his region, selecting potential partners who shared common understanding, were concerned about industry conditions, dissatisfied with their business, had good reputations, innovative thinking, and a desire to do more. He visited them and ultimately chose two to integrate and finalize cooperation.

First, they consolidated overlapping storefronts and warehouses in the region, reorganized personnel, optimized product lines, and precisely aligned with manufacturers' quality resources for product combinations.

Second, they deepened channel penetration. Beyond existing channels, they assigned fixed personnel to visit convenience stores, fresh food stores, restaurants, B/C-class stores, and some special channels, achieving optimal channel structure, extension, and regional coverage.

Finally, they standardized the workflow of the newly established Shunxing branch companies, set assessment standards, and provided incentives. They gathered industry peers, upstream and downstream customers, and supporting service departments to communicate the new company's direction and strategic goals, stunning the entire industry! Everyone was full of confidence.

**Partnership Mechanism and Profit Sharing**

Under the partnership system, each branch is treated as an independent entity with 100% equity. Every employee holds company shares, with allocation ratios based on departmental functions: managers 20%, sales teams 70%, and service departments 10%. Each branch pays salaries on time monthly, calculates net profit for the month, and distributes dividends 60% in January of the following year and the remaining 40% in June. This turns employees into bosses—they decide how much they earn, which excites them immensely.

**Seizing E-commerce and Diversified Operations**

They partnered with a professional network to establish a joint e-commerce company, building a professional e-commerce platform that leverages their product, channel, and logistics advantages. They gradually guide offline service customers to place orders and pay online, reducing offline labor costs, increasing online customer transaction traffic, and capitalizing on the Internet+ FMCG trend. They reallocate manpower, enhance service, strengthen regional brand power, and transform the company into a diversified service platform.

The market is complex, competition is fierce, and channels are diversified, hitting distributors hardest—especially traditional individual distributors, for whom the impact is fatal.

**At this stage, if a distributor is strong, they should integrate others; if not, they should seek to be integrated by others. Either way, it's beneficial. Through integration and unity, strengthening competitive advantage and market voice is the only way to remain invincible.**

Continuously learn new models and methods, borrow from others' successes, stand on the shoulders of giants, avoid detours, seek advice, and discuss more to avoid wasting hard-earned money.

-END-

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