---
title: "Channel Digitalization: Distributors Have Their Own Calculations"
description: "This article explores distributors' real experiences and concerns during brand owners' push for channel digitalization, highlighting issues like vested interests, role anxiety, short-term efficiency, and process habits. It argues that successful digitalization requires treating distributors as partners, understanding their specific concerns, and creating benchmark distributors, while distributors themselves must proactively embrace change."
author: "任文青Andy"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-03-04"
language: "en"
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# Channel Digitalization: Distributors Have Their Own Calculations

> This article explores distributors' real experiences and concerns during brand owners' push for channel digitalization, highlighting issues like vested interests, role anxiety, short-term efficiency, and process habits. It argues that successful digitalization requires treating distributors as partners, understanding their specific concerns, and creating benchmark distributors, while distributors themselves must proactively embrace change.

Recently, I interviewed some distributors to learn about their firsthand experiences during brand owners' push for channel digitalization.
Previously, New Distribution's reports on bC integration cases were mostly from the brand owner's perspective, describing how they use digital tools to empower distributors, connect with retail outlets, and reach consumers.
But in this process, **what are the real thoughts of distributors, who play a key role in the chain? What practical obstacles do they face? What concerns and worries do they have?**
Channels cannot do without distributors; without distributor digitalization, channel digitalization cannot ultimately be achieved.
This article discusses channel digitalization from the distributor's perspective.
#### If channel digitalization is a big game being played by FMCG companies, then distributors are undoubtedly key pieces on the board, but these pieces have their own calculations.
Many companies are now promoting bC integration, with the first step being direct connection to retail outlets (b), such as establishing a mini-program-based mall where stores order through the mall instead of through sales representatives.
Will distributors actively cooperate in this process?
Through exchanges with some distributor friends, I found the following issues.
**1. Existing Interests**
In the past, although there were transaction systems, they mainly relied on sales representatives to help stores place orders manually, leaving much room for manipulation, such as creating fake orders for short-term gains, which was even a common industry practice.
Promoting a to-b mall means that the difficulty of creating fake orders increases significantly, and distributors, including the brand's sales representatives, are reluctant or even resistant to this change.
**2. Role Concerns**
When stores order directly through the mall, distributors gradually become mere delivery roles, reinforcing their existing feeling of being marginalized.
Moreover, different customers have different prices. In the traditional way, distributors have their own room for manipulation, but with a mini-program mall, this becomes difficult. To maintain a sense of security, distributors are unwilling to make their downstream data too transparent.
**3. Short-term Efficiency**
From an overall and long-term perspective, transactions through a to-b mini-program mall can improve efficiency, but in the short term, for an individual distributor, this may not be the case.
Image source: Zhanglian - Rocket Brother
Normally, distributors have their own delivery routes and schedules, but when customers order from the mall, one customer in the east orders one box, and another in the west orders one box. You have to deliver, but doing so disrupts the distributor's own arrangements and inevitably increases delivery costs.
**4. Process Habits**
People are accustomed to the existing way of doing things. Introducing new tools means sorting out a new set of business processes. **Unless the benefits are substantial or there is a potential huge loss, distributors are unwilling to change their process habits.**
Digitalization is a trend that can ultimately improve the efficiency of the entire system, and most distributors are well aware of this, but often short-term interests are the key factor determining how a person acts. The above are the real feedback from distributors when facing brand owners' promotion of digital tools.
As an irreplaceable link in the traditional chain, distributors' positions and considerations are issues that brand owners must take into account when promoting digitalization.
#### Currently, FMCG companies are launching a new digitalization practice, empowering the industry within the WeChat ecosystem. With the support of technologies such as mini-program cloud stores and one-item-one-code, brand owners see more possibilities.
This can create an illusion: **After the emergence of new tools, coupled with new concepts, many people feel that problems that were previously unsolvable are now easier to solve.** This is not the case.
Looking back at the traceable clues of manufacturer-channel digitalization, there are SFA, DMS, and B2b.
Whether it is the sales force automation system (SFA) for sales representatives or the dealer management system (DMS) for distributors, these are essentially information management tools. Under the drive to meet management requirements and self-interest, the problem of false information is inevitable.
Brand-owned B2b platforms were an attempt spurred by the "Internet+" wave, but most were not successful because logging into a single brand's APP to order is far less convenient than getting goods from distributors, and downloading multiple brand APPs is also troublesome, especially since store order volumes are not large.
Now, when we talk about digitalization, have the people behind it—whether distributors or retail outlets—changed? No!
**Tools are important, but more important are the people using them. We cannot ignore their positions and thoughts just because we have new tools and concepts.** Technology is not the core issue; the core issues are philosophy and organization, models and processes, and behind all this, the key is still people.
#### From some typical industry cases we have learned about, the direction and logic of FMCG companies' channel digitalization are clearly articulated, and there are relatively successful attempts, but it is far from being summarized as a successful model that leads the industry.
For brand owners, it is easy to talk about the concepts and logic of digitalization, but the process and effort to achieve digitalization are difficult.
Just on the distributor level we discuss today, for brand owners, here are some points for discussion.
**1. Truly treat distributors as partners, not just as a channel**
Informationization is for control, digitalization is for empowerment, but for it to truly work, it still relies on a shift in philosophy behind it.
For example, the issue of fake orders mentioned earlier is actually a hidden rule formed during the long-term game between distributors and brand owners over market management. Because brand owners treat distributors as mere targets for pushing inventory, without faking orders, they cannot complete tasks, and without faking, they may be penalized.
Image source: Baijiahao - Chengxin Cheng
Mechanisms need to be adjusted, but first, the philosophy must change: treat distributors as partners to be empowered, not just as a channel or a role for pushing inventory.
**2. Understand distributors' specific concerns, rather than always imposing one-way mandatory requirements**
Many problems faced by distributors either fail to reach decision-makers due to poor communication mechanisms, or due to information attenuation, they become trivial issues when they do reach them.
Understand distributors' specific concerns and help them solve practical problems in the process of promoting digitalization, rather than issuing a broad policy and demanding results. Otherwise, it is likely to distort the behavior of frontline staff, turning effective digital tools into formalistic tools like information management systems.
**3. Create benchmark distributors, rather than a one-size-fits-all approach**
Distributors manage their own customers, and many human considerations cannot be measured by uniform standards. There are long-established different transaction methods, and sudden changes may even affect the foundation of distributors' businesses.
Distributors are a group, but within this group, specific business forms, operational scales, and willingness to change vary.
Creating benchmark distributors serves two purposes: on one hand, it establishes a model to identify specific problems and find solutions; on the other hand, it allows more distributors to see how benchmark distributors operate and the benefits they gain, thereby gradually stimulating the enthusiasm of the distributor community.
#### In exchanges with distributor friends, I found that they actually agree on the necessity of digitalization, especially in helping transform their own processes and promoting the transformation and upgrading of their businesses.
But why are they resistant and unwilling to actively cooperate? **Mainly because they feel it's not yet "that time," simply put, they can still get by with the status quo.** At the same time, they yearn for change. It's this contradictory psychology.
From the actual situation of many distributors that New Distribution has encountered in recent years, those who are developing better are the ones who dare to change.
**1. Break the status quo, not respect it**
Who is the real opponent of business operations? The status quo! The status quo is your true opponent. Respecting the status quo will not find growth opportunities.
Efficiency replacing inefficiency is the direction of business evolution, and digitalization is the specific way to follow this direction now. The trend will not change. Doing things that align with the trend early may cause short-term troubles, but if you don't proactively step out of your comfort zone today, when you are forced to change, it will be more painful, and eventually, you will fall behind and be eliminated.
**2. Self-transformation, not passive transformation**
Brand owners' promotion of channel digitalization is actually an opportunity for distributors to transform into digital distributors. **Whether or not brand owners push, distributors can proactively take actions for digital self-transformation.**
We see that distributors who have successfully transformed are those who actively tried new models and tools at various stages of industry development.
In fact, the WeChat ecosystem now provides many options for empowering physical distribution, and with supporting digital service providers, the threshold for digitalization is lowering.
Distributors can proactively undertake digital self-transformation. New Distribution has previously reported relevant cases that can be referenced.
**Final Thoughts:**
#### Achieving channel digitalization is a consensus.
How to realize this consensus?
It requires the joint efforts of brand owners, distributors, and digital service providers, among other parties in the industry. Digitalization is not a completed state but an ongoing process. Mutual communication, learning, exchange, and discussion are very necessary.
In April, at the Channel Innovation Conference hosted by New Distribution, we will focus on topics such as channel digitalization, BC integration, and distributor business development, providing an opportunity for the industry to fully communicate, learn from each other, and exchange ideas.
Welcome to come and exchange and discuss.
Cover image source: Visual China
Focusing on in-depth interviews in the FMCG industry, thinking about the latest changes in the industry. If you want to communicate, you can add WeChat by long-pressing. When adding, please indicate your company, position, and name.
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