---
title: "City Manager in a First-Tier City: Wholesale Chaos Is a Chaos of Hearts. Create a Sunny Wholesale Environment and Empower Business Transformation"
description: "Today is the local wholesale market's autumn ordering fair. For this grand event, Lao Wang and the distributor's team have been preparing for over two weeks, hoping it will be as successful as usual. However, the lively atmosphere did not bring the expected orders. After the wholesale clients left with their families, well-fed and satisfied, only a dozen tables of leftovers remained... Seeing his somewhat deflated subordinates and the distributor boss, Lao Wang cheered up and encouraged everyone: \"Perhaps the traditional wholesale ordering fair format is outdated. We need to change, to upgrade the promotion strategies and mechanisms of the wholesale market!\""
author: "许翔 Ryan Xu"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-10-11"
language: "en"
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# City Manager in a First-Tier City: Wholesale Chaos Is a Chaos of Hearts. Create a Sunny Wholesale Environment and Empower Business Transformation

> Today is the local wholesale market's autumn ordering fair. For this grand event, Lao Wang and the distributor's team have been preparing for over two weeks, hoping it will be as successful as usual. However, the lively atmosphere did not bring the expected orders. After the wholesale clients left with their families, well-fed and satisfied, only a dozen tables of leftovers remained... Seeing his somewhat deflated subordinates and the distributor boss, Lao Wang cheered up and encouraged everyone: "Perhaps the traditional wholesale ordering fair format is outdated. We need to change, to upgrade the promotion strategies and mechanisms of the wholesale market!"

Today is the local wholesale market's autumn ordering fair. For this grand event, Lao Wang and the distributor's team have been preparing for over two weeks, hoping it will be as successful as usual.
However, the lively atmosphere did not bring the expected orders. After the wholesale clients left with their families, well-fed and satisfied, only a dozen tables of leftovers remained...
Seeing his somewhat deflated subordinates and the distributor boss, Lao Wang cheered up and encouraged everyone: "Perhaps the traditional wholesale ordering fair format is outdated. We need to change, to upgrade the promotion strategies and mechanisms of the wholesale market!"
**The wholesale market is an old but resilient channel, and this industry, full of liquidity and uncertainty, is facing transformation.**
Whether it was the manufacturer-led deep distribution strategy of the past, the direct coverage joint sales model initiated by distributors, or the ERTM platforms represented by JD New Channel and Alibaba Retail Link in recent years, all aim to reduce the multi-tier circulation links of FMCG and gradually reduce dependence on wholesalers.
With natural metabolism and industry survival of the fittest, a number of stalls and sedentary merchants have been eliminated over the years, but most mainstream wholesalers remain active in today's market and continue to play an important role in the FMCG distribution chain.
**The existence of wholesalers is not only to meet manufacturers' need for efficient store coverage but also to actively regulate the external market environment and internal production supply-demand balance.**
There are nearly 5.8 million traditional FMCG retail small stores nationwide, with over 80% distributed in third-tier and below cities. No brand can achieve store coverage solely through multi-tier distributors in various regions.
Additionally, most categories have obvious consumption off-seasons and peak seasons, making supply and demand volatile. As relatively linear and constant planned producers, the wholesale market also serves as a commodity reservoir, bearing additional functions such as advance payment and inventory holding.
**Therefore, although the market is advancing, the wholesale market will continue to exist for a considerable period.** This article, from the perspective of the regular daily chemical category, discusses the evolution trends of the wholesale market and, in the context of new retail, how city managers in first-tier cities should correctly view the wholesale channel, along with corresponding strategies and countermeasures.
**-01-**
**Declining Numbers, Shifting Toward Specialization**
As mentioned, the wholesale market has its explicit value. However, it is undeniable that **over the past decade, the wholesale market's share in city managers' business has been gradually declining.**
To facilitate understanding, I roughly categorize wholesale clients in each mainstream market into three types: **large wholesalers (generally accounting for 10% of local wholesale market merchants), medium wholesalers (20%), and small wholesalers (70%).**
First, the 10% large wholesalers are influential wholesalers. They generally have strong financial strength, the ability to receive large quantities of goods and quickly distribute them, and are second to none in the local market. They are not only market trendsetters but also price benchmarks! In short, these large wholesalers are the rule-makers and biggest beneficiaries of the local wholesale market price system.
Medium wholesalers, the 20% clients, are mid-sized wholesalers. They are relatively young, ambitious, and eager to grow and surpass the large wholesalers, but they are constrained by bottlenecks in capital, connections, networks, etc. They are currently in a mid-stage, neither high nor low. Sometimes they independently source goods from outside, but more often they transfer goods from large wholesalers.
The remaining 70% are generally small wholesalers in the market, basically just making a living. In recent years, due to the rapid rise of e-commerce and new retail, the days of medium and small wholesalers have become increasingly difficult.
**We generally evaluate whether a wholesaler has market status and inventory strength based on whether they occupy the "price ecological niche."** In the traditional retail era, large wholesalers typically sourced goods from key account hypermarkets or flowed goods and engaged in cross-regional dumping between large wholesalers. Essentially, as long as they controlled price dominance, they occupied the "price ecological niche," and thus the flow goods business grew larger.
Taking the daily chemical category as an example, there are approximately 20 influential wholesale markets nationwide. The large wholesalers in these markets actually control national price trends. Although with the rise of e-commerce and new retail, including new platforms such as ERTM, Pinduoduo, and community group buying, the ones who truly hold the "price ecological niche" are still the top large wholesalers in these key markets.
Such large wholesalers often have more capital, networks, connections, and larger warehouses. In the traditional retail era, they sourced goods from KC (key accounts), and in the new retail era, they have kept pace with the times by sourcing from e-commerce and platforms. **These key cities' mainstream wholesale markets are like an invisible web, controlling the prices of each manufacturer's core best-selling products.**
Medium and small wholesalers basically get their goods from large wholesalers. In the new retail era, the wealth gap has widened, and the situation for medium and small wholesalers has not improved but worsened. Because the larger the wholesaler, the stronger their ability to absorb goods and the more substantial their financial strength.
In short, **whether in the past or present, the wholesale market has always been the "vanguard" deeply impacted by industry changes.** E-commerce has gradually replaced KC as the largest source of flow goods in the market. The rise of community group buying, ERTM, and O2O has also made the channels for wholesale goods more numerous and mixed than before. This phenomenon further exacerbates the difficulties for medium and small wholesalers, with some transforming, some struggling to hold on, and others directly exiting the market...
The above is the overall evolution trend of the wholesale industry. Of course, in the new retail era, many medium and large wholesalers with distribution awareness are also attempting transformation. For example, opening online stores on JD, Tmall, and Pinduoduo, engaging in deep cooperation with ERTM platforms, and even building their own platforms, self-developed mini-programs, and official accounts, doing enterprise and institutional group buying, points platforms, and terminal small stores.
**In addition to embracing new retail and building platform-oriented transformations, some wholesalers are transforming into professional distributors.** Through multi-brand operations and store takeover formats, they focus on intensive cultivation in one region. With professional guidance from manufacturers, they change the previous model of purely competing on price and passive distribution, and resist development risks through proactive distribution and active service.
In fact, not only are wholesalers suffering from market impact, but for city managers, managing the wholesale channel is also becoming more difficult, facing many pain points.
**-02-**
**More Sourcing Channels, Prices Continuously Hitting New Lows**
Previously, there were 2-3 source channels, but now there are N sourcing sources. With more channels, prices are prone to chaos, and wholesalers can more easily fish in troubled waters. Current city managers face the following three major pain points in managing the wholesale channel:
**Pain Point 1: Wholesale Prices Continuously Hit New Lows**
In the past, being a city manager meant managing the wholesale channel mainly by preventing fire, theft, and KC. Basically, if you controlled KC, the problem was not too big. **But now wholesalers have too many sourcing channels: traditional e-commerce platforms, ERTM, community group buying, and new retail O2O platforms.**
These channels, like the wholesale channel, sell hot products at increasingly lower prices, and market supervision is not perfect. Wholesale clients have almost no loyalty, making city managers' management of wholesale increasingly tiring!
**Pain Point 2: Downstream Outlets Suffer Impact**
**As prices continue to hit new lows, the first to be affected are the downstream outlets under the distributor's jurisdiction.** To survive, wholesalers often further use first-line brand hot products or core single products distributed by major distributors as carriers and stepping stones for maintaining business relationships with downstream stores, forcing prices even lower.
This vicious price competition directly leads to deteriorating cooperation between the distributor and stores under the city manager's jurisdiction, resulting in distribution being done in the front but lost in the back, with others reaping the benefits. Distributors' confidence will continue to decline. New retail is already eroding sales, and with the wholesale channel continuously lowering price lists to survive, distributors are full of complaints.
**Pain Point 3: Aging Wholesale Personnel**
**To put it bluntly, the wholesale market is the most rustic and backward channel in the FMCG industry. Over the past few decades, there has been little major development or innovation.** Because whether it is new retail or ERTM, it is difficult for capital or players to pay attention to and invest in this sunset channel, as wholesale has always been the object to be replaced, not an innovative field worthy of heavy capital investment.
Correspondingly, we can see that neither city managers nor distributors are willing to send capable "good salespeople" to manage this channel, let alone invest effort in cultivating the wholesale channel. Personnel managing wholesale are often "old salespeople" who have been deeply involved in wholesale for many years. On the one hand, they have long working years and lack drive; on the other hand, they lack sensitivity and urgency for business transformation.
Over time, these "old salespeople" easily fall into burnout. Apart from daily complaints and feedback about low prices, they basically do not engage in "hardcore" management. Of course, city managers also fall into a vicious cycle: the more wholesale-oriented the market, the more they believe it is a circle based on customer relationships, and they are afraid to change personnel easily.
There is also an unspoken rule: many business personnel in traditional wholesale markets, after years of operation, have built networks and business circles. They gradually discover that being a wholesaler is simple. Therefore, many salespeople use company resources to do small business, being both salespeople and small wholesalers, benefiting from both identities. **Similarly, many distributors' old wholesale salespeople are also double-dealers, complaining about problems while also acting as middlemen.**
The wholesale channel is different from other channels. No matter how capable a salesperson is, it is unlikely they will open their own store and advance funds in the retail channel. But for the relatively simple wholesale business of left-hand to right-hand, many salespeople managing wholesale gradually become small bosses and join the ranks of goods dumping.
Why are prices always so chaotic? Actually, the chaos is in people's hearts and in management.
The above are the three key pain points city managers face in the wholesale channel. Facing these pain points, combined with the overall trends of the wholesale industry, let's look at how city managers, as frontline commanders, should respond.
**-03-**
**Create a Sunny Wholesale Environment and Empower Wholesale Transformation**
No matter who comes to revolutionize wholesalers, from the current perspective, the existence of wholesale still has great value for manufacturers. **Therefore, city managers in first-tier cities still need to pay attention to planning and layout in the three dimensions of "people, goods, and place" for the wholesale channel.**
**1. People: Select and Cultivate Professional Personnel**
Use new people! Don't be superstitious about old hands. Select professional personnel to be responsible for the local wholesale market. Integrity is the first priority. Dare to use new people; at least they genuinely work and want to work!
Cultivate the professionalism of wholesale personnel, such as how to control daily price fluctuation information of core sensitive single products in the local wholesale market. It is important to cultivate new people's ability in this regard. At the same time, help wholesale personnel sort out their overall understanding of price flow patterns, know the external price level, and accurately predict and prevent it.
Be very sharp, not just hearsay. Go deep into every corner of the market, every merchant, and understand market movements through indirect questioning.
Cultivate wholesale personnel's ability to collect logistics and freight information in real time. Where does the goods come from? What is the price per box? What is the logistics cost? How much can a return trip save? Only with information initiative can you make early layout and interception.
For city managers, not only should they cultivate professional wholesale personnel, but also cultivate wholesale clients who have control over prices. Which are high-quality wholesale clients?
Based on my observation, it is the aforementioned 20% medium wholesalers. Medium wholesalers want to grow; they have the awareness and ability for proactive distribution, are relatively young and motivated. City managers in first-tier cities should support medium wholesalers to grow, thereby sorting out the price system of the entire wholesale channel and creating a good wholesale environment.
**2. Goods: Select Single Products, Promote New and Sell High, Manage Prices, and Investigate Sources**
In terms of goods, the wholesale market mainly sells to small and medium store channels. To avoid direct competition with the two mainstream B2B ERTM platforms, product structure should be differentiated as much as possible, focusing on distributing selected single products suitable for small store channels, distinguishing them from e-commerce and KC specifications that are prone to price erosion.
Promote new and sell high. Wholesalers cannot just stare at hot products, because everyone sells hot products: e-commerce, community group buying, ERTM, Pinduoduo. In the end, no one makes money. Other platforms can burn money and handle large volumes, but wholesalers do not have the capital strength of platforms. If wholesalers want to make money, they should try to avoid this.
Additionally, city managers should know the prices of core single products like the back of their hand, protecting the local market's price system and network to the greatest extent. Fully leverage the distributor's local social resources, cooperate with audit and inspection departments, investigate the price, source, and logistics information of every cross-dumping order, ensure that core hot products and key single products are not over-exploited, and try to extend the product life cycle.
**3. Place: Create a Sunny Wholesale Environment and Empower Wholesaler Transformation**
Finally, regarding the "place" aspect. Empowering wholesaler transformation requires using new means, not being eliminated by the times, and helping wholesalers reduce dependence on low-price competition. If wholesalers are only positioned as stalls selling low-priced goods, they clearly cannot get a share in the current and future distribution chain.
Currently, many large and medium wholesalers do not want to sit idly by. City managers can empower wholesale transformation. On the one hand, they can help wholesalers through new marketing methods, **such as opening O2O, community group buying and other supply channels, and using live streaming and new retail means to do online discounts, flash sales, and gift promotions.**
Taking Changsha as an example, the wholesale business in the Gaogiao market is still booming, thanks to the emergence of a large number of new retail formats in Hunan in recent years. For example, new retail platforms like Xingsheng Youxuan are industry dividends for wholesalers. Timely connection and cooperation can open new tracks and opportunities for wholesalers in the "place" dimension. In fact, every city market will more or less see some new formats. When new formats appear, wholesalers should proactively connect, fully integrate, and seize the dividend and window periods of emerging platforms to broaden and widen the "place."
**Another empowerment path is to develop excellent wholesalers into authorized distributors of manufacturers.** To more comprehensively and deeply control channel prices and increase direct and effective coverage, city managers can evaluate high-potential wholesalers in terms of development philosophy, empowerment ability, and financial strength, and develop some wholesalers with strong willingness to cooperate into regular authorized distributors of the manufacturer.
**One more point to mention: why are wholesale market prices so absurdly low? There is an unspoken rule: adulteration.** For key wholesale markets, especially those with a history of blacklisting, key surveillance should be conducted. Once discovered, it is necessary to report to the brand protection department immediately, send an alarm signal, and combine with the company's media department to provide materials for exposure and severely crack down on counterfeit merchants.
In summary, in the wholesale market, whether in the past or future, whoever occupies the price ecological niche holds the core price advantage and supply discourse power. But even so, they can only maintain the status quo. To develop and iterate, they must upgrade.
City managers in first-tier cities need to guide and cultivate a group of new wholesalers with full online and offline coverage capabilities to achieve sustainable development of the wholesale channel business. They can even choose to proactively unite or facilitate a group of wholesalers willing to grow stronger to accelerate digital and platform transformation, achieving vertical and horizontal alliances, mutual alliance, and joint warmth to build a good business environment for sunny wholesale.
After finishing the closing work of the ordering fair, Lao Wang and his team did not immediately go home. Instead, they gathered for a temporary meeting with the topic "How to Create a Sunny Wholesale Environment and Empower Wholesale Channel Upgrade."
"The wholesale channel cannot be left unchecked! Nor can we simply wait and see. The upgrade of wholesalers will not happen naturally. As manufacturer business representatives, we must lead their transformation!"
Lao Wang decided to set aside half a day each week to visit the wholesale market on-site, go deep into customers and terminals, extract the latest business pain points and opportunities, and manage the wholesale channel well. Because Lao Wang firmly believes that only by going deep into the front line can problems be truly solved!
About the author: Xu Xiang, currently the Sales Director of Unilever South China, with 20 years of experience in FMCG daily chemicals, dairy, and condiments, deeply engaged in regional market management and customer marketing, willing to exchange and learn with peers for common progress. The above article only represents personal views.
Tips will be paid 400-2000 yuan once adopted.


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