---
title: "Dealer-Opened Stores: 90% May Lose Money!"
description: "Following the report on Shandong Hongyixing, many dealers are curious about opening their own stores, while others warn of failure. This article explores whether store opening is a 'second growth curve' or a 'resource black hole' for dealers, and what type of dealer is suited for it, based on interviews with Yu of Tangshan Yihe Trading and Ding of Shandong Hongyixing."
author: "张雨薇"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-03-09"
language: "en"
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# Dealer-Opened Stores: 90% May Lose Money!

> Following the report on Shandong Hongyixing, many dealers are curious about opening their own stores, while others warn of failure. This article explores whether store opening is a 'second growth curve' or a 'resource black hole' for dealers, and what type of dealer is suited for it, based on interviews with Yu of Tangshan Yihe Trading and Ding of Shandong Hongyixing.

Recently, we reported on the case of Shandong Hongyixing, and many dealer bosses showed keen interest, thinking: if other dealers can open stores, why can't I?
Another group of dealers, however, believe that dealer-opened stores are doomed to fail, with some even sharing personal experiences of losing millions. **Is opening a store a 'second growth curve' for dealers, or a 'resource black hole'? What kind of dealer is suitable for opening a store?** With these questions, I visited Yu of Tangshan Yihe Trading and Ding of Shandong Hongyixing for in-depth discussions. This article shares our exchange, hoping to provide some insights.
**Why Do Dealers Hit Pitfalls When Opening Stores?** At the start of our discussion, I posed the question: How feasible is it for dealers to open stores? "Opening a store is easy for dealers, but doing it well is extremely difficult!" "Nine out of ten dealers who open stores will lose money!" This answer didn't surprise me, but what was surprising was why the failure rate is so high, to the point of hitting pitfalls immediately. On this, the two bosses had a unified view—**mismatched genes, inadequate organizational management, and insufficient professionalism.**
**1. Mismatched Genes** Many dealers make a mistake at the first step, **using wholesale logic for retail.** Ding said bluntly: "When you visit stores, you can tell at a glance whether the owner is a dealer or a retailer. **Dealers tend to turn stores into product showrooms, or engage in self-indulgent product selection.** " Many dealers retain a brand agency mindset, thinking their own products are good and competitors' are not. Over time, the store becomes a showroom for their products. But **consumers only care about price and convenience, not whose distributor you are.**
**2. Inadequate Organizational Management** "Dealers used to wholesale find it really hard to switch to retail. Retail demands execution and attention to detail, while wholesale relies more on relationships and high-volume turnover," Yu said. **"In wholesale, when you're out, the system keeps running; in retail, as long as the store is open, you have to worry."** Traditional wholesale teams are built on a "boss + relatives" talent structure, with the dealer as the core. For retail stores, most treat them as an attempt at a "second growth curve," **juggling wholesale and retail.** Wholesale focuses on payment terms, rebates, and key account relationships, with a coarse granularity; but retail requires obsessing over sell-through rates, average transaction value, and repurchase rates, down to the SKU level. "Managing 50 salespeople during the day and inspecting 4 stores at night—how can you have energy for these details?" **Where the money is, the core business is, and the boss's heart is. When 80% of energy is occupied by traditional business, the remaining energy cannot support the refined operations and iteration of retail, and any slight fluctuation in daily sales can lead to giving up.**
**3. Insufficient Professionalism** "The most fatal thing is that we old hands are all primary school students in retail," Ding told me. Some dealers wanted to open community stores, went out to learn, saw the value of internet-famous products, introduced them, and ended up losing badly. Golden display shelves were filled with imported chocolates, but nearby residents preferred 5-yuan packs of cookies. **It's like selling Moutai at a pancake stall—how could it sell?** Additionally, **location is key. In retail, location determines life or death, and blindly trusting prime locations often leads to pitfalls.** "Good storefronts are scarce resources; good locations are already taken. What you get is often what others have left over," Yu cited an example: the front gate of a school looks like high foot traffic and target consumers, but the flow disperses quickly and doesn't stay, **foot traffic doesn't equal customer traffic.**
**Why Can 10% of Dealers Succeed?** Even so, dealers still have natural advantages in opening local stores. Yu told me. On one hand, dealers do local business, with their own product assortment and team, and compared to external chain systems, they are closer to consumers and understand local needs. **By reusing resources well, they can leverage local advantages.** For example, using factory-direct supply to get lower purchase prices, and supplementing with regional products to build a local moat. Ordinary dealers might only have 10% profit in snack foods, but some stores achieve **gross margins of 22% or even higher** through localized product selection. On the other hand, **dealers better understand the value of locations** and can find good spots in the region. **Good locations are scarce, and dealers, deeply rooted locally, know the local storefront resources best.** Whether to join a chain brand or go independent is your choice; if Brand A doesn't work, choose Brand B; if Brand B doesn't work, switch to the next. Even if you eventually don't want to open a store, you can transfer the location. This is the inherent advantage of dealers opening stores, but **the core of success still lies in 'people.'**
Yu shared the success of his first store: there was a team member eager to open a store, who treated it like his own child, from laying floor tiles and designing the lightbox to planning the display, doing everything himself. "In the early days, performance won't meet targets immediately. Who bears the pressure? The boss just shouting slogans isn't enough; you need someone who truly loves it, otherwise the project will only die prematurely." Even though the first store's daily sales were only 2,000 yuan, the feedback was all positive from customers: "This store is great, we feel proud." **Wholesale and retail are two completely different models.** **You might be good at selling goods to stores, but not necessarily at selling goods to consumers.** So, where do suitable 'people' come from? Ding believes there are three ways: first, recruitment, but the conditions dealers offer make it hard to attract excellent retail talent; second, internal promotion, looking for people interested in and passionate about retail; third, poaching from retail companies.
For example, a peer opened 7 stores in one year, all profitable, with the core being hiring a professional retail promoter. After she took over the store, she adjusted the display—putting yogurt at the outermost layer, chocolate next to frozen dumplings, so customers buying snacks for kids would also grab a pack of dumplings, raising the average transaction value from 15 yuan to 25 yuan. **"Only those who can manage 7 shelves well can manage 7 stores."**
**What Kind of Dealer Is Suitable for Opening a Store?** Back to the initial question: What kind of dealer is suitable? Yu summarized three key elements: **people, goods, and store.** Among them, the most core is 'people'—whether there is someone who can invest continuously. This person must be fully committed and not treat the store as a side project. Based on the exchange with the two bosses, I summarized three profiles of dealers suitable for opening stores:
**1. Passionate Young Entrepreneurs** Young bosses have drive and enthusiasm, are interested in retail, and are willing to invest time; such people often persist. For example, some second-generation successors who are not interested in traditional wholesale but are full of interest in opening stores.
**2. Dealers Seeking a Path for Their Children** Many dealers in their 50s or 60s have been in wholesale for decades, and their children are unwilling to take over. They can consider opening a small store for their children, running their own brand, giving the second generation independent development space.
**3. Core Team Members** If a dealer's team has core members who have followed for years, are very interested in opening stores, and the boss is willing to support, consider internal employees partnering with the boss to jointly expand retail business. After solving the 'people' problem, ask yourself two more questions: **Can you accept not making money for six months? Dare you cut 30% of your agency brands?** If the answers are yes, then consider opening a store.
#### **Final Thoughts**
Can dealers open stores? If methods and resources are appropriate, yes. But it must be emphasized that this article is not advocating for opening stores, nor is it telling dealers to abandon their original business to build a retail group or enterprise. On the contrary, we hope to **broaden the horizons of those with resources and determination, providing a business extension idea.** In the past, dealers have been supplying goods to customers, but in this era of major retail transformation, more and more dealers are exploring upstream and downstream, trying new things. **Opening a store is not a must, but an option.** Compared to doing B2b or private labels, dealers spending hundreds of thousands or millions to try opening two or three stores, even if they fail, the loss is within a controllable range. But if successful, it provides a way out for core members and the second generation, avoiding a dead end. And this path is already being explored by peers in the industry, and they are enjoying it.
When price wars dilute channel profits and new business formats impact terminal patterns, dealers are trapped in a dual dilemma: **sticking to traditional business faces growth stagnation, while rashly transitioning to store opening may fail due to 'gene mismatch' and 'management disconnect.'**
Transformation requires not just courage, but also good methodology and resource leverage. Besides the cases mentioned in the article, are there other reference paths and methodologies?
On March 19, in Chengdu, at the **4th China FMCG Dealer Conference**, we have invited over a hundred outstanding dealers, factory executives, and retailers to discuss channel changes and business opportunities for dealers in the new environment. There will also be excellent dealers sharing practical cases of transitioning to retail. Interested friends, don't miss it!


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