---
title: "Dealer's Product Selection Ability Is Ten Times More Important Than Before"
description: "When visiting dealers, I often ask them, 'What is your competitive advantage locally?' Two years ago, common answers were 'I have many top brands,' 'My compensation and performance are good,' 'My team is strong,' 'My store coverage is extensive,' etc. Since last year, I frequently hear a new answer: 'My product selection ability is strong' and 'My category management is good.' I've noticed that many dealer friends are beginning to realize that finding good products is also a core competency. Why did dealers overlook product selection in the past? Why has it become extremely important today?"
author: "周群"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-07-03"
categories: "Dealer Operations"
language: "en"
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markdown: "https://xinjignxiao.com/en/articles/dealer-s-product-selection-ability-is-ten-times-more-important-than-befo-0d999abf.md"
original_source: "https://mp.weixin.qq.com/s/0snGi-nmaDsgknSgtGe5YQ"
translation: "https://xinjignxiao.com/zh/articles/%E7%BB%8F%E9%94%80%E5%95%86%E7%9A%84%E9%80%89%E5%93%81%E8%83%BD%E5%8A%9B%E6%AF%94%E8%BF%87%E5%8E%BB%E9%87%8D%E8%A6%81%E5%8D%81%E5%80%8D-0d999abf.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/dealer-s-product-selection-ability-is-ten-times-more-important-than-befo-0d999abf/"
citation: "周群. “Dealer's Product Selection Ability Is Ten Times More Important Than Before.” New Distribution, 2025-07-03. https://xinjignxiao.com/en/articles/dealer-s-product-selection-ability-is-ten-times-more-important-than-befo-0d999abf/"
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---

# Dealer's Product Selection Ability Is Ten Times More Important Than Before

> When visiting dealers, I often ask them, 'What is your competitive advantage locally?' Two years ago, common answers were 'I have many top brands,' 'My compensation and performance are good,' 'My team is strong,' 'My store coverage is extensive,' etc. Since last year, I frequently hear a new answer: 'My product selection ability is strong' and 'My category management is good.' I've noticed that many dealer friends are beginning to realize that finding good products is also a core competency. Why did dealers overlook product selection in the past? Why has it become extremely important today?

When visiting dealers, I often ask them, 'What is your competitive advantage locally?'
Two years ago, common answers were 'I have many top brands,' 'My compensation and performance are good,' 'My team is strong,' 'My store coverage is extensive,' etc.
Since last year, I frequently hear a new answer: 'My product selection ability is strong' and 'My category management is good.'
I've noticed that many dealer friends are beginning to realize that finding good products is also a core competency.
Why did dealers overlook product selection in the past? Why has it become extremely important today?

**Why Dealers Didn't Prioritize Product Selection in the Past**

For a long time, dealers did not place much emphasis on product selection, which was determined by the market environment and the stage of industry development at that time.

**First, top brands were too dominant.**

In the era when brands dominated the market, market rules were set by top brands. Consumer awareness was highly concentrated on brands, and market share was monopolized by a few major brands. That was also the era when blockbuster products (big SKUs) were most common.

For dealers, rather than spending energy on selecting products, it was better to strive for agency rights of top brands, because representing top brands was the biggest competitive advantage.

Once a dealer obtained agency rights for a top brand, they essentially secured stable sales and profits. So at that time, many dealers liked to call themselves 'XX brand dealers' and regarded it as an honor.

Moreover, retail stores tended to stock branded goods. The reasons were simple: first, they sold well because consumers trusted them; second, under the profit model of charging channel fees, top brands could afford more expenses, such as entry fees and barcode fees, and then pay for shelf space, floor displays, and in-store promoters.

Consumers recognized brands, and retail stores also recognized brands. At that time, product differentiation itself was not the focus.

In the market, brands had absolute say, and dealers were pushed along. Their role was more about executing the tasks set by manufacturers rather than proactively judging market demand and discovering good products.

**Second, dealers lacked market sensitivity and faced significant information asymmetry.**

In traditional trading businesses, the core function of dealers was as intermediaries, helping upstream manufacturers deliver products to retail stores, without direct connection to consumers.

This led to most dealers not understanding consumers; consumer demand was mainly conveyed through feedback from stores and brand owners.

This information asymmetry made it difficult for dealers to proactively select products. Even if a new product had potential to explode, dealers found it hard to respond quickly. A common situation was that by the time dealers noticed a product, the trend had already passed.

So for dealers, the safest strategy was to follow the manufacturer's lead and choose high-volume products rather than risk trying uncertain ones.

**Third, the cost of product operation was too high.**

Last month in Yunnan, I met a major beer dealer who shared his experience of adjusting his product mix.

'Our sales were initially dominated by mid-to-low-end beer, with large volume but small profits. To improve profitability, we started to increase the market share of high-end beer. But this adjustment process took a full two years, during which almost all the company's earnings were reinvested into the market for consumer habit cultivation and marketing. Now, although overall sales haven't changed much, high-end beer accounts for 40% of total sales, and profitability has improved significantly.'

In this case, the core issue we see is that product operation is costly, time-consuming, and uncertain.

Because product operation inevitably involves heavy resource investment, such as securing premium display positions, running promotions, and advertising. This requires dealers to invest a lot of manpower, materials, and capital, and the market success rate for new products is not high; many investments may end up with no results.

**Fourth, the mindset of 'channel is king' was deeply rooted in dealers' cognition.**

In the past two or three decades, the consensus was that a dealer's core competency was store coverage. Whoever had more retail outlets and broader channel coverage would capture a larger market share.

This 'channel is king' business logic led dealers to invest resources and energy more into expanding stores, distributing goods, and pushing inventory, while ignoring the value of the products themselves.

In such an era centered on brands and oriented by channels, it was understandable that dealers did not prioritize product selection.

**Dealers Need to Turn Product Selection Ability into a Moat**

Recently, I visited Changsha New High-Qiao and Zhengzhou Bairong Market, and exchanged ideas with several major dealers. I found that in these two markets, there is a type of dealer that focuses on 'category operation,' and their growth has been quite good in the past two years.

What is 'category operation'? It means focusing on a specific category, doing it deeply and thoroughly, and providing category-specific product services to retail stores.

There is an important change: it's not about what products the dealer has to supply, but what products the stores and consumers need.

What are the needs of stores? What are the needs of consumers? Behind this, what is tested is actually the dealer's product selection ability.

Of course, this is the result. Tracing back to the root, why should dealers value product selection ability today?

**Directly, it's retail pushing dealers in reverse. Stores are shifting from 'selling shelf space' to 'selling products,' forcing dealers to pay attention to products.**

The past retail logic can be summarized as 'shelf logic': various fees plus deductions, whoever is willing to pay can get on the shelf.

This business model resulted in limited shelf space being basically monopolized by top brands. Additionally, brand power effectively promoted sell-through, so dealers preferred to represent big brands; the more they distributed, the higher the sales.

But today, the market has changed.

There is a severe oversupply of goods, and retail-side changes are happening one after another. Times have changed; 'selling shelf space' no longer works, and consumers are no longer buying it.

We see that more and more traditional retailers are also realizing this problem and proactively making adjustments. Behind these adjustments, there is actually a large amount of product replacement and supplier turnover.

Under this trend, if dealers still rely on standardized products from big brands, it's hard to help retail stores achieve differentiated competition. Only with strong product selection ability, being able to provide stores with unique products that align with consumption trends, can they gain a competitive advantage in the retail transformation.

Of course, if we only look at retail, it's still superficial. Essentially, the core is the mismatch between supply and demand.

The problems in today's market are, first, severe oversupply, and second, diversified consumer demand.

That is to say, the market does not lack products; the real problem to solve is how to match product supply with consumer demand.

Some friends might say, 'In the past two decades, I've been selling these products, and consumers were willing to buy. Why do you say now that products and consumer demand don't match?'

This has a historical background.

The diversification of consumer demand is not new; it's just that it has been fully stimulated now.

Before e-commerce emerged, consumers could only shop in physical stores. In that era, the entire offline market was fully educated by top brands.

Ads seen in print media and on TV, and products seen in stores, were basically all top brands. This gave consumers a strong perception that these brands' products were good, also because they had no exposure to other products.

The emergence of e-commerce turned 'limited physical shelves' into 'unlimited shelves,' allowing consumers to access more products.

At that point, consumers began to realize that there were so many products to choose from. During this process, many well-known 'Taobao brands' were born.

Today, consumers have massive channels to access product information, including traditional e-commerce like Taobao and JD.com, live-streaming e-commerce like Douyin and Kuaishou, as well as community retail and instant retail.

At this time, the diversification of consumer demand is fully stimulated. 'Buy, browse, stock up,' 'eat, drink, play, have fun'—different channels, different scenarios, different consumer needs, and correspondingly different products.

Moreover, this change is dynamic, meaning that as a retail end, you need to dynamically replace products based on these changes to fully meet demand.

For dealers, the same logic applies: if you can continuously provide the right products to retail stores, that is also the core moat.

**Final Thoughts**

Today's market environment is undergoing profound changes. The needs of retail stores, consumer habits, and the logic of product circulation are all being restructured.

From 'channel is king' in the past to 'demand is king' today, the role and function of dealers are transforming. In the past, it was about providing capital advances and warehousing and distribution. Today, dealers truly need to focus on consumer needs and provide stores with a product portfolio that can drive sell-through.

In this process, product selection ability is definitely one of the core competencies of dealers. The current market belongs to those dealers who truly understand consumers and can serve retail stores well.

🔺


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## Citation metadata

- Publisher: New Distribution
- Author: 周群
- Published: 2025-07-03
- Canonical: https://xinjignxiao.com/en/articles/dealer-s-product-selection-ability-is-ten-times-more-important-than-befo-0d999abf/
- Original source: https://mp.weixin.qq.com/s/0snGi-nmaDsgknSgtGe5YQ

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