---
title: "Dealers who sigh, complain, and drift with the tide are doomed to be eliminated!"
description: "In recent years, with the rise of FMCG B2B and the invasion of numerous new retail platforms into offline channels, wholesalers and dealers have seen a significant portion of their space and territory taken over. How to respond to this impact and survive in the new environment is a question all dealers are pondering. The wheel of the times rolls forward; those who adapt thrive, while those who resist perish. The 'Internet+' core has given rise to an internet gene characterized by flattened information, low-cost logistics, and more convenient payments. As Darwin noted, it's not the strongest or the most intelligent that survive, but those most adaptable to change."
author: "杨志国"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-08-09"
language: "en"
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# Dealers who sigh, complain, and drift with the tide are doomed to be eliminated!

> In recent years, with the rise of FMCG B2B and the invasion of numerous new retail platforms into offline channels, wholesalers and dealers have seen a significant portion of their space and territory taken over. How to respond to this impact and survive in the new environment is a question all dealers are pondering. The wheel of the times rolls forward; those who adapt thrive, while those who resist perish. The 'Internet+' core has given rise to an internet gene characterized by flattened information, low-cost logistics, and more convenient payments. As Darwin noted, it's not the strongest or the most intelligent that survive, but those most adaptable to change.

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In recent years, with the rise of FMCG B2B and the invasion of numerous new retail platforms into offline channels, wholesalers and dealers have seen a significant portion of their space and territory taken over. How to respond to this impact and survive in the new environment is a question all dealers are pondering.
The wheel of the times rolls forward; those who adapt thrive, while those who resist perish. The 'Internet+' core has given rise to an internet gene characterized by flattened information, low-cost logistics, and more convenient payments.
"In nature, it's not the strongest or the most intelligent that survive, but those most adaptable to change."
From an evolutionary perspective, the dealers who survive will be those who decisively transform and enhance their core competitiveness. Conversely, dealers who sigh, complain, and drift with the tide are doomed to be eliminated.
"History is a mirror that reveals the rise and fall of dynasties." The first generation of dealers, originating in the early 1990s, were called "official merchants," represented by sugar and alcohol companies, supply and marketing cooperatives, and department store stations.
Soon, with the reform of state-owned enterprises and the rise of wholesale markets, the second generation of dealers emerged in the late 1990s, known as "sitting merchants."
With the surge in consumer goods manufacturers and intensified market competition, around 2008, a small number of new-type dealers emerged as "trading companies." They formed professional sales teams, went out to secure orders, provided terminal services, formulated promotional policies, and delivered goods to stores. This is the third generation of dealers, called "traveling merchants," and they are currently the mainstream form of dealers in the market.
The times abandon you without even saying goodbye. Waves push forward, and the iteration of dealers will not change with individual will. The depth and breadth of B2B and offline new retail penetration into the FMCG industry are irreversible. The fourth generation of dealers is being born. Are you ready?
There are two paths for the transformation from the third generation to the fourth generation: transforming upstream and transforming downstream.
First, let's discuss transforming upstream to become a "brand marketing merchant." Specifically, this involves transferring warehousing and logistics functions to third parties, temporarily retaining the commercial flow function, and adding brand marketing functions. In simple terms, it means being able to distribute products, maintain relationships, and conduct promotional activities. It's not about having many brands, but about having quality ones (categories with potential and high gross margins).
If you don't understand, think about how Apple captures 90% of the profits in the entire mobile phone industry without owning a single factory, relying solely on core technological innovation and brand innovation.
Now, let's discuss transforming downstream to become a "unified warehousing and distribution service provider." Specifically, this means abandoning "buying and selling" and transforming into "services." The profit model shifts from "margin × sales volume" to the dividends of cost reduction and efficiency gains brought by "shared warehousing, shared logistics, big data empowerment, and internet finance." The target customers are "brand marketing merchants."
Although transformation is the general trend, knowing does not mean doing. The two paths listed above are academic deductions by industry experts and successful cases in a few regions.
"Only the wearer knows if the shoes fit." In my judgment, if we follow the above two paths, 80% of our dealers will inevitably fail. Why? Let me analyze:
"Eggs can only hatch chicks at the right temperature." This means that the development of things is the result of both internal and external causes. In the matter of dealer transformation, the rise of B2B and new retail is the external cause, while the dealer's core commercial flow capability is the internal cause. If we and the dealers can honestly face ourselves, it is not difficult to make the following classification and summary:
**Type A dealers (public retreat, private advance):**
They excel in all four capabilities: commercial flow, logistics, capital flow, and information flow, scoring 100 points. However, their excellent commercial flow capability is voluntarily abandoned by our own sales team, forcing dealers to transfer their commercial flow capabilities to other brands.
**Type B dealers (unambitious):**
Self-sales account for about 10%. They have standardized inventory management software and hardware systems, proactively make payments, proactively correct orders, cooperate with company inventory collection, and can deliver most orders within 2 days. At best, they are 2.5-generation dealers, close to "sitting merchants."
**Type C dealers (ready to retire):**
Self-sales account for 0%. Delivery is not timely, payments require reminders, and they are prone to expired products. Let's not talk about transformation first. Don't you think it's a miracle that such dealers can still survive?
Objectively and fairly evaluating, our dealers' commercial flow capabilities vary. Most dealers have become comfortable relying on the endorsement of certain well-known brands, and only a few have reached the commercial flow level of third-generation dealers. If they rush into transformation, they may fall into a situation of "incremental sales falling short, and existing sales being lost." This is why we dare not lightly talk about transformation.
Since the trend of dealer transformation is irreversible, the only right way is to actively respond, make up for shortcomings, and enhance their commercial flow capabilities. Neither a startled bird nor a frog in warm water is advisable.
The common shortcoming of the above three types of dealers is "low self-sales ratio," but the reasons and degrees differ:
**Type A dealers actually have strong commercial flow capabilities:**
Except for first-tier products, all other brands rely on dealer self-sales. The key to driving such dealers is reasonable channel margins and stable price order. What we need to change is the fixed thinking of managers at all levels.
Shift from "trusting the power of local sales units" to "trusting the power of dealers." Under the premise of equal responsibilities, rights, and interests, decisively hand over the main body of market operations to dealers.
**Type B dealers lack commercial flow capability, and the condition is serious:**
Business office staff submit orders, and dealers deliver; when business office staff are on holiday, dealers are on holiday. They do the work of logistics providers but earn the money of dealers. It's simple and comfortable. If the business office staff were withdrawn this month, the dealer would close next month.
For severe illnesses, use slow-acting medicine; rushing will cause collapse! Type B dealers should first gradually increase their self-sales ratio before talking about transformation. This will be detailed later.
**Type C dealers are terminally ill and have no intention to transform:**
What we need to do is: **eliminate them immediately!**
Now, let's discuss in detail how to increase the self-sales ratio of Type B dealers.
**Step 1: Ensure data authenticity.**
Estimated actual sales for the period = opening inventory + purchases during the period - closing inventory.
Dealer self-sales ratio = (estimated actual sales - sales by salespeople) / estimated actual sales.
Dealers must cooperate with the company in inventory collection and order correction. These two obligations are written into the "Dealer Annual Contract." There is no reason for dealers to refuse to execute, unless salespeople or sales supervisors have selfish motives. Otherwise, how can we explain negative dealer self-sales? If the data is false, it only shows that the team's values are inconsistent. Different paths, no common goals!
**Step 2: Principles and methods.**
**Principles:**
1. No conflict, no replacement, complementary advantages.
2. Let the additional people and vehicles of dealers generate incremental benefits, at least not lose money.
3. Channel policy: align salespeople and dealers.
4. By September 30, 202*, the dealer self-sales ratio must be increased to 50%.
**Methods:**
1. Divide by region: urban areas use the visit-sales system by salespeople; township areas use the vehicle-sales system by dealers.
2. Divide by channel:
- Transfer wholesale channels to dealers for operation, as they have customer relationships and it helps stabilize price order.
- Encourage dealers to boldly cooperate with B2B and various new retail platforms.
- Vertical channels such as internet cafes, factories, canteens, fruit shops, fitness clubs, small restaurants, and government procurement are where dealers have inherent advantages.
3. Divide by product: high-margin products are self-sold proactively; new products are self-sold with a markup.
**Step 3: Rewards and penalties.**
Introduce the "Dealer Self-Sales Ranking Table," published every ten days, with monthly business reviews and quarterly meetings for rewards and penalties.
**Rewards:**
Rewards for self-sales ranking and self-sales progress; encourage dealer proposals to create a positive atmosphere!
**Penalties:**
1. Dealers with negative quarterly self-sales ratio or in the bottom 10% of rankings will be directly eliminated.
2. Dealers in the bottom 10%-20% of quarterly self-sales rankings will have their regions divided, and new dealers will be added.
**The green mountains cannot block the river; it will eventually flow eastward.**
In the face of technological progress, even the soft emotional factors of humanity seem fragile. Almost all business observers believe that big data and artificial intelligence will disrupt most industries in the near future. For everyone involved, the question is simply whether you are the disruptor or the disrupted.
Transformation is not easy, and dealer transformation is even harder. Let's start with the "self-sales ratio," patiently persuade our dealers to take one step at a time, bravely face possible difficulties, boldly try, verify through attempts, and adjust through verification.
Those who know themselves are wise, and those who conquer themselves are strong! Thank you to every fighter sweating on the front line!


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