--- title: "Distributors Are Polarizing: Understand These 7 Points to Avoid Elimination" description: "Many distributors started their businesses over a decade, two decades, or even thirty years ago, in the late 1980s, when the business environment was vastly different from today's. Now, distributors face a dramatically changed environment, and their situation is actually more difficult than that of manufacturers. This article outlines seven key challenges, including intense competition leading to polarization, information symmetry, channel shortening, service improvement, profit decline, the Matthew effect, and demand differentiation." author: "New Distribution" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2017-10-24" language: "en" canonical: "https://xinjignxiao.com/en/articles/distributors-are-polarizing-understand-these-7-points-to-avoid-eliminati-8944015e/" markdown: "https://xinjignxiao.com/en/articles/distributors-are-polarizing-understand-these-7-points-to-avoid-eliminati-8944015e.md" original_source: "https://mp.weixin.qq.com/s/L7BdtLv7yNtA791nnEIgxA" translation: "https://xinjignxiao.com/zh/articles/%E7%BB%8F%E9%94%80%E5%95%86%E6%AD%A3%E5%9C%A8-%E4%B8%A4%E6%9E%81%E5%88%86%E5%8C%96-%E8%AE%A4%E6%B8%85%E8%BF%997%E7%82%B9%E6%89%8D%E8%83%BD%E4%B8%8D%E8%A2%AB%E6%B7%98%E6%B1%B0-8944015e.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/distributors-are-polarizing-understand-these-7-points-to-avoid-eliminati-8944015e/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Distributors Are Polarizing: Understand These 7 Points to Avoid Elimination > Many distributors started their businesses over a decade, two decades, or even thirty years ago, in the late 1980s, when the business environment was vastly different from today's. Now, distributors face a dramatically changed environment, and their situation is actually more difficult than that of manufacturers. This article outlines seven key challenges, including intense competition leading to polarization, information symmetry, channel shortening, service improvement, profit decline, the Matthew effect, and demand differentiation. ****Many distributors started their businesses over a decade, two decades, or even thirty years ago, in the late 1980s, when the business environment was vastly different from today's. **Nowadays, distributors face a dramatically changed business environment. To be honest, distributors are in a difficult position, even more so than manufacturers.** 1 ## ****Intense Competition Leads to Polarization**** Think about it: how are the once locally prominent distributors doing today? Those who were impressive in the past, especially wholesalers, the big players and provincial agents of their time—what is their current state? Wholesaler-type distributors will inevitably polarize: **some, leveraging platform power, will do very well because they have teams; others, if they stick to simple delivery and credit sales, will quickly decline.** This divergence arises because wholesaler-type distributors have two distinct characteristics: **Some have their own clear business strategies,** even deep cooperation with manufacturers, and they have the advantage of a strong team. If they seize this and transform quickly, they can do well; **others are traditional delivery services,** with a few vehicles and staff, making rounds every ten days or half a month. These so-called "salespeople" are essentially just deliverymen, lacking the ability to do real business—the boss does all the selling. If they continue this approach, even extending credit, and at year-end have to haul back several truckloads of goods when collecting debts, they will soon fail. This is the predicament traditional distributors face. 2 ## ****Information Symmetry**** **For those of us in retail and terminal sales, the pressure we face is information symmetry.** Small retail outlets are decreasing, while medium and large terminals are growing, and we don't know how to deal with them. China's distributors have gone through several stages of development. **The first stage relied on courage and seizing opportunities. Others dared not enter the market, but I did; others dared not do something, but I did, and I succeeded. The second stage relied on information asymmetry.** **The advent of the internet has essentially eliminated information asymmetry, and those who once profited from it now find it difficult to move forward.** You'll notice that the internet spreads information at an unprecedented speed. I say the internet hasn't spread much knowledge, but it has spread a lot of information. Information dissemination means our competitors and customers receive information at the same speed as we do. If we continue to rely on information asymmetry to "make a living," we will find it very hard. But remember: **the internet can eliminate information asymmetry, but it cannot eliminate knowledge asymmetry.** In the past, we relied on information; in the future, we must rely on knowledge. Some say, "Live and learn." I tell you, you must learn to live; knowledge renewal is our lifeblood. Without updating our knowledge, even though we are alive, we are already dead, unable to keep up with the times. 3 ## ****Channel Shortening**** Regarding the wholesalers I mentioned earlier, some say, "I'm doing well." I congratulate them, proving that such wholesalers are still good. But honestly, most wholesalers will struggle because channels are shortening. This is a trend that no one can stop. Today's small shops may bypass distributors and cooperate directly with manufacturers. 4 ## ****Service Improvement**** Service is becoming increasingly difficult and truly needs improvement. **The challenge is: when facing terminal stores, can we provide a level of service higher than that of internet e-commerce platforms?** Whether we can offer superior service is the difficulty we face. 5 ## ****Profit Decline**** In any industry, the more intense the competition, the more mature the industry, and the lower the profits—this is beyond doubt. We can no longer expect to buy a product for three yuan and sell it for ten, as we did thirty years ago; now, it's likely we buy for ten and sell for eleven or twelve. **When profit competition reaches its extreme, note that it's not that the product itself has no profit, but that the business model has undergone major changes.** 6 ## ****The Matthew Effect**** Good employees flock to good companies, good distributors follow good enterprises, and bad distributors follow bad ones. This is the Matthew effect: **the good get better.** 7 ## ****Demand Differentiation**** The most important manifestation of demand differentiation is: **some only need the cheapest products and don't care about anything else from the manufacturer.** I (the distributor) can handle everything; you (the manufacturer) just give me the cheapest product. **Others disdain the product itself**—if your service is good, I'll deal with you; if not, I won't. Demand differentiation is already emerging, so we must adopt different measures for different customers. Source: FMCG Marketing Frontier **The 2017 (3rd) FMCG + Internet Conference** will be held in Chongqing in November 2017. The conference will closely focus on the theme "New Forces, New Ecology," inviting **1,000+ distributors, 500+ brand owners, founders of 200+ B2B platforms, and 100+ investment and financing institutions** to jointly explore a new chapter of cross-border integration! Click the link below to review the highlights of the 1st and 2nd FMCG + Internet Conferences: [2016 "FMCG + Internet" Summit Forum]() -END- --- ## Copyright and AI use This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL. Contact: zhaobo258@gmail.com · +86 158 5481 7671