During the CFC conference in March, I spoke with several distributor friends, and the most common topic wasn't a specific channel or product, but a shared emotion: anxiety.
"Last year, I attended several industry forums, and at each one, someone talked about B2B, digitalization, and how if you don't transform, you'll die," a snack food distributor told me.
The more we talked, the more I felt that many distributors are not troubled by a lack of direction, but by too many directions. Everything others do looks like an opportunity, and everything others say sounds like a trend, which leads to confusion. Some are led by the nose, others are misled into investing, and in the end, they spend a lot of money without a clear path.
This is not an isolated case. Over the past year, many distributors have told me that to ease their anxiety, they invested heavily and tried many things, but they kept losing money.
Some models are indeed viable, and some transformations have succeeded, but that doesn't mean every distributor must follow the same path. What works in one region may not work in another; a model that a team can handle may become a burden for another team; a path that others have paved with years of accumulation, financial strength, and organizational capability may only bring investment and no results for another distributor.
To put it bluntly, many distributors are not losing because they don't work hard, but because they are swept up by transformation anxiety, rushing to imitate and invest, and in the process, disrupting the basic business they could have held on to.
There are more and more "transformation plans" in the market Why are distributors becoming more anxious?
In the past two years, the distributor circle has been flooded with new directions. Today someone talks about B2B, tomorrow someone talks about digitalization, and the day after tomorrow someone talks about instant retail, warehouse-store supply, platform operations, and so on.
But have you ever wondered where these voices come from?
The first category is digital service providers. Their business model dictates that they must constantly tell distributors, "You need digitalization," because they only earn revenue when you buy their systems. This doesn't mean their products are worthless, but they naturally amplify the urgency of falling behind without digitalization. For them, the more anxious you are, the faster you make decisions.
The second category is various platforms and matchmakers. They need distributor resources in the supply chain to build their networks. In their stories, you are not the protagonist but a piece of their ecosystem puzzle.
The third category is some industry media and forums. What topics get traffic? What content spreads easily? Anxiety. Titles like "Distributor Shakeout," "Transform or Be Eliminated," and "Billion-Dollar Market Redistribution" are naturally more viral than "Steady Progress with Basic Skills." When the traffic logic of industry content diverges from the real needs of distributors, noise is generated.
The fourth category might be your peers who are already doing it. A distributor friend starts B2B, posts on social media, shares a few numbers, and you think it looks good. But what you see is a carefully curated side; you don't see how much they invested, how many pitfalls they encountered, or what unique resources support them. Survivorship bias is very severe in the distributor circle.
I'm not saying this to deny transformation itself. The market is changing, channels are changing, and distributors certainly cannot stand still. But there is a premise that must be clear: Are you acting based on your own judgment, or are you being pushed by market noise?
Driven by your own judgment, even if you make a wrong step, you can correct it because you know why you started. Swept up by others' anxiety, even if the direction happens to be right, you don't know when to stop or adjust.
So, the root of many distributors' anxiety is not a lack of opportunity, but the inability to distinguish real opportunities from those that just look lively; not a lack of direction, but too many directions, leading to a loss of judgment.
Distributors, don't follow the trend when transforming!
When I communicate with some distributors, a clear feeling is that they are not unwilling to change, but they are too easily led by external "cases." Whoever does B2B, everyone starts studying B2B; whoever adopts a system, everyone starts studying digitalization; whoever gains incremental sales through instant retail, everyone starts studying warehouse stores and new channels.
This is the pitfall many distributors easily fall into today. Many cases in the market look attractive because they often showcase growth, efficiency, and transformation results.
But the problem is that why they succeeded, what milestones they passed, etc., are not clearly explained.
For example, a distributor doing B2B may not just be because they saw it early and acted fast, but more likely because they already have sufficient customer density, regional deep cultivation capability, warehousing and distribution foundation, and organizational capability.
But when many distributors see these cases, they often receive not the conditions but the conclusions and results. This easily creates an illusion: if others can do it, I should too; if others have already done it, I'll fall behind if I don't.
This kind of judgment is very dangerous. Because business is never about copying others' homework, but about whether your resources, capabilities, and stage can handle it.
For example, last week, when I was exchanging ideas with some distributor friends, we discussed which software to adopt. A distributor said that after attending a study tour and listening to others' sharing, he immediately switched software, but now he's suffering and is about to switch again.
Digitalization never exists independently; it is essentially just a tool. What truly determines the effect is the business actions and management capabilities behind it. If your product structure is unclear, customer segmentation is not detailed, inventory management is rough, and team collaboration is not smooth, then the faster you adopt a system, the faster you expose problems, not solve them.
So, the real problem for many distributors is not unwillingness to invest, but too easily turning transformation into addition. If your current business is not doing well, processes and standards are not established, and organizational structure is not complete, how can you do well in new models? The most common result is that the old business is not maintained, and the new business has not truly taken off.
Sorting out your own business logic is the most important thing
No matter how big the industry changes or how many models there are, when it comes down to each distributor, the answer cannot be exactly the same.
My suggestion is: don't rush to find a direction; first answer three questions. These questions are not complicated, but I've seen too many distributors who have never seriously thought about them.
First question: How does your business make money?
Do you make money from brand profit margins, or from distribution efficiency? Do you make money from your relationships with terminals, or from your deep understanding of a category?
Different profit logics mean your core capabilities are completely different.
For example, brand-type distributors hold exclusive agency rights for several strong regional brands, and terminals cannot do without these products. The core of this business is brand resources; your moat is upstream, not downstream.
Channel-type distributors have dense coverage networks, fast response, and good service, and terminals are used to finding them. The core of this business is fulfillment capability; your moat is in efficiency.
Category-type distributors have deep cultivation in a category for over a decade, know the product structure, sales rhythm, and terminal display inside out, and have strong product selection ability. The core of this business is category expertise; your moat is understanding of the category.
Once you figure out how you make money, you know what to strengthen and what to give up.
Second question: What do your terminal customers really need?
Note, I'm not asking about industry trends, but about the customers you are serving: what are their biggest headaches?
Industry trends are macro, but business is specific. The whole industry is talking about instant retail, community group buying, and discounting, but the pain points of the stores you serve may not be these at all.
Many distributors study every day, look at cases and methods, but have you thought about whether these methods and strategies are suitable for your city and your customers?
In most cases, it's not that you are behind, but that you chose the wrong reference frame. The people who know your terminals best are not any industry experts, but you and your team. The stores you visit daily, the orders you process daily, and the problems you solve daily are the real basis for your decisions.
So instead of spending time studying others' models, spend a week visiting your core terminals with one question: "What problem do you most want me to help you solve right now?"
Third question: How much action can your existing resources support?
A distributor's business is inherently cash-flow sensitive, with a large amount of capital tied up in inventory and accounts receivable.
Under this premise, any transformation action requires a calculation: How much money does this need? How long before it shows results? If it fails, can I afford it?
Distributors are not startups; they don't need to and shouldn't gamble on a big direction. First, validate with the smallest cost; if it works, increase investment; if it doesn't, stop losses in time.
In conclusion
Back to the initial question: Should distributors transform or not?
Yes!
But the first step of transformation is not action, but cognition. Recognize your capability boundaries, recognize the real needs of terminals, and recognize your resource constraints.
The terminal relationships you've built over decades, your deep understanding of the local market, and the intuition and judgment you've accumulated in this category are your most valuable assets.