"Being a distributor, I have no sense of security at all now." A few days ago, while chatting with two distributor friends, one of them shared this sentiment. "Manufacturers can't be relied on, customers aren't loyal, and salespeople want to jump ship." The other distributor responded, "Distributors can no longer have a sense of security!"

The market isn't growing, but manufacturers' targets are still increasing. From early May to now, I've visited seven or eight distributors, with annual sales ranging from tens of millions to hundreds of millions. When discussing Q1 business, the common feedback was that sales had declined more or less compared to the same period last year. One daily chemical distributor shared, "In Q4 of last year, I clearly felt poor market sell-through, but to meet the annual target, I still paid for a batch of goods and pushed them to terminals using my relationships. The side effects appeared early this year: the manufacturer wanted a strong start, but I had millions in inventory in the warehouse, and store goods hadn't sold through, leading to a vicious cycle." Starting three or four years ago, the industry has been talking about a stock market. In the past year or two, the competitive pressure in this stock market has become more pronounced. From the 2023 financial reports of major listed companies, it's clear that FMCG manufacturers face the reality of competing fiercely within a stagnant market. As channels become more fragmented, the offline market is being carved up. We used to say offline business had a larger pie, but today we see offline share trending toward flat. This means distributors have fewer business opportunities in their regional markets. "Strangling yourself and eliminating peers has become the real market picture."

"Although the market isn't growing, manufacturers' targets haven't stopped growing. This year, a leading seasoning brand has set a 20% growth target for me," said one distributor. If the target ultimately can't be met, they'll have to dump goods into the market, because they still want to claim rebates. The agency nature of China's FMCG industry determines that the manufacturer-distributor relationship is unequal. In most cases, some leading manufacturers demand that distributors be "obedient, follow instructions, and execute." If distributors fail to meet the manufacturer's targets, they lose many rebates, and the annual calculation may result in losses. Not only do sales targets increase every year, but some manufacturers are also making it harder for distributors to achieve them. A seasoning distributor shared an interesting phenomenon: "A certain seasoning manufacturer has twenty or thirty distributors in the same city, divided by region, channel, product line, and even custom products." On one hand, they require distributors to sell more goods; on the other, they open more distributors in the same area, making it harder for existing distributors to sell.

In the past, manufacturers emphasized regional protection, but when facing growth pressure, they often break it themselves. Many provincial managers even tacitly allow cross-region selling within a province, as long as the sales count toward the province's target. For manufacturers, the only thing that matters is selling goods and maximizing profits, whether online or offline, because sales still belong to the manufacturer. Distributors can't influence manufacturers, especially those who rely on brands; without the agency right, their business is gone. But in the current environment, with no market growth and brands still demanding growth, distributors who fail face challenges to their agency rights, and switching is common. The shift from manufacturers' past support to present pressure is itself the biggest source of insecurity for distributors.

Relationships can't compete with prices; terminal stores have no loyalty. "In the past, it was second-tier wholesalers who lacked loyalty; now some terminal stores are gradually losing loyalty too. When salespeople push products, store owners often open various online platform mini-programs to show prices, and relationships are only worth fifty cents," a snack food distributor told me. For most stores, the distributor's biggest advantage is service. When products don't sell well, stores demand exchanges or even returns, shifting that risk and loss onto distributors. But now, some terminal store owners don't appreciate relationships and service either. The reason is that terminal stores are also finding business harder.

On one hand, e-commerce has carved away part of the market, especially for planned purchases like paper, personal care, and cleaning products, where consumers have formed the habit of buying in bulk online. On the other hand, various new retail models—community group buying, discount stores, snack stores, chain convenience stores—are all vying to take supermarket business in different ways. For example, snack stores sell 555ml C'estbon water for 0.9 yuan and 500ml Oriental Leaf tea for 3.9 yuan, with prices for standard SKUs 20%-40% lower than traditional channels, and even 50%-60% lower for some bestsellers. Surrounded by such stores, small shops in the same area inevitably see their business squeezed. During New Distribution's terminal research, some small shop owners said bluntly, "My small shop even sources from Duoduo Maicai and Meituan Select; their supply prices are lower than what distributors offer me, let alone for ordinary consumers." These big platforms have scale cost and efficiency advantages, while traditional small shops are numerous, scattered, unorganized, and backward. Facing competition from big platforms and capital, small shops have no defense. If these platforms weren't prohibited from selling cigarettes, small shops would be even worse off. In such an environment, distributors can't really blame terminal stores for lacking loyalty. Small shops' traffic is being stolen by other formats, sales are declining, and if they can't even guarantee profits, they can't survive.

Can't recruit or retain salespeople; talent shortage. During a visit to a distributor in Chengde, we discussed an interesting topic: "According to media data, many people can't find jobs now, but we can't recruit anyone, and we worry daily about existing salespeople leaving. " The inability to find and retain salespeople is a common problem for many FMCG distributors. Essentially, this is a problem for the entire FMCG industry. Many young people think FMCG sales isn't advanced enough, that frontline sales has no future, and more importantly, the field can't pay higher wages to attract good talent. Previously, during terminal research, I talked with several salespeople. In third-tier cities, their monthly salary is only 4,000-5,000 yuan, which is less than what food delivery or courier drivers earn. Over the years, prices and living costs have risen, but many salespeople's wages haven't changed much compared to seven or eight years ago. And they have to do more work because goods are harder to sell. Is a salesperson's job simple? Actually, it's not. Compared to delivery riders, frontline sales work is not only complex but also difficult. For a delivery rider, they just follow system instructions, pick up goods, and navigate to the destination. It's standardized work that anyone can do. But a salesperson's job is different: it's a sales role, requiring entering stores, explaining products, persuading small shops to order, helping owners place orders, and competing for the best shelf positions. Besides selling, there are terminal account reconciliation, payment collection communication, after-sales service, plus manufacturer-assigned tasks like terminal display photo check-ins. Salespeople have many tedious tasks daily. And the pressure is considerable. For example, at year-end, manufacturers push inventory onto distributors; goods can't sit in the warehouse, so salespeople have to push them to stores using relationships, but if the market doesn't move, it consumes relationships and requires finding solutions. Just from the salesperson's actions, their effort and income are mismatched. Of course, this isn't the distributor's fault; it's an industry-wide issue. Food and beverage is a livelihood industry; costs have risen over the years, but profits are increasingly thin, so distributors can't afford to pay higher wages. This puts distributors in a painful position: they can't pay higher wages, can't attract or retain good talent, existing salespeople are complacent but can't be fired, and the business operates at a low level.

Final Thoughts Market changes are irreversible, and the uncertainty and crisis they bring are beyond distributors' control. For distributors, the only way to increase security is to strengthen themselves. Can they achieve higher efficiency through digitalization? Can they cover more effective terminals? Can they design better compensation and performance plans to cultivate talent? Since the external environment can't be changed, start by changing yourself.