Dear friends, hello. As if seeing you in person, I am Yuan Lai. Recently, I visited several distributor boss friends intensively and asked about their current business situation. The answers I got are probably the same as many distributors: business is very bad! There are two specific comparisons for the bad business: first, a decline compared to 2022; second, compared to 2019, it has not recovered to pre-pandemic levels. In addition, due to the rise and expansion of discount supermarkets, chain snack stores, wholesale stores, and flash warehouses, they have taken away a lot of business from mainstream supermarkets and small stores. Combined factors have led to further decline in distributor business. Distributor bosses are very anxious. Although it is not as crazy and directly predatory as Alibaba's Lingshoutong, JD's Zhangguibao, and Yijiupai in 2017 and 2018, in some regions, such as Hunan and Chongqing, various new retail formats have indeed put considerable pressure on distributors and independent stores. Facing the decline in business, what should we do? This reminds me of a sentence from General Manager Liu Fen of Quanjielai Trading: "Change what can be changed; for what cannot be changed, there are tall people to hold up the sky." After thinking, I added a sentence: "If it cannot be changed, not only are there tall people holding up the sky, but also a batch of small distributors will fall first." What does this mean? What distributors can change is to continuously polish their own operational efficiency and operating costs. Since they have chosen the distributor business and operate the circulation of goods, they must inevitably bear the challenges brought by upstream and downstream, as well as the overall economic environment. Since they cannot change external changes, they can only face the changes and solidly do the basic work. The latest external changes first affect first-tier cities and provincial capitals. For mainstream distributors in ordinary prefecture-level cities and county-level cities, pressure is transmitted, and those in the most frontier cities are affected first. In addition, even in their own cities, they must believe that "a lean camel is bigger than a horse." The simplest truth is that if your business scale is large, you must be more resilient than small distributors. If someone is to fall, it must be the small ones first! Of course, this does not mean that when external changes come, distributors do nothing, but rather they must clearly know where their core capabilities and core competitiveness lie! Since the reform of the commercial circulation system in the 1990s, the emergence of individual distributors has not been without twists and challenges. The rise of KA stores, e-commerce, and new retail has each had a direct impact on distributor business. In the waves of impact, batches of distributors have fallen. But looking at the overall development of the distributor group, it has not become weaker; instead, some distributors have become stronger and stronger in the twists and turns! Facing external changes, how should distributors grow their business? Today, I will share the understanding of distributor business from three post-80s and post-90s distributor bosses I met. The first is a post-90s female distributor boss. She started a business with 2 million yuan from her parents 14 years ago and became a well-known regional dairy distributor in 8 years. Here is her understanding of distributor business and related topics:

  1. Market profits are thin and the environment is poor. The more so, the more we need to "re-learn and re-do." Many distributors have forgotten why they succeeded in the past. In the past, they built up terminal sales bit by bit, but now that they have grown, they sit in the office looking at reports and feel the market is hard to do. Actually, it is because they haven't gone into the market to see where the real problems are.
  2. In the past, the significance of distributors was warehousing, distribution, and capital advance. Now, the significance of distributors is to push new products.
  3. The key contradiction in second-generation succession is not how the second generation takes over, but how the parents hand over (teach) the class. Don't get it reversed.
  4. Regarding team management, don't think about "managing" all the time. Start from the premise that "he doesn't know how to do it," which is a logic of helping, not a logic of control and assessment.
  5. On the topic of manufacturers managing distributors: Why are distributors hard to manage now? Because they don't make money. Why were distributors easy to manage in the past? Because they made money (without too many complex factors, making money is the simplest and most direct measure). Distributors are not hard to manage; the question is whether the starting point is to help distributors make more money. The second is a post-90s distributor boss. He took over a business of only a few million from his parents and now has annual sales exceeding 100 million, plus tens of millions in retail supermarket business. His sharing is:
  6. In county-level markets, there are two types of retail business to do: first, community fresh food supermarkets in county towns; second, supermarkets over 800 square meters in townships.
  7. Doing business with first-line brands cannot make money purely from purchase-sale price differences, but it must be done: first, make money from fees and rebates; second, make money from capital turnover through downstream ordering meetings. For instant noodles, milk, beverages, and other first-line brands, if after a year of doing them, you cannot use downstream capital turnover and still use your own money for agency, give up directly.
  8. The salary of frontline salespeople should be 20% higher than local peers to keep the team stable.
  9. The development model of a county-level trading company: distribution agency + local supply chain + physical retail supermarkets + local community e-commerce.
  10. If a distributor's core capability lies in distribution, multi-category and multi-brand is the inevitable path; if the core capability is product sell-through, multi-brand and single-category is the inevitable path. The third is a distributor boss born in 1989, focusing on snack food distribution. In 22 years, he achieved annual sales exceeding 100 million in a county-level city. His sharing is:
  11. Do well in one or two core brands, strive to become the manufacturer's benchmark distributor, follow new products, and confidently invest money and resources. Why? Because the company cannot let the "benchmark" fall!
  12. In the past, traditional distributors did business to meet demand. Now, under the background of stock competition, what we need to do is "create scenes and create demand." How to do it specifically? The simplest real case: bundled sales of milk and nuts.
  13. Excellent distributors take the 50-page market strategy PPT that the manufacturer's city manager tells them, and then extract 30 pages to talk about category development trends with local system store managers and buyers.
  14. Many snack food distributors take on "internet celebrity" products not to sell well, but to prove they can't sell. Without giving internet celebrity products C-position display, and thinking about making money from the start, how could it be possible? When internet celebrities go offline, don't think about making money at first.
  15. When doing new categories, the first thing to consider is market share and industry position, not single SKU profit and gross margin. The above is a summary of the views of three young distributor bosses on the distributor business. Finally, let me introduce the understanding of the distributor business by "New Distribution." In the past five or six years, I have visited more than 300 distributors, and we also have a set of understanding of distributors, which is a more objective third-party interpretation. 1. Distributors in 2000 and distributors in 2020 have undergone earth-shaking changes. Whether in scale or capability characteristics, they have begun to evolve into corporate, team-based, and professional businesses. 2. Many people think that the distributor business is nothing more than moving goods, representing more products, covering more stores, and there is no business model to speak of. But in fact, distributors have now evolved into 5 types of distribution models. Under different models, other different business directions have also been extended. 3. The core competitiveness of distributors has only two: distribution or sell-through capability. If focusing on distribution, do it broadly and comprehensively; if focusing on sell-through, do it deeply and professionally. From birth to now, after 30 years of elimination and iteration, what changes are actually happening to distributors? From individualization to corporatization, what are the business models of distributors? How to do daily operation and management around core capabilities? The above three distributor bosses, plus me as an industry observer, will all share completely in the internal community of the "Distributor Member Club." Welcome to join the "Distributor Member Club" initiated by "New Distribution." Let us learn, exchange, and discuss with excellent distributors. In the discussion, find shortcomings, discover opportunities, upgrade management concepts, withstand pressure, and create new business growth! Welcome to scan the QR code to add my personal WeChat to learn more about the Distributor Member Club and discuss the development of the distributor business with each other. Extended Reading