---
title: "Distributors in 2023: Focus on Profit, Not Sales Volume"
description: "In 1998, marketing expert Jin Huanmin proposed 'Don't focus on brand, focus on sales volume,' which was well-received. Now, a new viewpoint is proposed: 'Don't focus on sales volume, focus on profit.' With profit, sales volume becomes easier. Sales volume and profit are mutually causal. This article argues that in the current low-growth era, distributors should shift from a sales-volume-centric approach to a profit-centric one, exploring new paths such as high-end products, white-label products, and a 2C organization."
author: "刘春雄"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2023-01-20"
categories: "Dealer Operations"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/w3Ktx7Q3Ev8FkvzIFhospg"
translation: "https://xinjignxiao.com/zh/articles/%E7%BB%8F%E9%94%80%E5%95%86%E7%9A%842023%E5%B9%B4-%E4%B8%8D%E5%81%9A%E9%94%80%E9%87%8F%E5%81%9A%E5%88%A9%E6%B6%A6-ed7de5ef.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/distributors-in-2023-focus-on-profit-not-sales-volume-ed7de5ef/"
citation: "刘春雄. “Distributors in 2023: Focus on Profit, Not Sales Volume.” New Distribution, 2023-01-20. https://xinjignxiao.com/en/articles/distributors-in-2023-focus-on-profit-not-sales-volume-ed7de5ef/"
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---

# Distributors in 2023: Focus on Profit, Not Sales Volume

> In 1998, marketing expert Jin Huanmin proposed 'Don't focus on brand, focus on sales volume,' which was well-received. Now, a new viewpoint is proposed: 'Don't focus on sales volume, focus on profit.' With profit, sales volume becomes easier. Sales volume and profit are mutually causal. This article argues that in the current low-growth era, distributors should shift from a sales-volume-centric approach to a profit-centric one, exploring new paths such as high-end products, white-label products, and a 2C organization.

In 1998, marketing expert Jin Huanmin proposed "Don't focus on brand, focus on sales volume," which caused a huge response. Sales volume and brand are mutually causal. Once sales volume rises, it naturally becomes a brand. Later, based on this viewpoint, the book "Sales Volume is King" was written. **"Don't focus on sales volume, focus on profit"—with profit, sales volume is not difficult. Sales volume and profit are mutually causal. This is the new viewpoint we propose.**

Jin Huanmin once said that even if we propose opposite viewpoints, the underlying logic is the same. They all reflect the marketing themes of different eras.

**Sales Volume as the Theme**

Without profit, it's all in vain, and who would want to work in vain? Distributors are meant to pursue profit. Sales volume is just a means to achieve profit.

So why has sales volume long been the marketing theme? Because with sales volume comes profit. Sales volume is the absolute principle. Sales volume is the undisputed theme of marketing.

Now this argument may no longer hold. Over the past years, many companies have lost too much profit in order to maintain sales volume, and they haven't even maintained sales volume. Involution means exactly this.

2023 is the first year after the three-year pandemic. Many people have proposed "restarting growth," gearing up to increase sales volume.

I can't help but ask: **Restart growth, or restart involution?**

Involution stems from a persistent struggle for sales growth.

Why persist in the struggle for sales volume? Because distributors aim to make money (profit), and with sales volume, they can make money (have profit).

Thus, distributors' profit goals are transformed into a struggle for sales volume.

This is precisely the root of the current predicament for distributors: in order to pursue profit growth, they desperately pursue sales growth.

The result is often: **Not only did profit not grow, but sales growth was also not achieved.**

Can we try to return to the source of profit: besides sales growth, what other methods can achieve profit growth?

In the past decade, Chinese marketing has made almost no progress. An important reason is that corporate goals have been simply transformed into sales growth.

**If distributors want to avoid restarting involution, they need to find new paths for profit growth.**

**Profit as the Business Theme**

Since profit is the goal of business operations, where does profit come from?

The three elements of profit are **sales volume, price, and cost.**

The larger the sales volume, the higher the profit; the higher the price, the higher the profit; the lower the cost, the higher the profit.

This is elementary arithmetic, very simple. But reality is not so simple.

The higher the price, the smaller the sales volume. The lower the price, the easier the sales. **Therefore, there are contradictions and conflicts among the three elements of profit.**

How to resolve contradictions and conflicts?

Distributors' past experience was: lowering prices can increase sales volume. Thus, continuous price cuts and promotions became the main means to increase sales volume. This is lowering prices to maintain sales volume.

There are also contradictions and conflicts between cost and sales volume. Distributors' past experience was: increasing costs can increase sales volume. For example, doing more displays and shelf arrangements. For example, giving salespeople higher commissions. This is increasing costs to maintain sales volume.

Among the three elements of profit, they spared no expense in sacrificing price and cost to maintain sales volume. Because in the past, sales volume had too much room for growth. Over the 40-plus years of reform and opening up, sales volume grew continuously for more than 30 years.

**Now, past experience has suddenly become invalid. Lowering prices and increasing costs do not necessarily increase sales volume, and even maintaining existing volume is difficult. Among the three elements of profit, all three are declining.**

Therefore, it is better to say that profit is not about the three elements, but about the art of handling "two pairs of contradictions."

"On Contradiction" tells us that there are principal contradictions and secondary contradictions. Moreover, principal and secondary contradictions can transform into each other.

**Among the three elements of profit, in the past, sales volume was the principal contradiction, and grasping the principal contradiction was enough. Now the principal contradiction is not sales volume, but unit price (product structure). If price increases, a decline in sales volume is acceptable.**

**Sales Volume is No Longer the K (Key) of KPI**

Before 2013, China's GDP grew at an average annual rate of about 10% since reform and opening up.

The rapid GDP growth was due to extremely strong demand for quantity. Therefore, among the three elements of profit, sales volume was the principal contradiction.

It was right to grasp the principal contradiction of sales volume. Therefore, they were not afraid of high costs or promotions.

Promotions increase costs (expenses) but also increase sales volume. To increase sales volume, they spared no expense in increasing costs.

After the lifting of restrictions in December 2022, salespeople couldn't be organized. A distributor in Beijing made a big move: **The company's entire December profit was given to the sales team.**

To increase sales volume, they spared no expense in increasing (labor) costs.

Another factor for distributors to increase sales volume: manufacturers' tiered rebates.

Even if operating profit is zero, they still want to increase sales volume, because there are tiered rebates anyway.

In short, the operation at this stage can be simplified to one word: **sales volume.**

Sales volume is the principal contradiction; everything else is secondary.

All operational work must give way to sales growth.

All KPIs are sales-volume-centric. Sales volume is the K (Key) of KPI.

Long-term sales growth has become solidified and formed a habit.

Habits are behaviors without thinking.

What influences behavior is not knowledge, but instinct and habit.

Habits can be personal or collective.

**"With sales volume, there is profit" has become a collective habit of distributors.**

**Low Growth is the New Normal**

Evolutionary theory is the most important marketing law.

When the environment changes, everything must change. You can't wear summer clothes in winter.

The change from the old normal to the new normal is the biggest environmental change.

From pursuing quantity satisfaction to pursuing a "better life"—this is qualitative marketing language.

Quantitative marketing language is: 1. GDP from 10% to about 7%, then to about 5%; 2. FMCG industry sales volume has peaked.

If the entire industry's sales volume has peaked, why should your sales volume grow?

In the liquor industry, within 5 years, measured by tonnage, sales have halved; measured by sales value, sales have increased.

In the beer industry, measured by tonnage, sales have declined, but sales value has increased.

In the instant noodle industry, measured by packs, sales have declined, but sales value has increased.

**In short, we have entered an era of declining quantity but increasing sales value.**

Quantity decline is the general trend, an inevitable trend. Manufacturers can't do anything about it, and distributors even less.

Returning to the three elements of profit, when sales volume is no longer the principal contradiction, price and cost become the principal contradictions.

New profit growth should revolve around **price** and **profit**.

**Revolving around price means selling high-end products.**

**Revolving around cost means selling white-label products.**

**Revolving around both price and cost means changing salesperson assessments from sales volume to profit.**

**High-end: Small Volume, Big Contribution**

Whenever high-end products are mentioned, distributors have two reactions: small volume, not easy to do.

Small volume, not easy to do. Salespeople assessed by sales volume KPIs will definitely marginalize it.

Even if they reluctantly do it, they will lower prices and run promotions. The result is neither volume nor profit.

High-end products have small sales volume and low share. This is normal for high-end.

**It is normal for high-end to dare to sell at high prices.** If one piece sells for the profit of ten pieces, why fear small volume?

What if you don't open for three days, but when you do, it covers three days?

Moreover, high-end consumers are not price-sensitive, and promotions are ineffective.

Industry sales volume peaking is the peak for mass products, but it is also the starting point for high-end products. A 1% share might bring a 10% profit increase.

**However, selling high-end products requires solving three problems:**

**First, sales scenarios.** Most terminals focus on mass products, and owners are not good at selling high-end products. Therefore, it is necessary to find terminals that sell high-end products. Such terminals are very few but very important. Therefore, terminal classification management, which used to be by sales volume, may now need another standard: classification by high-end promotion capability.

**Second, high-end requires strong cognition.** Mass products often build brand cognition through advertising, while high-end emphasizes experiential cognition. Therefore, in sales methods, scenario-based experience becomes the main method.

**Third, unlike mass products which use deep distribution and emphasize displays + promotions, high-end experience is actually a 2C action.** Therefore, the 2b organization of deep distribution is no longer sufficient; a 2C organization is needed.

**White-label Products Also Make Money**

Another method for distributors to increase profit, which many may not expect, is **selling white-label products.**

White-label products are unknown brands.

In the early days, white-label products were hard to sell, and distributors tried every means to sell famous brands. Now famous brands don't make money, and selling white-label products has become one of the profit-making methods.

Distributors also sold white-label products in the past, mainly through a combination of [famous brand + white-label], using deep distribution methods. Moreover, this method was only suitable for low-tier markets, which are now the markets below county level in the north. Or long-tail categories, such as leisure categories.

**White-label products can make money, depending on three conditions:**

**First, directly connect with manufacturers (F-end).** It's best to find white-label products at the manufacturer. If it's a salesperson who finds the distributor, especially a county-level distributor, then there are two problems: one is that the manufacturer's marketing expenses have already been incurred, compressing profit margins; the other is that even if you sell well, there is imbalance between regions, which can easily lead to cross-regional dumping. So, selling white-label products also has skills. Good quality is of course the first priority, but the premium is in the merchant. Otherwise, selling cheap doesn't make money, and selling expensive doesn't move.

**Second, scenario experience, white-label monetization.** White-label products are of course not easy to sell. To sell them well, distributors need a method for quickly recognizing quality, and scenario-based experience is exactly that. Experience is strong cognition, and in-store experience can quickly monetize.

**Third, there must be a new team oriented towards C-end experience.** I call it the 2C team. Traditional deep distribution teams are accustomed to distribution and promotion; the 2C team mainly focuses on experience.

The premium of famous brands lies with the manufacturer, while the premium of white-label products lies in the business environment. Distributors do white-label, and retailers do private label. **The popularity of white-label (private label) has three major reasons:** First, the overall improvement of social quality. In the past, famous brands were a guarantee of quality; now product quality is generally good. Second, retailer guarantees: if there's a problem with white-label, you don't need to find the manufacturer; you can directly find the retailer.

In the era of deep distribution, distributors of famous brands gradually became manufacturers' delivery agents. Even worse, distributors' salespeople have become employees directly controlled by manufacturers (the bait is that the manufacturer pays wages).

**Distributors Need to Go 2C**

Doing high-end and white-label does not mean rejecting mass famous brands.

**High-end + mass famous brands + white-label will become a product structure that gives distributors both scale and profit.**

Problems that linear thinking cannot solve may be solved with structural thinking.

Sales volume and profit—this is linear thinking.

Using mass famous brands for sales volume, and high-end and white-label for profit—this is structural thinking.

Sales volume is important. Without sales scale, costs cannot be spread, and influence over terminals cannot be formed.

Profit is also important. Without profit, what use is scale?

Mass famous brands will inevitably involve tug-of-war; it's unavoidable and can't be ignored, but you can't expect famous brands to make money. Distributors are already trapped in the "famous brands don't make money" trap. That's normal.

High-end products have no tug-of-war; once done, they have strong user stickiness and high profit.

Many people can't imagine white-label as a source of profit, and the technical content of operating white-label is also high. You can make money, but competitors may not be able to.

Making money that competitors can't make even if they want to involve in involution makes making money relatively easy.

**However, the new product structure is not so much about changing products as it is about changing the operating system.**

**First, of course, change the product structure.** As mentioned earlier.

**Second, change the promotion methods.** In the past, it was distribution + promotion. Now it must become scenario + experience. Whether it's high-end products or white-label, the key to monetization is experience.

**Third, build a 2C team.** The 2b team should achieve regular visits to b-end: first, relationship building; second, display and shelf management; third, policy communication. This is a standing team. The 2C team only needs to complete experiences and can then move on; it is not fixed to regions or terminals, and is a mobile team.

With a 2C team, the 2b team can be appropriately reduced. But the 2b team is still necessary. This forms a balanced push-pull team: the 2b team does channel push, and the 2C team does channel pull.

**Fourth, to achieve the above three points, it is necessary to "connect upstream to F-end and downstream to C-end."** Connecting upstream to F-end requires distributors to go out and find good products; connecting downstream to C-end requires the 2C team to use digital means during the experience process to establish relationships with C-end, thereby achieving bC integrated digitalization. Without the local support of distributors, bC integration for FMCG manufacturers is impossible; at the same time, without the local operations of distributors, it is difficult for retail stores to connect with C-end.

**Doing Sales Volume vs. Not Doing Sales Volume**

In 1998, marketing experts Jin Huanmin and Wang Rongyao wrote an article "Don't Focus on Brand, Focus on Sales Volume." Today, I propose **"Don't Focus on Sales Volume, Focus on Profit."** The change in viewpoint requires thought.

When everyone thought brand was important, Jin Huanmin proposed "sales volume" as the main appeal. It wasn't that brand was unimportant, but relative to the long-term, high investment of brand, China's "channel-driven" model was more efficient in doing sales volume. Market sinking and deep distribution were important methods.

Under the slogan "Don't focus on brand, focus on sales volume," I co-authored the "Growth Trilogy" with Mr. Jin: **"Sales Volume is King," "Sustained Growth," and "Let Growth Change Destiny."**

When sales volume is big, brand is brand. When sales volume is big, profit naturally comes.

What enterprises pursue is profit, but the profit goal is transformed into a sales volume goal.

**Don't focus on sales volume, focus on profit—the ultimate goal is still profit. But the profit goal is transformed into structure. High-end and white-label are product structure.**

Just as early channel-driven was more efficient, now scenario-based experience cognition is more efficient.

The ultimate goal hasn't changed, but intermediate goals and means have been changing.

Jin Huanmin once said that even if we propose opposite methods, the underlying logic is the same.

This is true for "Don't focus on brand, focus on sales volume," and the same for "Don't focus on sales volume, focus on profit."


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## Citation metadata

- Publisher: New Distribution
- Author: 刘春雄
- Published: 2023-01-20
- Canonical: https://xinjignxiao.com/en/articles/distributors-in-2023-focus-on-profit-not-sales-volume-ed7de5ef/
- Original source: https://mp.weixin.qq.com/s/w3Ktx7Q3Ev8FkvzIFhospg

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