Click to read the original article for details. In recent years, people have repeatedly asked me similar questions: Will distributors disappear, and where is their way out? Some B2B platforms and experts have also voiced that distributors are the target of revolution and will be replaced. My conclusion is simple: Distributors will not disappear, but those in redundant roles will be optimized. The future form of distributors will change. In other words: As a group, distributors will not disappear, but as individuals, if they do not transform or fail to transform successfully, they will likely disappear. I find it strange. Twenty years ago, we called for distributors to change from "sitting merchants" to "traveling merchants," but there was great resistance at the time. Later, a new type of distributor known as "traveling merchants" rose, and the "sitting merchants" were eliminated. Traveling merchants mean going out, not only people but also goods. "Vehicle sales" became the standard for traveling sales. Later, we proposed "visit sales" with people and vehicles separated, which also met with great resistance. Fortunately, many large distributors have now made the transition. Now, we propose third-party "unified warehousing and distribution" in the B2B environment, which is an improvement over "visit sales." Simply put, it strips the [warehousing and distribution] function from distributors, and it still faces resistance. Over the years, distributors have been constantly negating themselves. Each negation meets resistance. So, the elimination of the traditional and the rise of new forces are perfectly normal. Core Functions of Distributors What are core functions? They are those without which distributors as a group would not exist. As long as core functions are irreplaceable, distributors as a group will not disappear. Individual elimination and renewal are normal. Due to the highly backward and fragmented nature of Chinese channels, Chinese distributors bear too many non-core functions, leading many to believe these are natural functions of distributors, but they are not. As a division of labor, manufacturers (brand owners) bear the function of value creation, while merchants (various types, including agents, distributors, and retailers) bear the role of value delivery. Of course, there is creativity in value delivery, otherwise there would be no progress. Merchants may also participate in brand owners' value creation, but these are not core functions. Distributors undertake approximately four functions: capital, promotion, ordering, and warehousing/distribution. Capital, warehousing/distribution, and ordering are not core to value delivery; especially warehousing/distribution, which is goods transfer, not value delivery. Which of the above functions is core? I believe it is promotion. Promotion is the true value delivery, and the others are derived functions. Distributors and B2B B2B has emerged as a new species, and some have sentenced distributors to "death," seemingly thinking that everything distributors can do, B2B can do better, with fewer steps and higher efficiency. Of course, some B2B platforms currently have low integration and efficiency, but that does not negate B2B's efficiency logic. We have emphasized distribution and traveling sales in the past because China lacked efficient third parties, and distributors were [forced] to do things outside their core functions. For example, in the U.S., distribution is entirely done by third parties. With B2B emerging, it carries part of the channel integration function, which is progress in China's circulation, even though it is combined with the internet. B2B's advantage as a channel integrator lies in the integration segment. Whatever has integration advantages should be handed over to it in the future, such as order integration and unified warehousing and distribution. As for big data and internet finance, they are derived functions, not core. The U.S. has long had channel integration services, such as third-party distribution, yet distributors still thrive, showing that not all channel functions have integration advantages. Promotion is the Core Function of Distributors Promotion is largely an interpersonal activity. For interpersonal activities, small organizations have an advantage. Unlike the classic product strategies of multinational companies, Chinese companies launch new products much faster than multinationals. Product promotion, besides backend support (advertising, communication, branding, etc.), relies heavily on the trinity of channels. Teacher Shi Wei proposed the trinity of the internet era—cognition, transaction, and relationship—which is the trinity brought by online communication. The reason Chinese marketing could creatively propose "using channels to counter brands," with brand driving and channel driving, is that Chinese channels are also a trinity—relationship, cognition, and transaction. Both are trinities, but the logic differs. The internet trinity is premised on communication generating cognition, while the offline trinity is premised on relationship generating cognition. Communication generating cognition is the internet's advantage. Relationship generating cognition is the offline advantage. Even in the internet age, the traditional trinity will not disappear and will exist long-term. The virtual share will rise, but it can never replace reality. Promotion based on interpersonal relationships favors small organizations, where social radius overlaps with business radius, where traditional social relationships exist, and where interest centers are clearer. I have repeatedly emphasized that B2B certainly has advantages, but it must not think it is omnipotent, otherwise it will have only enemies and no friends. Acknowledge your weaknesses, cooperate with those who have strengths, and you will have friends. Focus on Core Functions The world's trend is mighty; those who follow it prosper, those who oppose it perish. B2B as a channel integrator and distributors stripping non-core functions is progress in Chinese channels. Even without the internet, China would have reached this point, just not as quickly. Do not think the current form of distributors is normal; it is actually abnormal. Future distributors will strip warehousing and distribution, focus on core functions, and their advantages will be better utilized. In the current distributor organizational structure, warehousing and distribution personnel take up too much proportion, daily work is routine, and core functions are often forgotten. Future distributors will be light, possibly without warehouses or vehicles, with significantly fewer drivers, warehouse keepers, and even back-office staff, reducing management complexity. Isn't that a good thing? Focusing on core functions, besides offline relationships, can completely [transform from army to air force], doing both the offline trinity and the online trinity. Once both trinities are done well, there will be independent traffic. In the internet age, independent traffic is precious. With independent traffic, distributors have status with brand owners, a status incomparable to the past as mere distributors.