---
title: "Distributors: The Harder It Gets, the More You Must Not Be Blind!"
description: "Recently, New Distribution spoke with a number of distributors about changes in their business, and many expressed a lack of confidence due to market shifts, channel reforms, and rising costs. This article summarizes successful cases of distributors who have achieved growth by focusing on internal organization and efficiency, as well as external transformation directions such as B2B, self-built terminals, and private labels."
author: "周群"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2023-05-23"
language: "en"
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# Distributors: The Harder It Gets, the More You Must Not Be Blind!

> Recently, New Distribution spoke with a number of distributors about changes in their business, and many expressed a lack of confidence due to market shifts, channel reforms, and rising costs. This article summarizes successful cases of distributors who have achieved growth by focusing on internal organization and efficiency, as well as external transformation directions such as B2B, self-built terminals, and private labels.

**Introduction: Learn a little more, and you'll take fewer detours!**

Recently, New Distribution had focused conversations with a number of distributors about changes in their business. Many distributors showed a lack of confidence when discussing their current business.

**First, market changes and channel reforms have brought many uncertainties.**

The supply-demand relationship in the market is now one of oversupply; good products are not scarce, and consumers have become independent and rational. In the past, distributors' brand-driven operational strategies are gradually failing. Traditional distributors not only need to connect with stores but also need to interact more with consumers.

At the same time, new channels are constantly emerging. Although offline remains the main business in the FMCG industry, the overall sales share of offline channels is continuously declining, and the market for traditional distributors is being carved up.

**Second, the imbalance between efficiency and cost has brought enormous profitability pressure.**

There is an old saying in the FMCG industry: distributors earn money by "bending down to pick up steel coins." Most distributors have already optimized cost reduction to the extreme within their capabilities.

However, rising costs still make it more difficult for distributors to be profitable. For example, more than a decade ago, a salary of 4,000 yuan for a salesperson was considered good, but now even 8,000 yuan may not retain talent. Yet the profits on mainstream products have not increased and may even have been compressed, making it harder for distributors to make money.

**Third, the direction of transformation trials has deviated, leading to sustained losses and no profitability.**

The industry is full of topics about distributor transformation, and many directions have been proposed, such as B2B, opening supermarkets, snack stores, private labels, online, etc.

Although there are many directions, many distributors have not evaluated whether these are suitable for their own specific situations. Blindly trying new things has led to losses during transformation.

Indeed, distributor business is becoming harder, and this difficulty is reflected not only in the increased complexity of the business but also in the uncertainty about future business development.

In such an environment, distributors whose business is still doing well are even more commendable. So, how are the distributors who are still growing doing it?

Over the past few years, New Distribution has visited hundreds of distributors. In this process, we have seen many excellent cases of growth, some through internal organizational efficiency, some through external model changes...

We have summarized and published these in article form to let more distributors understand how other distributors have achieved sustained growth.

But we found that the article format is not enough: first, the information density is insufficient; second, readers' questions during reading are not answered.

Therefore, over the past six months, New Distribution has been planning a Distributor Club. We hope to present the excellent growth cases we have seen in a better way, with two-way communication rather than one-way output.

The following content is a summary and reflection based on some excellent distributor cases, hoping to inspire you.

**Inward: Organization and Efficiency**

In the past two years, New Distribution has been communicating with excellent distributors in the FMCG industry. We have found a pattern: most successful distributor transformation cases have an important prerequisite:

**Their own trading business has already done well in the region, even becoming a leader, and to some extent, has reached the ceiling of their own business. The competition in their market has reached a balanced pattern. Without major changes, it is difficult to create new growth.**

**For distributors, the core is to first do a good job with the basic business. Is there room for optimization in the current business? Only then think about transformation.**

From the perspective of traditional trading business, the core of the basic business is two levels: **one is organization, the other is efficiency.**

**1) Organization: Manage people well and distribute money well**

From the distributor's perspective, the core role of the organization is sales and marketing, and the key point here is people management.

At the New Distribution conference, Mr. Jia, General Manager of Xuzhou Jintong Food, shared a viewpoint: To grow a distributor business, you must dare to delegate authority and share profits. **Distributor bosses must not only constantly paint a vision for employees but also continuously let them eat the pie.**

For distributors, managing people means driving employees in different positions to work seriously. In addition to standardized systems, the most important thing is compensation and performance. **When your wages exceed those of local peers by more than 50%, hiring and retaining people is not a problem.**

In the past, most distributors used simple and crude compensation: basic salary + commission, and further, adding KPI assessments, with the core still on sales. This assessment method is fine when the market environment is good, but when profitability pressure is high, distributors need to adjust, focusing on profit.

For example, the basic salary should be linked to monthly tasks, split according to actual conditions in a certain proportion, such as sales accounting for 20%, profit accounting for 40%, etc. The purpose is to increase the enthusiasm of salespeople and avoid the situation of "eating from the same big pot."

At the same time, a high reward mechanism should be established. After completing the monthly task according to the target, the extra completed part should have corresponding high rewards, such as 30 yuan for every additional 1,000 yuan in sales, and 30 yuan for every additional 100 yuan in profit, etc.

**2) Efficiency: Use tools to improve personnel efficiency**

Ren Wenqing, a digital expert in the FMCG industry, mentioned in a previous article: **"The ultimate competition in business is the competition of efficiency. Letting consumers benefit is the task of business. High efficiency replacing low efficiency is always the direction of business progress."**

The essence of digitalization is to improve the efficiency of distributors' large-scale coverage and distribution. The role of tools is to improve personnel efficiency. Things that can be done with tools should never be done by people.

What can tools accomplish?

Customer management, warehouse and logistics management, order management, financial management, product management, sales data, marketing methods, etc. **Actions that can be standardized and do not require thinking can all be completed with tools, and accuracy can be guaranteed.**

What should salespeople do?

Visiting customers, maintaining customer relationships, promoting products, after-sales service, expanding customer resources, market competition feedback, etc. **These are actions related to sales that require thinking, and these are what salespeople should focus on.**

Reasonable use of tools is the greatest improvement in efficiency.

**Outward: Direction and Transformation**

Transformation and change are the second stage of distributor development. When the basic trading business is stable, and the distributor is already a leader in the region and category, they have the strength, capability, and time to innovate and transform.

New Distribution has also seen many excellent transformation cases, where some excellent large distributors have started a second venture and achieved good results. Here is a summary to share with you.

**1) Self-built B2B**

In the past two years, New Distribution has visited many distributors, and a considerable number of large distributors are doing B2B, which can also be called localized commodity supply chain platforms, such as Anshan Hongye Hengda, Luoyang Hecai, Nanjing Aiyou, etc.

Why does New Distribution firmly believe that B2B is definitely one of the best directions for distributor transformation in the future?

**Offline business consists of two core parts: one is traditional small store business, and the other is supermarket business.** But in recent years, supermarket foot traffic has declined, coupled with manufacturers' direct control and payment term issues, making supermarket business difficult.

Looking back, the depth of China's offline market is too great, and the market will still need a large number of community small stores to serve consumers in the future.

But small store business is a scale business; only large-scale coverage and large-scale distribution can create momentum.

Zhao Bo, founder of New Distribution, wrote in an article: "The supply chain transformation of distributors is also an inevitable result. On the one hand, the scale of the supply chain, multi-brand agency and distribution, can improve efficiency and reduce costs; on the other hand, it can also increase the bargaining power with upstream and downstream."

When communicating with Mr. Luo of Luoyang Rongcheng Yigou, he mentioned a very interesting phenomenon: when his B2B platform continued to grow, many brands that had previously rejected it took the initiative to seek cooperation.

For distributors, the conditions and timing for doing B2B are already mature. Terminal small stores have been deeply educated, manufacturers are willing to cooperate with B2B supply chains, and the supply of technology and talent is also available.

**2) Self-built terminals**

Distributors' business serves terminal small stores, and they understand terminal operations and needs best. From this perspective, distributors extending downstream to do terminal supermarkets have advantages.

What are the advantages for distributors of self-built terminal supermarkets?

**First, increase channel bargaining power and strengthen market influence.** Mr. Jia of Xuzhou Jintong Food shared at the Chengdu conference that the more self-built terminals, the higher the bargaining power in the channel, and it is an absolutely strong-controlled channel. Brands must enter, and conversely, brand agency rights will be prioritized.

**Second, stable cash flow, and funds can support the basic business.** In past visits, distributors with self-built terminals mentioned a viewpoint: It is easy to open a supermarket. Apart from rent and decoration, products are provided by suppliers, and there is at least a one-month payment term.

Traditional distributors doing supermarkets face cash flow pressure due to payment terms. Now with self-built supermarkets, this payment term becomes an advantage. Distributors can reasonably use the supermarket's cash flow to support the development of the trading company.

**Third, a "sewer" for near-expiry products, helping the trading company handle customer after-sales issues.** In daily operations, distributors inevitably encounter returns and near-expiry products.

In the past, this was a headache for distributors, especially many large-date products that could not be disposed of and had to be destroyed. But now, these near-expiry products can be recovered and placed in self-built supermarkets for promotional activities, which not only brings traffic to the supermarket but also helps the trading company handle after-sales issues.

Of course, distributors building their own supermarkets will also face significant challenges.

These mainly come from two aspects: on the one hand, the transformation from a second party to a first party, with different positions, different problems, and different handling methods; on the other hand, a shift in thinking. Distributors serve the B-end, while supermarkets serve the C-end, and there are significant differences between the two.

**3) Private labels**

In the traditional business chain, from manufacturer to distributor to store to consumer, the distributor's positioning is the channel, and the advantage is connecting small stores.

To put it bluntly, the distributor's role is to distribute products to small stores. For distributors, to earn more money, they either sell more or sell at higher prices.

The price system for well-known brands is fixed, and even if you sell more, there won't be much profit.

Doing generic brands costs double the time and energy. Even if the result is good and the brand is built in the region, in the end, you are constrained by the manufacturer and end up making a wedding dress for others.

Distributors control the channel and have a stable sales network. Doing a small and beautiful private label not only gives pricing power and increases business profits but also strengthens channel penetration and increases channel bargaining power.

**In conclusion:**

There are many paths for distributor business development. In past visits, New Distribution has also seen some distributors doing e-commerce, live streaming, logistics, etc., and there are successful cases.

These successful cases have many points worth learning and thinking about for distributors, and can even help distributors take fewer detours in future development.

**This is also the reason why New Distribution launched the Distributor Membership Club. We hope to share newer business opportunities and more comprehensive business growth cases, so that distributors can find suitable learning objects and path references!**

**Currently, membership recruitment has started, and it will officially launch on June 1, 2023! Interested friends are welcome to join the Distributor Membership Club!**

_ **Scan the QR code to add WeChat, welcome to join!** _


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