"Distributors in today's era must have foresight and never rest on past achievements, unless you say you don't want to continue and plan to go home. If you want to keep going, you must go out, see more, and learn more. I am 48 years old, and I don't want to stop. At this age, it's not about how much money we want to make; the most important thing is not to miss this opportunity and not to miss this era." Xia Hequn, general manager of Chengde Huihe Trading, who has been a distributor for nearly 20 years, said this from his personal experience in an interview with New Distribution.
Chengde Huihe Trading is a company focused on local aquatic product supply. As a three-time participant in New Distribution's B-end e-commerce inspection class, Xia Hequn insists on going out, learning while observing, and trying. Since 2016, he has attempted transformation by uniting with distributors of the same category for unified warehousing and distribution. Xia Hequn told New Distribution that the original intention for learning came from a sense of crisis.
01 Blind investment cannot fundamentally solve problems
"I started in the aquatic products industry in 1993, and business was particularly good then. Because I was young, I did business while playing. After 2013, I found business increasingly difficult, with more players and more challenges. In the past, there might have been only 3-5 companies in this field; now there are 30-50. The market cake is the same size, but with 30 companies sharing it, profit margins are shrinking, and price competition is becoming fiercer." Xia Hequn recalled that at the time, to boost sales, he tried increasing investment, but costs kept rising while profit margins kept falling, creating a vicious cycle and increasing the company's operational risk. Facing this situation, Xia Hequn realized that blind investment could not fundamentally solve the problem. Only by going out and learning from other excellent distributors could he find a way out.
Now, Chengde Huihe Trading has merged with two other aquatic product distributors to form a joint venture. Based on clear shareholding, they unified warehousing, distribution, finance, and integrated networks and employees. Both external market and internal management have been integrated. Xia Hequn told New Distribution that after nearly one year of collaboration, the overall operation has achieved the effect of 1+1+1>3.
Undoubtedly, in the past era of commodity shortage, distributors with a bit of business acumen could build a trading business. But times have changed; the internet has broken regional restrictions, competition has intensified, and no distributor can remain isolated or stick to their own turf. Before the storm truly arrives, distributors must plan ahead, adjust their business thinking, learn to use advanced technology and tools, and achieve growth and expansion within their regions.
02 Only by strengthening yourself can you qualify for negotiation
Xia Hequn told New Distribution that before integration, each of the three distributors had annual sales of around 10 million yuan. After integration, without adding any categories, sales reached over 40 million yuan, a 33% increase. In terms of outlets, coverage increased from 20%-30% to 45%. She explained that aquatic products are non-standard products with very low brand concentration. Distributors in this category are numerous and diverse, with many "mom-and-pop" distributors. With 40 million yuan in sales, they are now the industry leader in the Chengde market, with the second-largest distributor trailing by 30 million yuan.
Take last Spring Festival as an example: previously, the three distributors combined had fewer than 300 orders per day, but after integration, they reached 500 orders per day. Huihe Trading also sells aquatic gift boxes. In the past, they could only sell 200-300 boxes during Spring Festival; this year, sales increased tenfold to over 2,000 boxes. Without adding any vehicles or personnel, as order density increased, the delivery cost per vehicle decreased.
Xia Hequn told New Distribution that after uniting, besides reducing costs and increasing volume, the key is that the alliance has greatly enhanced their absolute dominance in the local aquatic products field. With industry status and influence, and control over the regional market, they become the preferred partner in the aquatic products category when facing regional or national platforms.
Xia Hequn believes: "Uniting distributors has strengthened Huihe Trading's voice at the terminal and given us a breather in the short term. Next, Huihe Trading must continue to work hard, learn for another 1-2 years, and strengthen itself. It is difficult to establish a firm foothold in the market relying solely on the business scale after the alliance. Distributors who want to grow bigger and stronger should not stop at uniting distributors for unified warehousing and distribution but continue to expand and seek development. After one year of running-in, Huihe Trading's internal management and external business are now smooth, and the next stage of upgrading has been included in our '2-year plan'."
Continue to expand surrounding outlets: Increase outlet coverage density, striving to achieve 70% coverage of small and medium restaurant outlets within one year. When outlets reach 50%, introduce an information-based ordering system.
Extend categories and deepen outlet cultivation: Based on aquatic products, extend to adjacent categories such as grain, oil, and condiments. Step by step, always focusing on the needs of small and medium restaurant outlets to enhance cooperation stickiness with the company and terminals.
Actively contact regional platforms: Fully recognize the difficulty of building a platform yourself, then change your thinking and cooperate with platforms. Strengthen your supply chain capabilities in aquatic products, borrow a boat to go to sea, and use platform advantages to break regional restrictions.
Huihe Trading recognizes the limitations of its category scale and intends to strengthen upstream product organization capabilities and downstream outlet coverage density, aiming to become a regional "unicorn" in aquatic products or even food ingredient supply. In the future, whether facing national platforms like Alibaba and JD.com or regional kings, they can respond more calmly and embrace them. Xia Hequn believes that when it is difficult to realize the "platform dream" yourself, first strengthen your main business and make yourself the preferred partner for platforms.
03 Find opportunities that belong to you
For distributors who want to transform but don't know how to start, Xia Hequn believes that confusion and anxiety are not solutions; too much confusion and anxiety can lead to depression. For distributors considering transformation, the first step is to go out, see how others do it, combine it with your own business resource allocation, and start the transformation steps. In the internet era, there are many opportunities in any industry or category, but some opportunities do not belong to you, and the idea of "taking it directly" is not advisable. We must think while learning and find opportunities that belong to us.
Xia Hequn told New Distribution that in the process of uniting distributors for unified warehousing and distribution, people are the biggest issue, and integration among distributors is the most difficult. In the past, each distributor was the boss, acting independently and making their own decisions. It is easy to talk about ideals and aspirations, but when it comes to money and business management ideas, it is often the most exhausting. Therefore, before transformation and alliance, distributors must establish who will be the leader of business operations, who will decide how the enterprise transforms, and clarify division of labor and cooperation to reduce unnecessary disputes during later implementation.
Final Thoughts
The above is a practical transformation case of a Chengde distributor. Huihe Trading's transformation gives us the following points to consider:
The principle of equity distribution: This is also a detour Huihe Trading took during transformation. Equal shareholding determined equal status in business operations, decisions were always made by democratic voting, and specific operational plans were always under discussion. Facts have proven that when uniting trading companies, equal shareholding is not advisable. While dividing shares, it is also necessary to clarify the company's leader, who has absolute decision-making power.
Unified warehousing and distribution is just the starting point: Rome was not built in a day. Company transformation and upgrading need time to adapt; don't try to complete it in one or two months. Huihe Trading spent nearly a year running in the team and business. In short, transformation and upgrading is a gradual, orderly workflow that requires time for continuous design and optimization.
Don't all think about platformization: When transforming, don't rush to think about building a platform. For a regional market, there is no need for so many platforms. Distributors must fully consider their own business logic and scale. If you cannot build a platform, first strengthen your body, focus on your category, and strengthen the supply chain of your category. If there is a high-quality platform in the region, cooperate as soon as possible; the earlier you enter, the more you can enjoy the market dividends of shared outlets and reduced warehousing and distribution costs. Transformation is not about building a platform, but about using information-based means to improve your business efficiency, reduce costs, and increase efficiency. The path is not important; the result is what matters.
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