---
title: "Distributors Who Make Money on Price Differences Have Reached the End of the Road"
description: "“SKUs are increasing, but money is getting harder to make.” This is the most common feedback heard while visiting distributors recently. Warehouses are full of goods, but accounts show no cash; salespeople run their legs off, but terminal sales don't rise. The old playbook has failed, familiar experience no longer works, and the era of making money by simply securing agency rights and laying out channels is gone forever. When slow sales become the norm and calls for disintermediation grow louder, many distributors are shrouded in unprecedented confusion and loss. Has the value of distributors truly reached its end?"
author: "张雨薇"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-11-08"
categories: "Dealer Operations"
language: "en"
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markdown: "https://xinjignxiao.com/en/articles/distributors-who-make-money-on-price-differences-have-reached-the-end-of-e2f4f398.md"
original_source: "https://mp.weixin.qq.com/s/XzRnED9V525Y1jfE-qG48w"
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attribution: "New Distribution — https://xinjignxiao.com/en/articles/distributors-who-make-money-on-price-differences-have-reached-the-end-of-e2f4f398/"
citation: "张雨薇. “Distributors Who Make Money on Price Differences Have Reached the End of the Road.” New Distribution, 2025-11-08. https://xinjignxiao.com/en/articles/distributors-who-make-money-on-price-differences-have-reached-the-end-of-e2f4f398/"
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---

# Distributors Who Make Money on Price Differences Have Reached the End of the Road

> “SKUs are increasing, but money is getting harder to make.” This is the most common feedback heard while visiting distributors recently. Warehouses are full of goods, but accounts show no cash; salespeople run their legs off, but terminal sales don't rise. The old playbook has failed, familiar experience no longer works, and the era of making money by simply securing agency rights and laying out channels is gone forever. When slow sales become the norm and calls for disintermediation grow louder, many distributors are shrouded in unprecedented confusion and loss. Has the value of distributors truly reached its end?

“SKUs are increasing, but money is getting harder to make.” This is the most common feedback heard while visiting distributors recently.
Warehouses are full of goods, but accounts show no cash; salespeople run their legs off, but terminal sales don't rise.
The old playbook has failed, familiar experience no longer works, and the era of making money by simply securing agency rights and laying out channels is gone forever.
When slow sales become the norm and calls for disintermediation grow louder, many distributors are shrouded in unprecedented confusion and loss.
Has the value of distributors truly reached its end?
Crisis is not the end, but the starting point for value reconstruction.
Based on recent visits and observations, and after in-depth exchanges with Zhao Bo, founder of New Distribution, we have reached a consensus: **The operating logic of distributors is undergoing a fundamental leap from “brand supply” to “category operation.” Category operation is the only path for distributors to redefine their value in the era of disintermediation.**
## The End of Supply Dividends: Why Is Selling So Hard?
In the past decade or more, the core competitiveness of distributors lay in obtaining goods—whoever could secure exclusive agency rights, negotiate the lowest prices, and achieve the widest distribution could make money.
But now, this **supply dividend of “having goods means having a market” is gradually disappearing.**
Before diving into the discussion, let's look at a few phenomena that are all too familiar in the daily operations of distributors:
> Promotions with no results—investing significant resources, following up on brand promotional activities, expecting to make small profits on high volume, but ending up with inventory pile-up, no movement at the terminal, and ultimately losses.
>
> Taking on major brand agency but poor sell-through—securing agency rights for many brands, filling shelves with products, but they just don't sell, with extremely low turnover rates.
>
> Implementing gross margin combinations without effect—combining products according to traditional high, medium, and low gross margin categories, but consumers don't respond, and high-margin products become high-inventory products.
Behind these phenomena lies a change in the underlying logic of the entire industry.
A beverage distributor in Henan told me: “In the past, holding an exclusive agency could feed you for years, but now brands do direct online supply and B2b bulk distribution, and the network I painstakingly built has become the brand's 'data sampling'.” He joked half-seriously: “I feel like I'm laying carpets for others.”
This statement reveals a shift of the times.
In the past, distributors were the reservoirs that brands relied on; now, brands are trying to “bypass” them.
It's not that brand manufacturers are heartless, but growth anxiety drives everything.
The market is extremely abundant in supply, with a host of brands and products competing in the same small sub-category. Looking at the financial reports of leading FMCG listed companies in the past two years, “slowing growth,” “declining profits,” and “increasing revenue without increasing profit” have become high-frequency terms.
Facing growth anxiety, brand manufacturers are also urgently seeking new growth points. Thus, we can see:
  * **New battlefields bypass distributors:** Under growth pressure, brand manufacturers instinctively seek new channels closer to consumers with higher profits, vigorously developing e-commerce, O2O, community group buying, and even private domain mini-programs. These no longer rely on traditional offline distributor networks but use brand direct supply or cooperation with new service providers.
  * **Resource tilt leads to “squeeze”:** Resources are limited. When they invest more market budget, new product launches, policy support, and profit margins into these “favorite son” channels, the resources left for traditional distributor channels (including profit margins and market expenses) are inevitably compressed.
  * **Channel conflicts become public:** Distributors sell at price A at the terminal, while the brand's direct online store may sell at price B, and O2O platforms may offer subsidy C. The traditional channel space for distributors is continuously eroded, and profits are squeezed lower and lower.
Terminal profits hit rock bottom, only price matters, not relationships
If upstream is like removing firewood from under the cauldron, then downstream terminals are having an even harder time.
On one hand, channels are becoming more fragmented, consumers are severely diverted, and both foot traffic and average transaction value are declining. At the same time, rigid costs such as store rent and labor are rising year by year.
On the other hand, price wars are intensifying. Prices are becoming more transparent, and category killers represented by snack discount stores are emerging endlessly, using extreme low prices to bloodbath the market. Small stores are forced to compete internally to retain customers, and terminal selling prices continue to fall.
With declining revenue on one side, rising costs on another, and plummeting selling prices on yet another, the only way out for terminal stores is to squeeze the profit margins of upstream distributors in reverse, demanding lower prices, longer payment terms, and more rebates.
All of this points to one conclusion: **The “supply era” where one could win by relying on agency brands, earning price differences, and high distribution rates has completely ended.**
## Terminals No Longer Want Stable Supply
## But Want Growth
If upstream brand changes are the push, then the awakening of terminal retail is the pull forcing distributors to transform.
Walking into any supermarket, convenience store, or mom-and-pop shop, we find that shelves are increasingly full, but product structures are increasingly similar.
When traditional supermarkets and mom-and-pop shops face brutal interception from emerging channels, they are more anxious than ever.
This anxiety has given rise to the hot “supermarket adjustment” wave in the past two years.
From Pangdonglai to various regional retail benchmarks, what is the essence that the industry repeatedly studies and learns from? — **Through refined product operation, they can achieve sell-through, sales per square foot, and profit margins far exceeding peers.**
In the past, terminal owners cared about: “Do you have this product? Can the price be lower? When can it be delivered?”
What they needed was stable supply.
Now, terminal owners care about: “Is your category structure reasonable? How is the sell-through of new products? How can you help me improve the profit margin of this category? Can you bring me foot traffic? What is your product structure proposal?”
What they need is certain growth.
They are no longer satisfied with a delivery person, but urgently need a growth officer who can help them operate the market and bring growth.
In this process, we notice that more and more forward-thinking brands are also changing their standards when recruiting distributors. They no longer only look at the distributor's capital strength and distribution capability, but:
  * Do you have professional category management capabilities?
  * Can you execute standard displays at the terminal?
  * Can you maintain the price system?
  * Can you plan and execute effective sell-through programs?
...
**Upstream demands professional operation, downstream demands certain growth. Both forces converge on one point: distributors must possess “category operation” capabilities.** Whoever completes this evolution first will get the ticket to the next stage.
## The Next Stage for Distributors:
## From “Selling Brands” to “Operating Categories”
The core of this transformation is a fundamental logical shift: distributors must move from “product operation” to “category operation.”
Simply put, it's shifting from “what brands I sell” to “how I operate a category well.”
Behind this are two completely different mindsets — “supply mindset” and “operation mindset.”
The so-called “supply mindset” focuses on purchase price, selling price, and distribution quantity.
Its core logic is: I buy at price A, sell at price B, and earn the difference. My capability is reflected in getting a lower price A and distributing goods to more points B.
Under this mindset, distributors are appendages and delivery workers of brands, highly homogeneous and easily replaced.
The “operation mindset” focuses on consumer demand, structural profit, display performance, and terminal sell-through rate.
Its core logic is: I need to help the terminal build the business of this category. I am no longer simply selling goods, but researching C-end consumers, designing a reasonable product structure, driving sales through display and sell-through programs, and ultimately helping the terminal maximize the profit of this category.
When oversupply becomes the norm, the survival rule becomes extremely simple: whoever can help the terminal make money will survive and live better.
So, how exactly is “category operation” done? It is not an empty slogan, but a set of scenario-based combination punches.
This first requires distributors to clarify category positioning.
You must understand the terminal owner's business better than he does. What role does the category you operate (such as beverages or condiments) play in his store (community store, convenience store, or campus store)? Is it a traffic-driving type to attract customers? A profit type to make money? Or a strategic type to build differentiation?
On this basis, you can optimize the category structure.
Structure is not stacking goods, but design. It's not simply piling up brand A, brand B, and brand C. Instead, build a product pyramid of traffic products, profit products, and image products to help the terminal find a balance between traffic and profit.
Structure is the blueprint; building a terminal execution system is the key.
This includes formulating sell-through programs, executing vivid displays, and maintaining price control. Salespeople are no longer “delivery + collection” but should become operation consultants who help terminals with inventory management, display, and event planning.
Finally, operation is not based on gut feeling, but driven by data for review.
Regularly help terminals with sell-through analysis (what sells well/doesn't), inventory analysis (prevent stockouts/overstock), and profit analysis (how much money this category actually makes). Based on data, continuously optimize your category structure and sell-through programs.
By achieving this, the distributor's role changes.
From a “begging to sell” delivery provider to a “trusted operation consultant,” and ultimately, a growth partner that both brands and retailers cannot do without.
Final Thoughts
Looking back over the past two decades, we can see that distributors have undergone three stages of role evolution:
1.0 era: Delivery provider, earning money from logistics and price differences.
2.0 era: Service provider, able to provide single-point services such as display and promotion.
Now entering the 3.0 era, distributors must become growth partners for upstream and downstream, integrating multi-category resources, outputting complete “category operation” solutions, and helping customers improve the profit margin of the entire category.
In the past, the value of distributors lay in “connection,” solving the spatial problem of brands being unable to reach terminals. But in today's “Internet of Everything,” the value of this physical connection is approaching zero.
**The new value of distributors lies in efficiency and growth.**
> By helping brands operate the market more efficiently, making brands “willing to cooperate”;
>
> By helping retailers achieve growth more certainly, making retailers “unable to do without you.”
From “category supply” to “category operation” is by no means a new slogan, but a self-revolution that concerns life and death.
Abandon the illusion of easy money, abandon the obsession with price differences, pick up the weapon of operation, and solidly help downstream make money. This is the next stage for FMCG distributors and the only certain future.


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## Citation metadata

- Publisher: New Distribution
- Author: 张雨薇
- Published: 2025-11-08
- Canonical: https://xinjignxiao.com/en/articles/distributors-who-make-money-on-price-differences-have-reached-the-end-of-e2f4f398/
- Original source: https://mp.weixin.qq.com/s/XzRnED9V525Y1jfE-qG48w

## Copyright and AI use

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Contact: zhaobo258@gmail.com · +86 158 5481 7671