---
title: "Distributors with Over 100 Million in Revenue Are Also Losing Money—Headache!"
description: "Hello friends. I'm Yuan Lai from New Distribution. Recently, many distributors have called me to discuss market and business topics, and the common feeling is anxiety and confusion. One distributor told me, 'After over 20 years in the trading business, I've been losing money for the past two years and feel particularly lost. The salespeople are still as numerous, but they just can't produce results. Is it that my thinking can't keep up with the market?' He continued, saying he initially wondered if his business volume of 30-40 million was too small to compete in stores. But after chatting with distributor friends with over 100 million in revenue, he found they were all the same—also losing money in recent months. Despite the large scale, they're actually very troubled."
author: "袁来"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-05-29"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/j8QKNruJPsoET6hVQbDWSw"
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# Distributors with Over 100 Million in Revenue Are Also Losing Money—Headache!

> Hello friends. I'm Yuan Lai from New Distribution. Recently, many distributors have called me to discuss market and business topics, and the common feeling is anxiety and confusion. One distributor told me, 'After over 20 years in the trading business, I've been losing money for the past two years and feel particularly lost. The salespeople are still as numerous, but they just can't produce results. Is it that my thinking can't keep up with the market?' He continued, saying he initially wondered if his business volume of 30-40 million was too small to compete in stores. But after chatting with distributor friends with over 100 million in revenue, he found they were all the same—also losing money in recent months. Despite the large scale, they're actually very troubled.

Hello friends.
I'm Yuan Lai from New Distribution.
Recently, many distributors have called me to discuss market and business topics, and the common feeling is: **anxiety and confusion.**
One distributor told me, "After over 20 years in the trading business, I've been losing money for the past two years and feel particularly lost. The salespeople are still as numerous, but they just can't produce results. Is it that my thinking can't keep up with the market?"
He continued, saying he initially wondered if his business volume of 30-40 million was too small to compete in stores. But after chatting with distributor friends with over 100 million in revenue, he found they were all the same—also losing money in recent months. **Despite the large scale, they're actually very troubled.**
Just yesterday, I exchanged ideas with an exceptionally outstanding distributor friend. She proactively asked me, "How are your recent visits to distributors going?" I told her not well. She replied, "I feel a bit more balanced now; it seems everyone is similar."
This is the general feeling about the market.
When business is tough, besides looking for external opportunities, internal reflection is also crucial. During my recent exchanges with distributor bosses, I've gained a few insights to share with you.
**Find Profitable Brands and Stores**
When business is difficult, you need to know where the difficulty lies. Which stores are not profitable, which brands are not profitable, and which brands have high sales but also high losses.
For example, a business with 30-40 million in revenue, representing dozens of brands, covering 500-600 outlets.
**First, you must clarify which stores are driving the 30-40 million in revenue.**
With 30-40 million in revenue and 500-600 outlets, there are definitely good and bad stores.
How many good stores are there? Do they contribute high sales? High gross profit? Which are the bad stores? Are they poor in sales? Or high in losses? Many distributors lack data-driven quantification.
This leads to misjudgments: **thinking a store is good because of high sales, but in reality, high-sales stores often have high losses.**
I suggest distributor bosses rank their 500-600 outlets by annual sales contribution. Likely, the top 50 stores account for over 40% of total business, mainly local supermarket KA stores.
But the profit contribution of these 50 supermarket stores, after accounting for salesperson time and energy, store credit periods, and expense investments, might be less than that of a 200-300 square meter community supermarket.
**Second, you must clarify which brands contribute sales and which contribute profit.**
Distributors do business differently from manufacturer business managers. Manufacturers pursue high sales, while distributors should pursue high gross profit.
High sales, high investment, low gross profit—such business is tiring and unprofitable. **This is especially evident with first-tier brands: high sales and good sell-through, but behind the sell-through is no profit.**
First-tier salespeople's work revolves around one or two brands, doing displays, hanging nets, and special prices. **Time is spent, sales are achieved, but when you calculate, there's no profit.**
I suggest distributor bosses rank brands by sales contribution and profit contribution, and balance salespeople's time and energy between first-tier brands and high-margin brands based on actual conditions, to achieve higher gross profit.
Of course, this doesn't mean abandoning first-tier brands or high-sales but loss-making stores. Rather, appropriately reduce attention and time allocation to first-tier brands, increase investment in profitable stores, and encourage good stores to stock more.
**The harder the business, the more you need to analyze the structural distribution of store and brand business. Appropriately control the quota for loss-making stores and brands, and increase focus on high-margin stores and brands.**
**Low Salaries, Afraid to Manage Salespeople**
A manufacturer's monthly task of 1 million is divided among 5 salespeople, but by month-end it's always incomplete. For second- and third-tier brands with high-margin products, a monthly task of 100,000, with each person assigned 25,000, still can't be sold.
The rule is that if tasks are not completed, corresponding commissions are not earned. But on payday, you can't bear it and add a little. Over time, it feels like salespeople are just coasting.
**Low salaries, afraid to manage. No market sales, and no more money to incentivize employees.** Such a cycle, and you don't know how to adjust. You want to transform, and you see successful cases around you, but thinking it will take three years, you fear that during the transformation, losses will continue to expand and you won't survive three years.
**The design of frontline salespeople's compensation and performance is not just about performance design itself; it also involves the comprehensive gross profit of downstream channels and the brands represented. Only with high gross profit can you dare to share money, and only after sharing money well can you dare to manage people.**
If salespeople can't earn money and you don't dare to manage, sometimes it's not a problem with the compensation and performance design itself, but with the entire company's business model.
**In the Future, Only Two Types of Distributors**
In the future, there will only be two types of distributors. One is retail-oriented distributors, and the other is brand-oriented distributors.
Brand-oriented distributors, to put it bluntly, **work for upstream brands.** They earn the gross profit that brands allocate to them. If they manage well, profits are higher; if not, profits are lower. They follow where upstream brands point.
**Retail-oriented distributors focus on stores and shelves, serving stores well.**
For a category with 12 shelves, take them all and monopolize. Then, based on category shelves, organize products by low, medium, and high price bands, and by consumption scenarios, functions, specifications, and flavors.
**Distributors should become category operation experts, acting as the category procurement managers for retail stores.**
Should you be a brand-oriented distributor or a retail-oriented distributor?
There's no right or wrong. Based on past inertia, taking the brand-oriented route can make your business more stable; but taking the retail-oriented route can make your business last longer.
**Summary:** Regarding distributor business development, where are the future directions for sales growth and profit growth? **On June 4-5, New Distribution, in conjunction with Zhoupu Data, will launch the '2024 FMCG Major Distributor Outlet Seminar,' with the first phase focusing on the snack food category. Over 50 snack food major distributors will gather in Nanjing to discuss business outlets.**
Interested friends can scan the QR code below for consultation:
**Recommended Reading**


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