Scan the QR code in the image to register After years of "struggle," it has become consensus across industries that traditional offline markets cannot be replaced by online e-commerce. On the consumer side, the value of retail stores is being fully proven and practiced through offline "experiential" and "immediate availability." As the last mile of consumption, stores provide a venue for consumers to experience and purchase products. If retail is irreplaceable, what about distributors? This group, seemingly just doing the work of moving goods, can they be replaced? Where exactly is their value? Where is the value of the "mover"? China has about 6.5 million traditional small stores, plus catering outlets (also beverage sales points) and various special channels and chain stores, totaling around 17 million. With so many small stores, no brand can reach them all alone; they must leverage social forces and collaborate through division of labor. This is the reality that requires brands to do so. At the core of any business system, there are three elements: information flow, capital flow, and logistics. Let's break these down in the context of FMCG to see if these "middlemen" can truly be replaced. 1. Mover—Logistics Value The most direct value of middlemen as movers is logistics. In the classic book "Marketing," it's explained that distributors (middlemen) reduce the number of logistics handlings, improving overall supply chain efficiency. As shown above, if a brand (producer) directly reaches consumers (or retail stores), the number of transactions and handlings is 3*3=9 times, meaning 9 costs. With middlemen (distributors), the handlings are only 6 times. Clearly, middlemen reduce costs and improve efficiency. Moreover, distributors also serve as "reservoirs" in logistics. Zhao Bo, founder of New Distribution, once explained that most FMCG products have peak and off seasons, especially food, beverages, and alcohol. Demand fluctuations mean peaks and troughs, which is not ideal for production because upstream brand factories have relatively constant production capacity. Take Nongfu Spring as an example: one water production line typically runs at 72,000 boxes. Summer is peak, winter is off-season. If demand-driven, some lines would shut down in winter and add in summer. Shutting down lines means idle equipment and waste, which translates to costs. So the common practice is to configure lines based on average sales and distribute production evenly across months. But then, producing so much in winter, warehouse space is limited, so they can't stockpile everything. The best solution is to use distributors' warehouses across regions to help brands solve storage issues. Inventory transfer effectively balances constant capacity with fluctuating demand, so distributors' warehouses act as "reservoirs," balancing time and space to achieve efficient supply-demand matching. Thus, we see beverage companies routinely push inventory to distributors in Jan-Feb, distributors push to wholesalers in Feb-Mar, and then to retail stores in Mar-Apr. 2. Mover—Capital Flow Value Besides operating costs, manufacturers must pay upstream suppliers; once a line runs, costs emerge. Therefore, inventory transfer also improves capital turnover efficiency. Payment before delivery, distributors pool funds to pay upstream suppliers and cover their own operating costs. So, temporal mismatches in supply and demand can be adjusted through distributors. "When consumers are thirsty, you need to sell my goods; when not, do I not survive? I must survive, and the only way is through middlemen adjusting—that's the optimal solution." 3. Mover—Information Flow Value Before discussing information flow, let's give a simple example. Two supermarkets: one traditional grocery, one 7-11. Both place an unknown beverage in the most prominent spot. Which is more likely to sell it? Undoubtedly, 7-11. Why? Because 7-11 is a well-known chain; customers trust that the product is decent. This is the value of information flow. Essentially, information flow solves "awareness and trust." Back to the middle: where does this unknown beverage come from? Distributors supply it. The store owner chooses this new product over others partly due to profit, but the key factor is the distributor and their sales reps. Past cooperation and service build trust between the store and the distributor. This trust extends beyond product quality to after-sales service and includes activities like shelf displays, posters, and promotions that drive sales and consumer experience. Therefore, for distributing unknown products, distributors have immense value in moving information to build awareness and trust. Until a product becomes well-known, only distributors' accumulated trust with stores can accomplish this. For well-known brands, practices vary. Brands like Master Kong and Coca-Cola handle information flow themselves through direct operations with their own sales reps. Others like Yili and Arawana guide and empower distributors to handle information flow, even training their salespeople. Interestingly, around 2014, Nongfu Spring began channel reform, converting direct sales reps to distributor-exclusive or shared reps, letting distributors do market work. It's known that Snow Beer and Uni-President are also trying to have distributors take on information flow in addition to logistics and capital flow. Why this shift? The internet has brought rapid market changes, especially in consumption scenarios; the past single, fixed retail store is now becoming diverse. Consumer needs are also diversifying, adding emotional needs for recognition, respect, understanding, and liking to the basic need for thirst. With multiple scenarios and needs, the consumption environment is increasingly complex. This market change requires brands to hand "information flow" back to distributors, who can leverage local characteristics to find new growth and integrate local traffic for sales promotion. In the past, traffic scenarios were fixed; now they are intertwined. Distributors' information integration efficiency will far exceed that of brands. The Core Value of Middlemen Is "Efficiency" A product has production costs, logistics costs, distribution costs, display costs, brand costs, etc. For a beverage, production cost is far lower than other costs. In people's perception, only production cost is recognized. In fact, brands can do all these tasks themselves, but honestly, doing everything alone costs more than using local distributors. Therefore, the core value of middlemen is to improve efficiency at the same cost, or reduce cost at the same efficiency. Of course, this "high efficiency" is being reconstructed again, which is why distributors have been criticized and predicted to disappear in recent years. What Disappears Is Not the "Middleman" Role Acknowledging middlemen's value doesn't mean they don't need to change. The reason for change is that with external internet tools, middlemen can re-integrate and re-divide logistics, capital flow, and information flow among themselves to further improve efficiency. Internally, some middlemen fail to balance efficiency and cost, leading to poor management, thin profits, and inability to sustain operations. As shown above, middlemen 1, 2, 3 each represented different brands in the snack category. Middleman 2, through integration (e.g., merging with 1 and 3, or obtaining agency rights from upstream brands), becomes a category middleman, improving operational efficiency again. Thus, what disappears is not the "middleman" role but a reduction in their number, an increase in their size, and improved efficiency. Additionally, restructuring and integrating the "three flows" is another form. As shown below, the number of middlemen may increase, but overall efficiency still rises. Is anyone doing this? Yes. It's reported that some brands are piloting in certain areas, stripping logistics from 8 local distributors and handing it to third parties, allowing distributors to focus on capital and information flows. Middlemen Won't Disappear; They'll Become More Important In the "three flows," logistics will gradually integrate toward centralization. Fewer but larger middlemen will handle logistics, and they'll become more important to brands. For information flow, as mentioned, changes in consumption scenarios and needs are making retail terminals increasingly fragmented and complex. Brands are unlikely to handle information flow directly with retail terminals. Middlemen, with their grasp of local markets, can organize efficient communication to solve awareness and trust issues. Similarly, they'll only become more important to brands. Middlemen won't disappear, but rapid market iteration requires them to clearly understand their functions. The clearer the function, the stronger their professionalism and influence, and the more important they become in the supply chain! Therefore, distributors won't die; their functions will change! Are you "watching" me?