"Recently, I've dropped most of the brands I represented, and several manufacturers I used to work with have issued 'ban orders' against me. Don't call me a distributor anymore; call me a 'daoye'!"
The speaker is Mr. Wang (pseudonym), a top distributor in a certain region. Just a few months ago, he told us that his sales had grown by 20% overall in the first half of the year, with profits up by 29%. Amid widespread complaints about tough business conditions, he was one of the few who could still push forward.
But now, he has chosen to voluntarily exit.
Initially, I took this as a personal choice, but during visits over the past few months, such voices have become increasingly common. In the past, they didn't want to continue because they weren't making money; now, even when they are making money, they don't want to continue. Why?
"Forced Inventory Loading" Is Crushing Distributors' Patience
Lao Zhang from East China has been in the trading business for over a decade. He used to believe in the saying: "With goods in the warehouse, the heart is at ease."
But in the second half of this year, his mindset changed.
"I used to fear stockouts, but now I fear meetings. The worst is when a sales rep casually says, 'Report your volume first, and you'll get rebates after completion.'"
Lao Zhang led us to his warehouse. Even though the peak season had just ended, the warehouse was still piled high with goods, a third of which were old packaging, and several pallets of new products pushed by the manufacturer were covered in dust.
His sales target rose from 800,000 to 1.5 million, and this year it jumped directly to 2.3 million.
The regional manager always patted his chest and assured him: "This volume will definitely sell out; you need to have confidence in the brand!"
But the reality is that hundreds of thousands of yuan worth of goods have been sitting in the warehouse for half a year.
"At its peak, inventory was close to 1.2 million, and for two months I almost couldn't pay my employees' wages," Lao Zhang said, his voice full of exhaustion. "If they force another load on me, I'll really have to sell my car."
The Price System Collapses from Within
If forced loading and heavy targets can still be endured, the loss of control over pricing directly destroys distributors' confidence.
Distributor Li (pseudonym), who deals in snacks, gave a typical example: a certain brand of biscuits retails at 6-7 yuan (120g) in small shops, but in discount snack stores, it sells for only 4.9 yuan (80g).
The manufacturer explained that this is a multi-channel strategy, and when converted by weight, the distributor's price is actually lower.
But consumers don't calculate by weight; they only look at the price.
"In the past, it was parallel importers and second-tier wholesalers who disrupted prices, but now even the manufacturers themselves are breaking the rules," Li said helplessly. "Those who follow the rules can't make money. How can we explain this to our customers?"
Agency prices, platform prices, discount store prices... Different channel prices are fighting in the same market, and distributors watch helplessly, unable to do anything.
They can't get the lowest price, can't control where goods flow, and can't explain to customers why it's expensive here and cheap there.
Over time, everyone gradually understands: it's not that they can't sell, but that some goods lose their competitiveness as soon as they arrive.
This creates a vicious cycle: the brand's sales figures keep rising, but channel loyalty and sustainable operating capacity are being hollowed out bit by bit.
Services Get Heavier, Profits Get Thinner
"To support a salesperson, the salary is 4,000-5,000 yuan, plus fuel and various social expenses, it costs at least 8,000 yuan a month. Sometimes, after a whole day of running around, the net profit isn't even enough to cover the fuel!" Mr. Wang said.
But manufacturers' demands are increasing: standardized displays must be photographed and uploaded, terminal visits must be checked in via mini-programs, weekly sales plans, monthly data reports...
These requirements are not unreasonable; many brands even see them as basic management practices.
The problem is that deep services must be supported by deep profits.
But distributors' profits are getting thinner, and they still have to bear these actions, which makes it a war of constant attrition.
In the end, they face only three paths: either lose money to fulfill contracts and bear the service costs; or not fully execute, get rebates deducted, and have even less controllable profits; or simply exit completely and unbind from the brand.
So we see more and more distributors shifting from full-responsibility brand agents to more flexible "goods assemblers," the so-called "daoye."
Mr. Wang told the author that going from a first-tier agent to a daoye seems like losing the brand name and a downgrade in status, but in reality, it removes risk.
First, capital is safer:
Cash on delivery, only purchase when there's an order, and source from wherever is cheapest. No forced loading tasks or inventory pressure; every penny flows, making capital more flexible and controllable.
Second, product selection is freer:
No longer restricted by exclusive clauses of a single brand, and no need to take on hard-to-sell products. Organize whatever the terminal needs, truly returning to the role of serving the terminal.
Third, operations are more efficient:
No need to maintain a large team to deal with manufacturer inspections, form filling, and photo taking. Shed those cumbersome non-operating costs and earn only clear price differences, making life easier.
In contrast, the traditional agency model faces: continuous forced loading, delayed payments, unstable rebates, chaotic pricing, and high service costs...
Comparing the two, not choosing the "daoye" model seems irrational.
Final Thoughts
It must be noted that this report is not encouraging everyone to "flip goods," nor does it intend to provoke conflicts between manufacturers and distributors.
Over the past few years, problems like forced loading, price instability, and profit imbalance have always existed, but as competition intensified, they turned from background noise into a mountain pressing down on distributors.
During our visits, we could feel that most distributors are not unwilling to work with brands. On the contrary, when they talk about the days of building the market together and enduring off-seasons together, many people's eyes still light up.
But sentiment can sustain for a while, not long-term losses.
If agency could bring reasonable profits, a basically stable price system, and at least a sense of security, who would be willing to give up the channel resources they've accumulated over the years?
The so-called "de-branding" we see today is, to a large extent, the result of distributors voting with their feet:
They are not rejecting brands; they are rejecting those brands that only shift risks onto them. They are willing to give, cooperate, and fight together, but on the premise that profits are linked to services, inputs match returns, and risks are not borne by one side alone.
In this sense, distributors shifting from agency to "daoye" is both a helpless act of self-preservation and a protest against the old game of "driving growth through forced loading and expanding scale through price chaos."
What is truly worth pondering is: as channels become more rational and mature, are brands willing and daring to renegotiate the rules with distributors?
If the answer is yes, then the so-called "de-branding" might just be a phase.
If the answer is no, then the phenomenon of distributors "preferring to be daoye rather than agents" will likely become more common.
[Moving Toward the C-End] The 11th China FMCG Conference Date: March 16-18, 2026 Location: Chengdu, China