--- title: "Fierce Brand Competition Makes Channels a Hot Commodity! Distributors Building Their Own Terminals Face Challenges" description: "As brand competition intensifies, channels have become a hot commodity, prompting many distributors to build their own retail terminals. However, this strategy is fraught with difficulties, including high complexity, professional talent shortages, and financial risks, requiring careful consideration and preparation." author: "张玉" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2017-09-12" language: "en" canonical: "https://xinjignxiao.com/en/articles/fierce-brand-competition-makes-channels-a-hot-commodity-distributors-bui-ebd665c3/" markdown: "https://xinjignxiao.com/en/articles/fierce-brand-competition-makes-channels-a-hot-commodity-distributors-bui-ebd665c3.md" original_source: "https://mp.weixin.qq.com/s/LOB9Crwc-_PmmlCTznWqlQ" translation: "https://xinjignxiao.com/zh/articles/%E5%93%81%E7%89%8C%E7%AB%9E%E4%BA%89%E6%BF%80%E7%83%88-%E6%B8%A0%E9%81%93%E6%88%90%E4%BA%86%E9%A6%99%E9%A5%BD%E9%A5%BD-%E7%BB%8F%E9%94%80%E5%95%86%E8%A6%81-%E8%87%AA%E5%BB%BA%E7%BB%88%E7%AB%AF-%E5%B9%B6%E4%B8%8D%E6%98%93-ebd665c3.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/fierce-brand-competition-makes-channels-a-hot-commodity-distributors-bui-ebd665c3/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Fierce Brand Competition Makes Channels a Hot Commodity! Distributors Building Their Own Terminals Face Challenges > As brand competition intensifies, channels have become a hot commodity, prompting many distributors to build their own retail terminals. However, this strategy is fraught with difficulties, including high complexity, professional talent shortages, and financial risks, requiring careful consideration and preparation. Click the image for details "Distributors' business is tough, so they have to find other ways out—either move up into product manufacturing and become manufacturers, or move down to build their own terminals and control channels. Comparatively, building terminals offers better security and returns, making it a key focus for distributors." This is how Wang Minglin, General Manager of Guangxi Nanning Yuheng Trading Company, explained the recent trend of distributors building their own terminals. As brand competition intensifies, channels have become a hot commodity. Especially in the past two years, with the deepening布局 of domestic giants like Alibaba and JD.com, distributors—especially regional major players—have significantly increased their efforts to build their own terminals. However, during the investigation, Food Business found that building terminals is not as simple as imagined, and entering this field requires caution. Three Main Reasons Behind the Surge in Building Terminals It is well known that building terminals has been seen as a way for distributors to relieve pressure. But what development advantages does it actually bring? **Self-controlled collection to solve cash flow issues in supermarket systems.** Distributors operating in supermarket channels are particularly keen on building their own terminals due to cash flow pressure from supermarket payment delays. The most typical example is Wang Yifang, Chairman of Urumqi Jinyibo Trading Co., Ltd. (hereinafter referred to as "Jinyibo Trading"). According to Wang Yifang, Xinjiang lacks large international supermarkets, and Jinyibo Trading has a strong supply position with local supermarkets like the dominant Friendly system, plus resources from over a hundred quality cooperative enterprises, giving it unique advantages in both negotiation and operations. In 2017, Wang Yifang **launched a plan for 100 "store-in-store" outlets in supermarkets, with self-controlled collection to eliminate the constraints of supermarket payment delays.** Some stores are already operating, while dozens are still under renovation. Wang Minglin said he had similar intentions and planned "store-in-store" supermarkets in 2016, but negotiations on self-controlled collection failed, so he had to abandon the plan and instead build chain terminals. **Integrating the industry chain to strengthen channel influence.** "Product innovation has been similar in recent years and doesn't have a decisive impact on trading companies' business. The ultimate improvement comes from multi-channel guidance and development," said Wang Zhangfeng, General Manager of Xi'an Bakery, who is currently preparing to establish a chain of leisure lifestyle supermarkets and open franchising. Unlike brand owners who earn franchise fees, Wang Zhangfeng's franchising model aims to control more channel resources. He not only does not charge franchise fees or increase markup rates but also selects employees with ideas and execution ability to create two or three model stores in advance, providing reference and guidance for franchisees. In Wang Zhangfeng's view, regional strong distributors have sufficient supply, giving them a clear advantage in building terminals. Even if stockouts occur, they can replenish through extensive networks. **Wang Zhangfeng's design interior for his chain leisure supermarket** **Emphasizing service to establish a "drain" for near-expiry products.** Shang Dongxu, General Manager of Henan Shuanghao Trading Co., Ltd., primarily deals in dairy brands like Moxly and Junlebao and has established his own milk stations. "Because dairy products have many near-expiry items, the milk stations mainly serve as a 'drain' to digest them, reducing losses and also strengthening brand promotion through promotional activities, which helps push sales to downstream customers," Shang Dongxu explained. "At the same time, since we can communicate face-to-face with consumers, we can directly receive feedback on packaging, pricing, taste, and other aspects, providing reference for future agency and purchasing decisions." Self-operated Terminals Face Many Difficulties; Professional Talent is Key Although retail and distribution are inseparable, their operational methods differ greatly. Pan Wenfu, a researcher on distributor topics, made a detailed comparison: * 1. It is estimated that achieving the same sales volume, the complexity of retail operations is more than five times that of distribution; * 2. They target different audiences: distribution mainly targets familiar markets where business can be discussed anytime, while retail targets strangers, making it more unpredictable; * 3. Distribution processes can be simple, but retail involves more detailed issues like employee management and inventory checks, requiring higher systemization; * 4. Retail requires higher professionalism, and general trading companies often lack corresponding professional personnel; * 5. Costs differ: distribution costs are lower, with cheaper warehouse and office rents, while retail store rents are higher; * 6. Input-output ratios differ: in distribution, it usually takes three months to judge whether a product is worth continuing, but in retail, products need a longer cultivation period, possibly six months to a year; * 7. Employee assessment methods differ: distribution can use performance as a standard, but retail cannot because foot traffic is not controllable, so the same standard is not suitable. **"Retail product profits are hard to offset rising costs like personnel management, electricity, and rent. Currently, 70% to 80% of chain terminals are losing money. If distributors simultaneously operate supply and terminals, their energy is divided, increasing operational pressure."** Sun Dunqing, General Manager of Jiangsu Peixian Zhiqing Food Co., Ltd., added, "Operating terminals requires strong professionalism. I have distributor friends who faced serious cash flow problems due to lack of experience." Even Wang Yifang, who has personally tried it, warned distributors considering building terminals: it is difficult and not suitable for everyone; avoid blindly following the trend. However, this does not mean that distributors building terminals is doomed to failure. Wang Minglin's success has injected confidence into the industry. For chain terminals, store location is crucial. Wang Minglin's four stores are all located in commercial areas, large communities, near cinemas, campuses, and office buildings, ensuring foot traffic. However, Wang Minglin admitted that due to a lack of professional management talent, the chain stores have developed slowly, but steadily, without losses. When asked how to reduce the impact on downstream customers, Wang Minglin explained that chain stores offer a wider product range, quicker adjustments, and higher price points, creating differentiation from downstream customers. Step-by-Step Approach and Good Service are Fundamental Although distributor-built terminals are widely viewed with pessimism, Pan Wenfu believes there is still room and possibility for investment, but requires thorough preparation in capital, human resources, and investment patience, following the development path of "small stores become big stores, big stores become strong stores, strong stores become famous stores, and famous stores open branches," advancing gradually and enhancing store brand influence. Pan Wenfu also emphasized that consumers entering a store are concerned with two main issues: environment and communication. If the environment and communication experience are not comfortable, it directly affects consumers' purchasing desire. To have staff serve consumers well, the simplest logic is for the boss to "serve" employees well. In practice, many distributors have begun exploring new models: **Wang Yifang has created exquisite exclusive gift boxes for bulk foods, which consumers can enjoy themselves or give as gifts, making them mobile "radiators" for the store brand; Xu Jicheng, General Manager of Henan Xinyang Public Bakery Co., Ltd., suggests establishing two branch companies to operate distribution and retail separately, and trying employee shareholding to enhance team professionalism and stability; Wang Zhangfeng's chain leisure lifestyle supermarkets are positioned as integrating experience and consumption, planning strategic cooperation with third-party delivery companies to provide 2-hour delivery within 3 kilometers, and striving to create differentiated themes through decoration and atmosphere to enhance the experience.** Opinions on distributors building terminals are divided, with challenges and opportunities coexisting. Should they get involved, and if so, how? Sun Xiaojing, General Manager of Shandong Weifang Beibele Trading Co., Ltd., offered insightful advice: Each region and distributor has different development situations and advantages. Building terminals is difficult, but it does not mean it should be completely denied. However, before trying, one should prepare both software and hardware, or learn while taking a stake, and be ready to adjust during practice. At the New Distribution "Third (CFIC) China FMCG + Internet Conference" in October, we will discuss how distributors should transform and upgrade, and in which direction. Source: Food Business (tyjzksp) Click the image for details **The Third (CFIC) China FMCG + Internet Conference** will be held in Chongqing in October 2017. The conference will closely focus on the theme "New Forces, New Ecology," inviting **1000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions** to explore new chapters of cross-industry integration! **Core topics of this conference:** > * **How can the FMCG industry leverage B2B to achieve new growth opportunities** > > > > > > > * **How to build the new supply chain behind new retail** > > > > > > > * **How can intra-city logistics help B2B achieve leapfrog development** > **Highlights of this conference:** > * **The industry's first "2017 China FMCG B2B Industry Competitiveness White Paper"** > > > > > * **Case sharing of excellent transforming distributors** > > > > > * **Upgraded conference and exhibition, Hall 6 Internet Technology Exhibition strengthens connections** > > > * **Alibaba Retail Link, Puhua Finance, Eternal Asia Supply Chain, Best Store Plus, Yijiu Pai, Unilever, Haiding Technology, Yunmei Shares—leaders from various well-known enterprises will deliver speeches and share pioneering views.** > > November 8-9, 2017 Chongqing International Expo Center Registration is now open. Long press the QR code below or click "Read Original" to register. Early bird tickets before September 15 enjoy a 30% discount! Add friend and note "Conference Registration" Click the links below to review the highlights of the first and second FMCG + Internet conferences: 2016 "FMCG + Internet" Summit Forum 2017 (Second) China FMCG + Internet Conference Click the links below to review the highlights of the first and second FMCG + Internet conferences: [2016 "FMCG + Internet" Summit Forum]() -END- --- ## Copyright and AI use This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL. Contact: zhaobo258@gmail.com · +86 158 5481 7671