---
title: "Five New Strategies for Distributors' Future Development | Frontline Methods"
description: "As 2019 is nearly half over, distributors need to identify their development directions and paths. Based on experience in the FMCG industry, this article discusses the evolution of the industry and proposes five directions for distributors to enhance efficiency."
author: "赵正强"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-06-23"
language: "en"
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# Five New Strategies for Distributors' Future Development | Frontline Methods

> As 2019 is nearly half over, distributors need to identify their development directions and paths. Based on experience in the FMCG industry, this article discusses the evolution of the industry and proposes five directions for distributors to enhance efficiency.

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**As 2019 is nearly half over, whether or not you have found a good product, distributors have their own development directions and paths. Today, based on experience in the FMCG industry, I will focus on discussing the development directions for distributors.**
**The Development History of the FMCG Industry**
**1. The Period of Capacity-Expansion Sales and Brutal Growth**
The expansion period began around 2000, when China gradually started large-scale construction of industrial clusters, leading to a rush of development. Beverage and food companies flocked in. Although there were products in the market, many categories were still incomplete. Compared to today, many categories were missing, and the variety was not rich. **Most distributors were still 'sitting merchants,'** with shops in streets and alleys mostly purchasing from county-level wholesale departments. Large comprehensive markets for food, beverages, daily necessities, and general merchandise began to be built, such as Beijing's Xinfadi Market, Zhengzhou's Wankelai Food City, Luoyang's Guanlin Wholesale Market, and similar markets nationwide. A large number of merchants moved in, directly sourcing goods from manufacturers, while county-level and smaller distributors came to purchase. At this time, manufacturers' business concepts and marketing strategies were mostly in a very rough stage. During this period, a batch of distributors made their first pot of gold. When I was researching at Wankelai a few years ago, I heard old merchants say, **'Earning over 10,000 yuan a day was normal; underdeveloped and asymmetric information and logistics created wealth.'** That's why current manufacturer salespeople often hear old distributors complain that business is not as good as before.
**2. The Period of Steady Growth in a Structural Market**
Over time, with economic development, **the rapid construction of highways, diversification of information tools, enrichment of products, and especially changes in consumer demand**—shifting from eating enough to eating well—led to higher requirements for products. Major enterprises also learned and borrowed many foreign experiences, making significant changes and improvements in research, production, marketing, and other aspects. The key account system gradually disappeared, and the model of establishing general distributors at the county level began to be promoted. At the same time, imported products increased. This period **roughly started in 2007, when the FMCG industry entered a state of steady structural growth.** Products began to emphasize consumer experience, and market building started to focus on displays and exhibitions.
New products emerged endlessly, making life harder for 'sitting merchants.' Wholesale market business began to decline, and 'traveling merchants' became widespread. Container trucks, small Wuling Sunshine delivery vans, and motorcycle tricycles became popular delivery tools. **High-quality counterfeit and 'edge-ball' products became rampant, products in channels became excessive, and growth in various categories began to slow.**
**3. The Period of Squeeze-Type Product Segmentation and Growth**
**After 2015, the era of mass entrepreneurship and innovation arrived. Information and logistics became super developed, e-commerce began to prevail, and WeChat business (micro-commerce) rose massively.** In medium and large cities, vehicle sales began to shift to visit-based sales. Young consumer groups began to demand personalized products. The food delivery industry emerged as a new force, diverting consumers of instant food. The older generation of distributors faced succession issues, and some distributors could not understand the development path. In Anhui, a post-90s girl sold over 30 million yuan of a fruit through the internet in one year, saving the enterprise and solving the local problem of selling fruit. **Counterfeit products became impossible, and high-quality fakes were suppressed.** The 2018 3·15 Gala reported on this, and subsequently, relevant authorities strictly investigated and dealt with it, further purifying the market. Consumers' health awareness increased, and they began to pursue healthy and wellness products. More and more people were willing to spend more for brands. Purchasing behavior shifted from warehouse-style to random. In a community store, it became more common to see a consumer buying one cabbage, two cucumbers, and a bundle of noodles. Changes quietly entered daily life. Manufacturers were forced to add small packages, such as 5-pack instant noodles and 6-can beer packs. **More personalized packaging came to market, unhealthy categories began to decline, and green and healthy products became segmented growth areas.**
**Five Directions for Distributors to Improve Efficiency**
**1. Seek Deep Cooperation with Upstream Manufacturers**
**As market saturation increases, distributors' profitability is getting lower and lower.** What to do? Investing in growing small and medium-sized enterprises (SMEs) and becoming regional managers for manufacturers has become a good path. Because labor costs have risen, manufacturers have shifted from a strategy of massive manpower to one of elite forces. Especially SMEs hope to have people with resources join their operations. Distributors, after years of experience, are familiar with the surrounding market conditions and have good customer resources. Distributors better understand the pain points and needs of other distributors and can promote cooperation from both the manufacturer and distributor perspectives. Manufacturers are also willing. At the same time, distributors can gain a more comprehensive and in-depth understanding of the enterprise's business development direction. When appropriate, they can invest a moderate amount of capital to become shareholders in the production enterprise, sharing in the development dividends. Their regional agency rights will also become more stable and receive greater support.
**2. Build a Platform with Employees for Broad Cooperation**
Working as an employee but with an entrepreneurial mindset—how many people harbor the dream of being a boss or a leader? Distributors will experience countless employees who, after learning and training, leave to become distributors in the same industry, some even becoming competitors in the same category. **'Make more friends, fewer enemies'** —this is Xiaomi's Lei Jun's original words, indicating that distributors need to change their past practices and thinking. After jointly selecting a good product, they can operate the market together with their employees. Based on the amount of capital, they can hold different shares, and then work together, sharing risks and benefits. **If employees plan to go out on their own, distributors should encourage them,** help analyze the project and its potential, support them, and if the project is worth investing in, they can also invest capital or resources to jointly promote the project's development. In this way, the interests of both parties are firmly tied together. **Do not use feelings or friendship to bind cooperation; always use common interests to build a career.**
**3. Build Terminal Stores in Downstream Channels**
After years of development, **most distributors have returned to warehouse-style professional distribution services.** Some previously had stores but gave them up due to lack of energy. Meanwhile, some terminal merchants have been pampered by manufacturers and general distributors, receiving display fees, end-cap fees, and even requiring help with shelving and stacking. In the Central Plains region, during this period, large terminals appeared in townships, offering a wide range of products, including food, beverages, snacks, daily necessities, clothing, and hats. These diverted villagers who used to shop in county towns, greatly reducing time costs. At the same time, they also gained the power to lead local consumption. There are also school stores and small to medium-sized supermarkets. Distributors can try to enter these based on their own strength. The benefits are numerous: on one hand, they can have a window to promote their agency products, **which can both promote products and handle channel overstock**; on the other hand, they have more opportunities to interact directly with consumers, hearing their feedback on products, **quickly discovering and addressing product characteristics and issues in a timely manner.** More importantly, they gain an additional source of information—seeing and hearing what new products other delivering distributors have, good promotional methods, and new developments in the FMCG industry, as well as visits from manufacturer personnel. This can provide leading business opportunities. They can do it themselves or cooperate with others.
**4. Find Suitable Categories for OEM**
In China's FMCG industry, those who take this path are concentrated in two groups: **one is manufacturer marketing personnel** who, after years of work, are not satisfied with the status quo. They set up companies, register trademarks, design packaging, find manufacturers for OEM production, and begin brand building. **The other group is distributors who unite with peers in the industry to enter this model.** There are many successful cases in the industry. After OEM, they develop well and then build their own factories to expand their business. The key points are capital and technology, as well as having strategic vision to determine the development direction and path to ensure they can persist and succeed. This is the beginning of building a private brand, with long-term gains.
**5. Establish Online Sales Channels to Expand Consumer Base**
Either sell enough products to one consumer, like the clothing brand HLA (Hailan House), earning enough money from one consumer at a time; or sell one product to enough consumers, like Red Bull in the industry, which has achieved a big brand and greater benefits through years of meticulous cultivation. **In the era of the internet, only the internet can sell products to a larger region.** No more examples are needed. Here, an important aspect is to use the right people. It is hard for old teams to have talents who can take on this heavy responsibility. You need to find capable people, and in the early stage, you also need to find good platforms to borrow traffic. You also need to be prepared to invest a certain amount of capital and time. It is difficult to have much space if you stick to your own small area.
**When you are proud, find a way out; when you are frustrated, you will have a retreat.** Whether distributors are doing well or not, they need new paths and directions to develop themselves. No matter which direction you take, it is best not to stop your current business operations. When you have not entered an industry, you mostly see successful cases and think it is a blue ocean. But when you enter, you will find that most industries are red oceans. Therefore, in a market economy, we cannot have a get-rich-quick mentality. The demand for profits should be combined with the situation of the category or industry to achieve reasonable and higher returns!
Source: Sales and Market (ID: cnmarket)


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