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As industry competition intensifies, distributors' operations are becoming increasingly difficult: operating costs are rising rapidly, with daily expenses; employee management is harder, recruiting is not easy, and post-90s employees are even more unpredictable, with turnover rates soaring; market prices are falling, consumers have too many choices, entering a red ocean of price competition; manufacturer support and rebates are declining sharply, with less support than before; sales are not increasing, volume is hard to grow or even declining, profits are as thin as paper or even losses; online sales are increasingly threatening physical channels, and e-commerce's popularity directly impacts survival space. Distributors face an unprecedented, deteriorating harsh environment.

As the severe situation approaches, what should distributors do? Close immediately? Over a decade of accumulation would halt or vanish, with the danger of permanent unemployment unimaginable; switch industries immediately? The industry resources built painstakingly would be wasted, and the fate of a new industry is unknown; continue struggling to maintain? Investment risks are greater, and it's unclear how long they can sustain, possibly a bottomless pit of losing everything; wait to be acquired by competitors? Watching their business fruits be taken by rivals, with the kingdom changing hands, feeling unwilling...

For years, the author has focused on distribution channel research. The era of physical distributors is gradually ending, moving toward elimination in struggle, while the era of intellectual distributors is just beginning, embracing opportunities with wisdom! At this critical moment, how can distributors break through the status quo and stand out in the white-hot competition?

The key is to start by changing the mindset toward competition. Abnormal mindsets lead to failure before even entering the competition, and many distributors are unaware, lingering in misconceptions.

Dangerous Mindset One: Immediately discounting prices when facing competition is suicide.

What is discounting? It is a suicidal act. Most distributors allow salespeople to promote order volume through various discounts. For a distributor with a gross margin of only 10% and a net sales margin of only 2%, an additional 2% discount forces the gross margin to drop from 10% to 8%, and the net sales margin from 2% to 0, wiping out net profit. Therefore, for distributors, discounting is suicidal. For example, Houyuan Building Materials Distributor ran a discount promotion during the off-season, attracting many customers but with little profit. In fact, many businesses like them are everywhere, engaging in price wars during holidays or off-seasons, increasing sales volume, but for products priced in the thousands, it's suicidal. However, without discounts, customers who were already negotiating might choose another supplier due to price, hurting both parties. In fact, discount promotions are not suitable for long-term holding, but short-term can have good effects. Facing such market conditions, is low price the only way to win?

Dangerous Mindset Two: Switching industries when facing competition means immediately losing all resources accumulated in the past industry.

What is switching industries? It means that industry resources accumulated over years or even decades have no value. Product knowledge, sales networks, customer resources, regional brands—these capitals painstakingly built with time and effort vanish in an instant, and rebuilding such resources is extremely difficult, almost impossible in a different industry. We can see examples of home appliance distributors forced to switch due to policy expiration leading to low sales: Before 2011, Pan Keqing, a refrigerator brand agent benefiting from the "Home Appliances Going to the Countryside" policy, achieved annual revenue of over 20 million yuan, but by 2012, revenue was less than 3 million, and the dozen or so sales staff he employed were reduced to one or two. Pan Keqing began to shrink his operations and planned to switch to the guarantee industry. What will this unknown industry bring to Pan Keqing?

Dangerous Mindset Three: Not proactively attacking when facing competition but relying on manufacturers means immediately losing the opportunity to improve self-capabilities.

Distributors often exhibit phenomena: relying on manufacturer promotions, relying on manufacturer training, relying on manufacturers to develop markets, relying on manufacturers for advertising, relying on manufacturer subsidies... When reliance becomes a habit, they lose the ability to be independent. Distributors should not rely on manufacturers to solve problems because you cannot guarantee that manufacturers will truly help solve them!

Dangerous Mindset Four: Not proactively learning to find methods to solve problems when facing competition will lead to elimination by competition.

Jack Welch said: You can refuse to learn, but your competitors will not! Soros said: Learning is expensive, but not learning is more expensive! This illustrates the value of learning; only those who learn can appreciate its value. Is competition a danger or an opportunity for distributors? The answer is certain: competition is definitely a danger for the weak, but for the strong, it is a rare opportunity! It is the best chance to defeat competitors. As mentioned above, the arrival of competition declares the elimination of physical distributors and the beginning of a new era for intellectual distributors! Product competition and price competition belong to physical competition; service competition and brand competition belong to intellectual competition. When market price competition is fierce, it is the turning point from physical to intellectual competition. Once the turning point is reached, the number of distributors will rapidly decline, leading to a domino effect. In a competitive market, only by ultimately becoming a brand can sustained profitability be achieved. Distributors who master sustainable profit models will have larger, more focused, longer-lasting markets, with less competition and more profits!

Distributors, do you have any of the above four dangerous mindsets? Changing mindsets may not be easy, but it is the first step to facing competition. Only by taking the first step can you transform into a new type of distributor and walk the path of future sustainable profitability.

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About us: WeChat name: FMCG Distributor Professional Consulting Management Account introduction: 20 years of FMCG distributor operation and management experience, professionally targeting distributor departments: We understand distributors better than manufacturers, and we understand internal management better than distributors. Senior marketing experts help your business develop.

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