The phrase 'the industry is getting harder' masks the most essential problems distributors face today. Data does not lie. In recent years, distributor closure rates have been far lower than related sectors like restaurants and retail; and Zhoupu Data's system shows that over 25% of clients achieve average double-digit growth annually. The FMCG distribution industry is not harder than other related industries; in fact, it is much better off. This seems to contradict many people's feelings, as most distributors complain that 'making money has become harder in recent years.' This statement implies at least two things: first, making money used to be much easier; second, distributors should easily make money. The first point is clearly an objective description of the past: China's demographic dividend and urbanization did bring extraordinary benefits. The second point, however, is a misconception born of past inertia—the belief that this business should be easy, that it should be a 'less work, more pay, close to home' kind of business. This misconception can lead to more dire consequences, causing many to still expect distributors to return to an era of easy money, and to hope for a so-called market recovery. But the market will not recover; at least not for a long time to come. In other words, today's industry is not abnormally hard; it is returning to normal. The present is the future. The future market will not get harder; it will just become more normal. Have confidence The FMCG industry is still worth doing The fact is, the FMCG industry is no harder than any other industry in China today. China's real estate has suffered a devastating blow, restaurant closure rates exceed 40%, and new energy vehicle sales plummeted 70% at the start of the year. Against this backdrop, looking at the FMCG industry, companies have mixed results, but the outstanding ones have maintained impressive growth. Zhong Shanshan broke the record for China's richest person, and Dongpeng maintained 30% growth in both revenue and net profit. Among Zhoupu Data's client base, over 25% see revenue growth annually, 40% improve per-capita efficiency, and 47% improve per-store efficiency, with business metrics continuously improving. If you still complain that FMCG is hard, and if you seriously consider switching industries, you'll find it hard to find a better industry than FMCG. You think it's hard because the way to make money has changed: before, you could get 10 with 3 points of effort; now, you might not get 3 even with 10 points. The way to make money has changed The old ways are failing The era everyone misses as 'easy' was an era of low value creation but high returns. Back then, distributors could reap substantial profits with simple management, simple organizational structures, and simple operations.

  1. Making money from brand dividends Over the past 20-plus years, many brands achieved growth of several times or even dozens of times. Distributors just had to ride the brand's fast train and achieve high growth without proactive effort. Even without proactive expansion or refined operations, they could be pushed forward by the brand's momentum and meet year-on-year growth targets. This growth was largely a spillover of brand dividends, not the result of distributors' own operations.
  2. Making money from non-compliant practices For a long time, a key advantage of distributors was cost advantage. This cost advantage was not built on scale or advanced operational methods, but on saving costs through unconventional or even non-compliant means. Labor could be less compliant, vehicles less standardized, and taxes handled flexibly. These industry-default practices gave distributors a significant cost advantage that substituted for operational efficiency.
  3. Making money from simple organizations Most distributors started with family ties: wife as accountant, brother as warehouse manager, brother-in-law as salesperson. The benefits of such an organization are obvious: in the early stages, it greatly reduces trust and management costs, with smooth communication, quick decisions, and worry-free execution. With minimal management input, they leveraged maximum business output, and efficiency was surprisingly high. These core sources of profit supported distributors' good times for over two decades. But today, they are being eliminated one by one.
  4. Brands offer less space and support Brand growth has stalled, so the support space brands can offer distributors has objectively shrunk. Market supply is abundant, consumer choices have increased, brands' own traffic effects have weakened, and distributors need to attract consumers through price competition, promotions, etc., compressing brand premium space. Worse, if brand owners still expect high growth, raising rebate thresholds, cutting market expenses, and extending payment terms will deal a fatal blow to distributors.
  5. Cost advantages from non-compliant practices will no longer exist The compliance process in China's market is irreversible: tax supervision continues to tighten, labor laws become stricter, and social security tax collection is fully advanced. These are unavoidable realities for enterprises. The significant increase in compliance costs means the cost advantages from non-compliant operations will disappear, and the cost advantages of certain functions performed by distributors will also vanish.
  6. Organizations built on nepotism are causing chaos As business becomes more diversified and complex, organizations built on nepotism will face capability bottlenecks. Relatives or acquaintances occupy key positions but lack professional skills, leaving no one capable for complex tasks. At the same time, when family relationships reach a certain density, relationships begin to undermine management: factionalism, buck-passing, and internal conflicts over interests cause management costs to rise rather than fall. These are the deep reasons why it is generally felt to be hard today. If you don't know why business was easy in the past, you can't understand why it's hard now. And knowing the reasons for the difficulty, you'll naturally find that complaining about the market is useless. It's not the market's problem It's the entrepreneur's problem A typical example is supply chain transformation. In recent years, more and more trading companies have transformed into supply chain enterprises. But they have almost only changed their names; the substance has not fundamentally changed. A supply chain enterprise means being customer-centric and achieving efficient upstream and downstream collaboration. But to this day, many companies cannot even accurately identify who their customers are. In upstream and downstream connection and collaboration, they have neither established efficient channels nor equipped themselves with the basic functions a supply chain enterprise should have. Take the procurement function as an example. Many 'supply chain companies' still act as an extension of brand sales, focusing all energy on the sales link, believing that selling is the only thing that matters. Procurement is treated as a simple payment operation, completely ignoring its strategic value as a supply chain enterprise. If you don't even have this awareness, changing the name won't help. Many distributor bosses do not lack awareness; in fact, their awareness is already very high. The real bottleneck is that team capabilities and organizational collaboration cannot keep up. Managing 20-30 people was fine before, but once expanded to 200-300, management costs skyrocket and efficiency drops. This is because they are still using the method of managing a 'ragtag team' to manage a modern supply chain enterprise. As a result, whether the business makes money often depends on the boss's key actions and the personal abilities of a few veteran employees. Once these people leave, the capabilities are lost. Modern enterprises require leaders with excellent team management skills, able to unite the team, inspire employee potential, establish cross-departmental collaboration mechanisms, and drive overall development, rather than relying on individual 'talents.' Transitioning from workshop-style management to modern enterprise, entrepreneurial leadership becomes a new challenge. Another challenge that no distributor can avoid is the challenge of compliant operations. Distribution enterprises need to complete compliance transformation within a certain period. In this area, no one should harbor illusions. Tax issues, labor rights issues, etc., are all problems that enterprises cannot escape. This means operating costs will rise further, and it also means enterprises need to find additional efficiency compensation in their operations. More importantly, it requires distributor bosses to truly possess the awareness and skills to run an enterprise systematically and in a standardized manner. These are the challenges and problems that future distribution leaders will face and solve, and they are also the awareness and capabilities that many distributor bosses lack today. Faced with such a huge capability mismatch, it is no surprise that everyone shouts 'the industry is hard.' In conclusion Admittedly, when we blame external factors, we may feel much better; when we blame ourselves, it is hard to accept. But only by facing and embracing the cruel truth can we truly escape the predicament of 'hard times.' This is the challenge that a new generation of distribution leaders must face, and it is also a huge opportunity.