---
title: "From Distributors' Split-Sales to Technological Upgrades: How Distributors Can Achieve Tech Advancement"
description: "Previously, distributors shipped and returned goods in full cases. Now, with smaller and more frequent store orders, split-case shipments are increasing, causing headaches. This article explores why split orders are rising, the underlying market trends, and how distributors can leverage technology and role changes to thrive."
author: "张文学"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-06-07"
language: "en"
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# From Distributors' Split-Sales to Technological Upgrades: How Distributors Can Achieve Tech Advancement

> Previously, distributors shipped and returned goods in full cases. Now, with smaller and more frequent store orders, split-case shipments are increasing, causing headaches. This article explores why split orders are rising, the underlying market trends, and how distributors can leverage technology and role changes to thrive.

Previously, distributors shipped goods in full cases, and returns were also processed by the case. Now, with store demand decreasing in volume but increasing in frequency, split-case shipments are on the rise, causing headaches for distributors. Why are stores ordering more split cases? Is it an isolated phenomenon or a market trend? The author surveyed over 300 distributors from different regions among more than 10,000 long-term clients during April and May, finding that most distributors saw business growth in the first half of this year, indicating a market recovery. This is why distributors are not as eager as last year to seek transformation and upgrade methods, as their current business is rebounding.

Behind this recovery are two reasons: **First, some manufacturers have developed new products that cater to the needs of the current mainstream consumers.** Some traditional manufacturers have upgraded their products with good results. Since distributors still serve as the main channel for these products, their business naturally improves.

**Second, sales at small terminal stores are growing.** Data from new distributor Zhao Bo shows significant sales growth in small stores. This is due to two factors: new products in these stores are gaining consumer acceptance, and the shopping environment in these stores has been continuously upgraded, making consumers more willing to visit physical stores.

However, the current growth in distributor business shows a different product outflow characteristic compared to previous years: an increase in split-case shipments, most notably in leisure and snack foods (other categories also see this but less prominently). Why? This phenomenon again confirms that the "mainstream consumers" have changed. Today's consumers seek quality and individuality, leading to "niche" products. Once products become niche, per-store consumption per SKU decreases, but total store sales rise because prices per SKU increase and the variety of SKUs expands.

This series of market phenomena is forcing distributors to deal with more split-case shipments in the future. If they stick to the old full-case shipping model, returns will worsen. Many distributors have already suffered losses in the first half of the year by persuading small stores to order more, only to find the products don't sell because consumption per SKU is determined by consumers, not store owners. Consumer behavior dictates product movement.

Distributors originally grew by representing multiple manufacturers' products, but the market has determined that products are "niche," meaning individual products cannot achieve large volumes. How can distributors grow then? They need more new products, but if they continue with the old mindset of directly becoming "general agents" for manufacturers, how much capital would be tied up in warehouses? How many brands would they need to take on? Such a model would inevitably break distributors.

The best approach is for distributors to change their role: instead of thinking about representing more products, think about serving the needs of stores. The former involves negotiating agency agreements with manufacturers, having salespeople push those products, and getting stores to order as much as possible, with returns guaranteed if they don't sell—this is the traditional distributor mindset. The latter involves working with stores to **profile consumers** and quickly delivering the products consumers need to stores. Upgrading from "product service" to "store service" is a successful breakthrough for distributor transformation. Some distributors using Medline's solutions have already adopted this mindset with remarkable results!

**Where do the many products needed for store service come from? Some are self-represented products, while others can be sourced by integrating resources from other distributors.** This is like the era of assembling PCs: consumers go to a digital market to buy a computer, and the computer store (distributor) provides professional services based on consumer needs. If consumers find the service professional and prices reasonable, they'll configure a computer there. But no computer store can be the general agent for all components; typically, each store represents one component, and when a consumer needs it, stores source from each other. Computer stores profit both from representing components and from providing professional services to consumers!

**Split-case outbound is an unavoidable headache for distributors.** If handled with traditional methods, it becomes extremely painful: chaotic warehouses, busy staff, frequent errors, and inaccurate inventory, leading to blind purchasing, difficult performance assessments, poor accountability, and loss of terminal trust.

When a distributor's sales are in the tens of millions, they can manage with a labor-intensive approach, but profits are thin. To grow further, they must scale up. Once order volumes increase and sales exceed 100 million, severe "indigestion" occurs: more staff, more busyness, messier warehouses, and more inaccurate inventory. Peers may envy the scale, but the owner's life is worse than before.

Distributors can only develop if they achieve "efficient operations"!

How to solve the headache of split-case operations?

Do traditional WMS software, performance appraisals, and employee incentives work? Yes, but only short-term, because they rely on proactive human behavior.

"Artificial intelligence" is the key breakthrough. Many distributors think AI means robots or something high-end. Indeed, we need to understand the latest technology—watching Amazon and JD.com warehouses on video is cool—but we also need to be pragmatic and align with our current warehouses, developing in a "down-to-earth" manner.

**AI is divided into two types: one is "mechanical," and the other is "intellectual."**

Mechanical AI brings to mind robots that replace human hands or feet. Intellectual AI is about business logic plus algorithms, like Google's AlphaGo.

How can distributors use AI? The author finds many areas for improvement. For example, Medline invented the **"Navigation Picking Machine"** : workers wear this device, which uses voice to tell them where to pick goods, how many to pick, where to place them after picking, and then prompts a rechecker for verification. After rechecking, it notifies the internal team. All actions are voice-navigated, similar to car navigation, fully intelligent and not dependent on humans.

**The "Navigation Picking Machine" is embedded with "intelligence,"** using warehouse management business logic (based on warehouse layout, picking status, order status, time, etc.) plus algorithms. It voice-instructs a specific person when to replenish stock, how much to replenish, when to do split-case picking, where to place new goods from manufacturers, and which items might have inaccurate inventory and need end-of-day stocktaking.

Medline also invented the **"Matrix Picking Conveyor"** : a person stands at a fixed position, and when a product needs to be picked, the shelf automatically rotates to that position. After the worker takes the product, the shelf returns, reducing walking time.

Medline also invented the **"Trolley Scale"** : if a worker makes a mistake in picking quantity, it lights up and alarms.

Only by making warehouses smarter can distributors be more efficient. I urge more software technology companies nationwide to create small inventions for distributor warehouses. Even improving efficiency by a few minutes per step can accumulate into significant gains across multiple steps!

I also urge distributor friends to get out and see more, especially visit new technology exhibitions. In the past two years, many AI black technologies have emerged. Distributors who understand their warehouse environment and combine that with new technologies can judge which areas can be improved. They can also adapt new technologies to create small inventions for their warehouses.

In the future, distributor warehouses will inevitably be "Internet of Things" (IoT) style, where many hardware elements (products, people, shelves, pallets, carts, vehicles, cameras, glasses, delivery notes, etc.) are connected via the internet. That day will come soon because warehouses that don't achieve IoT will struggle to be efficient.

**If you are interested in split-case operations, you can join Zhao Bo's Medline visit on June 20th.** Hear a Chengdu distributor's bumpy journey and experience sharing on transforming from "product service" to "store service"!

Also, hear how a Jiangxi distributor, while other B2B ordering platforms failed, still achieves 30% annual growth with 90% of orders placed proactively by stores.

And a mysterious B2B platform in Shanghai achieved profitability within half a year of operation, with local distributors lining up to list their products on it.

The B2B platform from Guilin, which we thought was a "castle in the air" for only doing online without a large warehouse, became the number one platform locally and was brought in by the local Yiwu wholesale market for joint operation. Also, distributors from Henan and Hubei have achieved what we thought impossible within the Medline circle.

**Let's meet in Suzhou on June 20th!**

For us distributors,

We deeply miss the past business. Back then, making money wasn't called making money; it was counting money.

We are very dedicated to the current business. In the past two years, distributors have turned gray hair from transformation efforts. A few days ago, I saw a photo of Zhou from Yiyatong posted by Zhao Bo in a group; his hair has turned much grayer than before. Working with distributors on supply chains is truly not easy.

We are very worried about the future business. The changes in recent years have been enormous, and we don't know what it will eventually look like, especially with the moves of the super giants, which have been earthquake-like for local distributor markets.

How should distributors develop next? Where is the future path?

Today, we won't talk about the future. Honestly, anyone can talk about the future because it's unknown; discussing an unknown topic is just a probability event.

This article only talks about the present: after the national initiative of "Mass Entrepreneurship and Innovation," where are the distributors who have transformed with Medline today? **Nationwide, Medline and distributors have jointly built over 50 platforms. Today, we share some representative platform models with you.**

Let's understand each platform: who is its owner, how did it start, and what does it aim to become?

1
1. Guilin Medline: Founded in October 2016 by the Guilin association leader and eight distributors, it has become the leading B2B platform in the Guilin region. In May 2017, it was introduced by the Guilin Yiwu Mall, and Medline now operates the entire wholesale city.
At the event, the head of Guilin Medline (the association leader) will share growth experiences, current opportunities, and challenges.

2
2. Henan Medline: Founded by the Fengqiu association leader and five distributors, it purchased land in March 2016 to build a large warehouse. By 2016, it completed warehouse construction, high-rack shelving, system operations, and ordering platform launch, becoming one of the few standard smart warehouses in China, equipped with high-level forklifts similar to JD.com's.
At the event, one of Henan Medline's shareholders will share the journey, current opportunities, and challenges.

3
3. Hubei Meiyitian: Formed by a 4+1 combination (four distributors plus one internet professional), it established a new company in August 2015, consolidating all original business. With Medline, it achieved unified warehousing and distribution early on, with a unified online ordering platform. In August 2016, Jingmen Pengdun Group invested, making it the largest internet supply chain enterprise in Jingmen. It is currently building a standard logistics warehouse totaling 40,000 square meters (10,000 square meters already delivered).
At the event, the general manager of Hubei Meiyitian will share experiences, current opportunities, and challenges.

4
4. Shanghai Chaoku: Initiated by the Shanghai Lishui Supermarket Association, whose members are all franchisees of Shanghai Lianhua, Hualian, and self-operated large supermarkets. The association cooperated with Medline to create a centralized procurement and distribution center for Shanghai supermarkets, with an online ordering platform for unified store ordering. Since its establishment in October 2016, it has achieved profitability and has great potential for future growth.
At the event, the general manager of Shanghai Chaoku will share the era's challenges and opportunities.

5
5. Jiangsu Menggou: Formed by the largest distributors in Yancheng. Before establishing Kugou, they already owned several supermarkets over 1,000 square meters in Yancheng, operating well. In April 2017, they partnered with Medline and, as a government-supported project, entered the 100,000-square-meter logistics park in Yancheng to professionally operate the B2B Menggou internet supply chain enterprise.
At the event, the general manager of Jiangsu Menggou will share the company's current operations and future direction.

6
6. Jiangxi Xiao Laoer: Started by a single distributor (relatively large locally). In May 2016, it independently launched an ordering platform. Through exploration and operation, it achieved over 30% online growth, with 90% of orders placed online. It was named one of Jiangxi Province's top ten e-commerce companies and is one of the few successful cases of a single distributor transforming to B2B.

7
7. Chengdu Xingrenxing: Started by a single distributor (relatively large locally). By achieving efficient warehouse logistics operations, enriching products on the online ordering platform, leveraging the wholesale market for real-time procurement, and upgrading from product service to store service, combined with team incentive building, it has seen significant performance improvement and great potential!
At the event, the general manager of Xingrenxing will share the journey and future direction.

**New Distribution's "7th B-end E-commerce Study Tour" is now recruiting!**

Event Schedule:
> June 19-23, Suzhou · Shanghai · Jiangsu
> June 19: Check-in at designated hotel in Suzhou;
> June 20: Visit Suzhou Medline;
> June 21: Visit Shanghai Haiding;
> June 22: Visit Jiangsu Wangcang;
> June 23: Return or free time.

**Distributor friends interested in transformation are welcome to join us for understanding and on-site inspection:**

**Organization Format**
************1. Company visit
2. Actual market case visit
3. On-site explanation
4. One-on-one communication************

Participating distributors only need to pay a registration fee of 200 yuan.
Other expenses are self-covered.
Long press this QR code or click "Read Original" to register.

**Long press the QR code to add WeChat for registration**

**Previous Study Tour Group Photos:**

**6th B-end E-commerce Study Tour group photo, from top to bottom: Zhongke Shangruan, Shuhai Supply Chain, Yunmei Shares, Yishang Logistics.**

**5th B-end E-commerce Study Tour group photo, from top to bottom: Huiwangxing, Beiquan, Tongying Tianxia, Quanshihui, Zhongke Shangruan.**

**4th B-end E-commerce Study Tour group photo, from top to bottom: Alibaba Retail Link, Qianmi Network.**

**3rd B-end E-commerce Study Tour group photo, from top to bottom: Yunbao Shangmeng, Weijie City Distribution, Wanshang Yizhan.**

**2nd B-end E-commerce Study Tour group photo, from top to bottom: Jinhuobao, Caiba, Yishang.**

**1st B-end E-commerce Study Tour group photo, from top to bottom: Piduoduo, Beiquan, Yishang.**

**Click "Read Original" to register**

-END-


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Contact: zhaobo258@gmail.com · +86 158 5481 7671