I am Yuan Lai from New Distribution. Last month, I organized a sharing and discussion session in the community of TOP500 Chinese Distributor Supply Chain Alliance (TAMENG), providing an in-depth interpretation of the operating conditions of FMCG distributors in 2024. What are the revenue expectations for FMCG distributors in the remaining two-plus months? Where is the future transformation direction for distributors' businesses? Combined with my recent thoughts during visits to distributors across various regions, this article provides a detailed and complete explanation. 31.5% of distributors are bearish on revenue We conducted a survey on distributors' revenue expectations for the second half of 2024. The results show a polarized state: 20.4% of distributors are bullish on revenue expectations for the remaining time, while 31.5% are bearish. Here we also made a breakdown. Clearly, large-scale distributors with revenue above 50 million are more optimistic about revenue expectations, while smaller distributors are more pessimistic. The data feedback is consistent with what we have observed and seen in the frontline market. This shows the current survival pressure on small-scale distributors. Regarding the future transformation direction of distributors' businesses, we compared upper-tier and lower-tier cities. In upper-tier cities, distributors are more inclined to develop private labels and products to enhance product differentiation competitiveness; In lower-tier cities, they are more inclined to plan to improve the professionalism of management systems and improve operational efficiency through optimized management. For distributors of different revenue scales, large distributors are more inclined to be driven by technology (digital capability building) to improve their operational efficiency; small and medium distributors pay more attention to new channel development and management improvement. Key points of internal management for distributors of different scales Through surveys and interviews with 302 distributors across the country, covering 14 categories, with business scopes ranging from 5 million to 300 million and 1 billion, we have refined and summarized. Based on different business scales, we have summarized the key points of internal management for FMCG distributors: 1. Small and medium-scale distributors (annual revenue <30 million), the core internal management points are: Sales management, customer management, and digital management of orders. At this stage, the distributor's business is growing rapidly, and front-end business management is more important than back-end functional management. 2. Medium and large-scale distributors (annual revenue 50-100 million), the core internal management points are: Warehouse management, promotion management, and digital management of expenses. At this stage, the distributor's business has a certain influence locally, and both brand resources and downstream store resources are relatively stable. At this time, efficiency management in key business links is extremely important. 3. Large-scale distributors (annual revenue 100-300 million), the core internal management points are: Product operation management, channel management, marketing digital management, and delivery digital management. At this stage, the distributor's business is already a leader in the surrounding area, with some distributors managing over 2000 SKUs, especially in daily chemicals, snacks, and condiments, with a large number of SKUs and nearly a hundred brand agencies. How to do product management well, optimize replacement, and classify and manage by gross profit contribution and sales contribution is key. Key points of external business for distributors of different scales In terms of external business operations, I have also made corresponding summaries: 1. Small and medium-scale distributors (annual revenue <30 million), the core external business points are: Category selection and brand portfolio, proactive coverage and product promotion. The bottleneck for a 30 million business is either the distributor is capital-constrained and cannot continue to expand the brand portfolio; or the distributor lacks the ability to proactively distribute, always thinking that as an agent, they only provide capital, delivery, and customer relations, and that the market is the responsibility of the manufacturer's sales staff, which they don't understand and don't want to do. The starting point of a distributor's business is brand agency, but the key to development is coverage and promotion. This is not the manufacturer's business; it must become their own business. This is the key to whether the business can continue to grow upward. 2. Medium and large-scale distributors (annual revenue 50-100 million), the core external business points are: Channel tiered management and investment, category portfolio and product operation. The bottleneck for a 50 million business is that the distributor already has a certain voice locally, especially at the store level, and the number of covered stores ranges from at least 500 to 1,000-2,000 (depending on the category). How to use digital tools to achieve tiered and classified management; In addition, a 50 million business already has dozens of brand agencies (except dairy and grain and oil). Next, they need to expand some categories and brands. How to coordinate and synergize between categories, and how to achieve better display of hundreds of SKUs in stores, is the focus for medium and large distributors. 3. Large-scale distributors (annual revenue 100-300 million), the core external business points are: Store category management planning, attention to external emerging formats, and expansion in upstream and downstream areas. Distributors with over 100 million are relatively the TOP1 distributors in their category in the local market, with almost all leading brands in the category in their hands. At this time, it is particularly important to do consumer promotion work based on the category and around the store carrier. From the store's perspective, helping increase the store's category customer traffic and gross profit is a key task. At the same time, pay attention to the emergence of new channels such as instant retail flash warehouses, discount supermarkets, and special channels, and follow up immediately to find new increments. In addition, distributors with over 100 million have good financial strength, control downstream channel resources, and have deep experience in some categories. It is not excluded to do 1-2 private labels to improve business gross profit. Facing discount chains, they can also consider franchising or self-operation to improve the local business's risk resistance. Thinking about distributor business in 2025 Recently, I visited distributor bosses in Zhejiang and Jiangsu, and here are my 5 thoughts. 1. Distributor business will become increasingly difficult; manage expectations and stay calm. The overall economic downturn, coupled with industry stock competition, will continue to increase the difficulty and professionalism of doing business for distributors. Don't expect this cycle to pass quickly; a new cycle has just begun. 2. In the future, distributors cannot rely on manufacturers; they must rely on stores. Either do "whole-store output" of categories in existing stores, or expand store types, do small stores, rely on scale advantages, resource advantages, through agency, wholesale external procurement, full-category coverage of small stores, and compete with peers. In short, they must completely transform from doing business for manufacturers to doing business for stores. 3. All distributor businesses will become more difficult, and another batch of small distributors will fall. Leading distributors can take advantage of this economic downturn to evaluate their own capabilities and consider merging and integrating small distributors locally to obtain resources such as blank channels, quality brands, and excellent teams. We believe that the merger and integration of distributors will be a definite trend now and in the next 1-2 years. 4. Although "New Distribution" advocates that capable distributors develop towards local B2b platformization, not all distributors must take this path; it is not the only path. Snack and beverage distributors are the best path for local B2b platforms, but for condiment and daily chemical distributors, they can completely do deep cultivation of categories and become urban category supply chain operators. 5. In the future, an ordinary mainstream city only needs 40 distributors (12 major conventional categories). Small and medium wholesalers or small distributors with only 1-3 brands (except beverages and beer) will be the first to fall under operational pressure and peer competition. A supermarket with more than 50 suppliers is completely unnecessary; 1-3 distributors per category can meet the demand. At the same time, because distributors have high share and high capacity, they can also promote professionalism in the operation of that category.