Click to read the original article for details. Since 2012, the survival value of baijiu secondary wholesalers has been questioned. After so many years, how are they doing? Recently, a reporter from MicroWine visited several wholesale markets and found that it is not an exaggeration to describe them as "bustling" and "crowded." After years of "de-secondary-wholesaling," "channel flattening," and the impact of various new platforms, why are wholesalers still thriving? To this end, the MicroWine reporter conducted an in-depth investigation. Three "Get-Out-of-Jail-Free Cards" for Wholesalers Whatever exists is reasonable. Baijiu wholesalers survive because they have value, and thriving indicates significant value. After a series of interviews, the MicroWine reporter believes the reasons for wholesalers' survival can be summarized into three points. First, they have abundant terminal resources. A wholesaler told the MicroWine reporter that after the market environment changed in 2012, those wholesalers with terminal resources, though facing hardships, still managed to survive in considerable numbers. Now, terminal construction and service maintenance have become key to wholesalers' survival and success. During the visits, the reporter learned that some wholesalers are not only cooperating with terminals but also starting to open their own stores to build self-owned terminals. This strengthens wholesalers' channel and distribution capabilities, reducing the risk of being eliminated, and also helps expand their sales scale. In conversations with wholesalers, they repeatedly emphasized: Terminal resources are the amulet for wholesalers, and customer relationships are the guarantee for its long-term effectiveness. In addition to regular rebates and profit margins, wholesalers also organize terminal networking events, tourism team-building, and leisure competitions to strengthen emotional bonds with core terminals. In terms of customer relationship maintenance, although companies with certain strength can also do this, for many regional products or new products, they still rely on the channel resources and appeal accumulated by wholesalers. A cigarette and liquor store owner said: "We have been cooperating with this wholesaler for many years, and we trust each other. In other words, the manufacturer can withdraw at any time, but the wholesaler won't. Also, if there is a product problem, I can directly contact him, and he will handle it. It would be troublesome for me to contact the manufacturer." The second "Get-Out-of-Jail-Free Card" for wholesalers is abundant product resources and one-stop distribution services. Channel flattening, cutting out middlemen, and direct supply to terminals and consumers have been popular trends in recent years. These can indeed benefit consumers to some extent and improve management efficiency, but they also mean that manufacturers or platform companies must bear risks in distribution, logistics, promotion, and inventory. The value of regional wholesalers lies in acting as a transit station for manufacturers' inventory. They have sufficient warehouses and delivery fleets, saving manufacturers logistics and storage costs, and can deliver goods to terminals in a timely manner. At the same time, retail terminals have high demand for a variety of products, and wholesalers operate a wide range of categories, almost covering all best-selling products needed by terminals. Among the several wholesalers interviewed, the largest had over a thousand categories in stock, and the smallest had over 300, comparable to a medium-sized supermarket. They can provide one-stop distribution for terminals, a service that manufacturers cannot replace. "We don't buy a single product in large quantities, but rather a large comprehensive volume. If we buy from manufacturers, the price may not necessarily be discounted, and we would need to contact many manufacturers. At the wholesaler, he can directly set a discount based on the quantity, which is more convenient," said a small supermarket owner. For wholesalers, increasing sales categories not only facilitates terminal channels but also helps activate funds and speed up turnover. Moreover, through sales channels of other FMCG categories, they can also open up more terminal channels. The third "Get-Out-of-Jail-Free Card" for wholesalers is being well-informed. Nowadays, high-quality wholesalers mostly have complex and extensive channel networks. Because they are closest to terminals, wholesalers have the ability to quickly collect, process, and transmit market information. They are sensitive to changes in consumer demand and update products promptly. When the reporter interviewed a wholesaler, terminal customers and sales staff from other wholesalers kept calling to inquire about product and price information, and many people came in person to ask. The wholesaler said: "After years of accumulation, whether peers or terminals, we basically exchange information quickly through phone and WeChat. I can know market changes in various places immediately without layer-by-layer reporting, and I can respond promptly to problems." An industry insider believes that at present, wholesalers still have huge value, and even if they are replaced in the future, it is only a transfer of value. Under the new model, wholesalers still have room to survive With the rise of "Internet+" and "new retail," wholesalers seem to have become a thing of the past. Manufacturers try to use "new models" to attack wholesalers' problems such as price chaos and inefficiency, aiming to eliminate middlemen and directly control terminals. What is the actual effect? A wholesaler at Chengdu Huafeng Food City said: "When new models like Alibaba Retail Link, Huazhi Liquor Store, 1919, and Yijiupai appeared, we traditional wholesalers in the large circulation channel were indeed panicked. But later we found that under their models, we still have a lot of room to survive, and even they need to rely on us." Why is this? On the one hand, new retail models like 1919, Huazhi Liquor Store, and Tmall Xiaodian have seized some terminal cigarette and liquor stores and supermarkets, but in local markets, the customer relationships maintained by wholesalers over the years are difficult to completely break through. For the vast regional market, there is still huge space for wholesalers to control. At the same time, the centralized procurement model of new retail requires franchise stores to purchase through the headquarters, so in terms of terminal supply, they do not have absolute advantages in price and variety. Unrestricted wholesalers can instead connect with many upstream suppliers, also achieving centralized procurement, and they are not inferior in variety and price. Moreover, because wholesalers are well-informed, they can choose products more flexibly and quickly meet market demand. On the other hand, e-commerce platform models like Alibaba Retail Link, although they can make terminal order processing and services more efficient, are beneficial to channel management and operation, and have their own channels and more detailed terminal data, but they also have limitations. A wholesaler told the MicroWine reporter: "Alibaba Retail Link is not that convenient. First, Alibaba can only register in one region, but I have many terminal resources across regions; second, it requires dedicated personnel to operate, increasing my labor costs; third, my terminal data is in someone else's hands, with the risk of being sold, which makes me feel insecure." At the same time, platforms like Tmall and JD.com are more focused on the C-end, while the wholesaler model is more like 2B, so there is not much conflict. Moreover, consumers' demand for alcohol is often sudden and temporary, and online shopping delivery takes too long, lacking timeliness. Some industry insiders believe that wholesalers who have survived the transformation pain have become controllers of channel terminals, maintaining the circulation pipeline of products. Nowadays, wholesalers play an important role in centralized procurement and distribution, information transmission, and terminal management and service. If manufacturers want to quickly push products to channels, bypassing wholesalers may reduce efficiency and effectiveness. Under the new trends of 2019, where are wholesalers heading? In 2019, brand-led channel reforms are accelerating changes in the industry landscape, and no one in any channel link can stay out of it. During the visits, the reporter found that wholesalers with many channel resources are mostly actively moving closer to famous brands, seeking opportunities to become distributors. Among the several wholesalers interviewed, all have already held several famous brands, some operating across all channels, some focusing on group purchases. A wholesaler said: "We can feel the exclusion from manufacturers, so we must reform ourselves and adapt to market demand changes. Now, manufacturers are increasingly strict in market management, with more refined control methods. All products can be traced to their final destination through QR codes. The risk of 'dumping' and 'parallel importing' is increasing, and once discovered, the consequences are serious. Seizing the distribution rights of famous brands, developing deeply into terminals, building self-owned terminal resources, and operating in compliance are the way out." The MicroWine reporter noticed that the baijiu products operated by wholesalers have shown a trend of concentration towards top famous brands, with almost every wholesaler stocking a large amount of mainstream products. "I now basically only operate mainstream famous brands. Consumers' brand awareness for baijiu is increasing, and the sales of mainstream products have a consumer base guarantee. As wholesalers, we have large quantities and good prices, so the channel can digest products quickly, and capital turnover is faster," said a wholesaler. After visiting the wholesaler's store and warehouse, she said that in the past, her operating principle was to promote whoever had the largest profit margin, and terminals and consumers trusted her. But now, market demand has undergone profound changes. Consumers are becoming more sophisticated, and operations must focus on famous brands, otherwise it is impossible to establish a foothold. Peers are also looking for opportunities to become distributors of more leading brands or their series brands, leveraging manufacturers' strength to complement advantages and strengthen themselves. The wholesaler also revealed that with the arrival of the sauce-flavor baijiu craze, in addition to well-known brands like Moutai, Langjiu, and Xijiu, brands like Diaoyutai, Guotai, and Zhenjiu are also gaining consumer demand. For these products, unless they have obvious momentum, they basically will not take the initiative to stock or list them, because the promotion cost is too high and the turnover time is too long. Some experts believe that the acceleration of brand concentration and the scarcity of high-quality brands will inevitably bring changes to the wholesaler community again. How to seize the last opportunity of famous brands, and whether new products still have a chance to seize opportunities, require wholesalers to maintain a keen sense of smell at all times. In the new cycle, wholesalers can only walk more steadily by firmly controlling terminals, maintaining good relationships with upstream, and operating in compliance. Source: MicroWine (ID: zgweijiu)