---
title: "If It Can't Help Distributors Cut Costs, What's the Real Value of Centralized Warehousing and Distribution?"
description: "A distributor in Jiangsu doubled sales and multiplied profits within a year by partnering with a cloud warehouse for centralized warehousing and distribution, freeing him from logistics and finance to focus on market services. The article argues that the true value of such systems lies in enabling distributors to specialize in market service rather than merely cutting costs."
author: "新经销刘少德"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-10-06"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/if-it-can-t-help-distributors-cut-costs-what-s-the-real-value-of-central-4f69ebc0/"
markdown: "https://xinjignxiao.com/en/articles/if-it-can-t-help-distributors-cut-costs-what-s-the-real-value-of-central-4f69ebc0.md"
original_source: "https://mp.weixin.qq.com/s/W_8b9uLiycOWRuzoFUlVCg"
translation: "https://xinjignxiao.com/zh/articles/%E5%A6%82%E6%9E%9C%E4%B8%8D%E8%83%BD%E5%B8%AE%E5%8A%A9%E7%BB%8F%E9%94%80%E5%95%86%E9%99%8D%E4%BD%8E%E6%88%90%E6%9C%AC-%E9%82%A3%E7%BB%9F%E4%BB%93%E7%BB%9F%E9%85%8D%E7%9A%84%E4%BB%B7%E5%80%BC%E7%A9%B6%E7%AB%9F%E5%9C%A8%E5%93%AA%E5%84%BF-4f69ebc0.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/if-it-can-t-help-distributors-cut-costs-what-s-the-real-value-of-central-4f69ebc0/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# If It Can't Help Distributors Cut Costs, What's the Real Value of Centralized Warehousing and Distribution?

> A distributor in Jiangsu doubled sales and multiplied profits within a year by partnering with a cloud warehouse for centralized warehousing and distribution, freeing him from logistics and finance to focus on market services. The article argues that the true value of such systems lies in enabling distributors to specialize in market service rather than merely cutting costs.

Click 'Read the original' for details.

> Core Guide:
>
> 1. In one year, sales doubled and profits multiplied several times—how did he achieve growth against the trend?
>
> 2. Driving a car to visit clients, monthly salary over 10,000 yuan—why can his salespeople earn such high pay?
>
> 3. If it can't help distributors reduce costs, what's the real value of centralized warehousing and distribution?

The internet has changed the way goods circulate, and the emergence of B2C, B2B, and other e-commerce models has, to some extent, impacted traditional FMCG distribution channels. Coupled with the disappearance of the demographic dividend, slowing sales growth, and rising operating costs, the already low-margin FMCG distribution business has become even more challenging. More and more distributors are wondering: Is the business they've painstakingly built over years or even decades really unsustainable? Where is the way out for traditional FMCG distribution?

△ Lv Fuxiang, Fu Xiang Trading, Ganyu County, Jiangsu

Of course, there are exceptions, and Lv Fuxiang of Fu Xiang Trading in Ganyu County, Jiangsu, is a typical example. A year ago, Fu Xiang Trading's business scale was only around 20 million yuan, but now its annual sales have reached over 40 million yuan, with monthly sales even hitting 7-8 million yuan. Salespeople's salaries have also increased from around 4,000 yuan per month to over 10,000 yuan now. How did Fu Xiang Trading achieve this counter-trend growth in just over a year?

1
**10 Years of Entrepreneurship, Hitting a Growth Bottleneck**

In 2008, Lv Fuxiang started his business, founding Ganyu Fu Xiang Trading Co., Ltd., and entered the distribution business. From the start, he secured the agency rights for Want Want in the Ganyu area. Leveraging Want Want's brand recognition, Fu Xiang Trading quickly opened up the market in Ganyu. As the business grew, he later added Wahaha and JDB brands.

However, adding more brands did not bring an increase in business volume; his business scale hovered around 20 million yuan for several years, making further market growth nearly impossible. At the same time, various problems in daily operations gradually emerged.

"At that time, I was already exhausted by just three brands," Lv Fuxiang told New Distribution. Although he was willing to take on more brands, if he couldn't do well with the ones he had, taking on more would only be a waste. Analyzing the problems in the business at the time, Lv Fuxiang identified the following main points:

**1. Non-standardized business processes, low efficiency**

The original market maintenance used a van-sales model, which was inflexible. Moreover, the steps of loading, selling, settling accounts, and inventory were interdependent; if one step had a problem, all subsequent processes were affected. Take loading, for example: Fu Xiang Trading required evening loading, but salespeople often didn't want to load at night after a day's work. To avoid evening loading, they would return very late, and reconciling the day's cash often took one to two hours. To avoid affecting the next day's work, they had to load in the morning.

But due to the lack of professional pallets and equipment, loading typically took one to two hours, so salespeople often didn't start working in the market until around 10 a.m. Moreover, with the van-sales model, each salesperson could visit at most 15 stores per day, limiting the number of stores and thus preventing performance improvement.

"At that time, we didn't have a clear count of how many stores we covered; salespeople just sold freely in the market, and the network and sales information were basically in the hands of the salespeople. They only went to big stores, not small ones, which led to a vicious cycle in the entire workflow."

**2. High staff turnover, difficulty in recruiting**

Because the original sales method was mainly van sales, the roles of driver and salesperson were often not clearly defined. Besides driving and selling, they also had to load and unload goods. Moreover, since the products were mainly beverages with low value but heavy transportation tasks, salespeople couldn't devote all their energy to market maintenance and terminal service. Additionally, the high-intensity work led to high turnover, making it difficult to recruit and form a stable sales team.

**3. Chaotic account management**

Furthermore, because salespeople used van sales, payments were settled on the same day and turned in at night. But involving inventory checks, account reconciliation, order verification, cash storage, and the many product items with different accounting methods increased the complexity of financial management. "At that time, with over 20 million yuan in business, I had to hire four accountants, and I often had to help with the calculations. Even so, it was hard to get the accounts clear," Lv Fuxiang told New Distribution.

The non-standardized business processes not only caused inefficiency but also left Lv Fuxiang with no time for other things. "I used to be a driver, a warehouse keeper, and also a financial officer and a loader—I had to do everything. When drivers or salespeople asked for leave, they always had a reason I couldn't refuse. When customers needed goods, I had to do it myself. I also had to watch over the accountants because I wasn't always confident in their work. And because the team was unstable, I constantly had to think about recruiting and poaching people, which consumed a lot of energy and left me unable to think about expanding the business."

2
**Joining a Cloud Warehouse, Doubling Performance**

By chance, Lv Fuxiang came into contact with Zhoupu Cloud Warehouse, and it was through this partnership that his business underwent dramatic changes.

In November 2017, all of Fu Xiang Trading's products began to be stored in Zhoupu Cloud Warehouse, which meant a complete shift from van sales to a visit-sales model. Salespeople were no longer burdened with daily loading and unloading, allowing them to focus on market service. The results were significant:

Previously, salespeople could visit at most 15 stores a day; now they typically visit 40 to 50 stores daily. With increased work enthusiasm, salaries rose from over 4,000 yuan to over 10,000 yuan. With the extra energy, Lv Fuxiang took on two more brands, Bright Dairy and Yanghe Daqu, and sales doubled from over 20 million to over 40 million yuan, with profits multiplying several times.

Lv Fuxiang calculated for New Distribution: When the business was at 20 million yuan, profit was around 2 million yuan. Back-end costs—warehouse, clerical, finance, plus fixed costs like warehouse fees, vehicle costs, and wages—were about 1 million yuan, leaving a net profit of about 1 million yuan. After expanding to 40 million yuan, the original fixed expenses didn't change significantly, but profit increased to 4 million yuan, meaning a net profit of about 3 million yuan. This is the market increment brought by joining Zhoupu Cloud Warehouse and implementing centralized warehousing and distribution.

Behind the performance growth, on the surface, it was a shift from van sales to visit sales, but in essence, it was about stripping away non-core functions and achieving professionalization of each business process through centralized warehousing and distribution via Zhoupu Cloud Warehouse.

In warehousing, a three-dimensional, orderly, and standardized warehouse replaced the original cluttered, closed warehouse. Product shelving, order picking, and loading for delivery are all handled by professional equipment, personnel, and information tools, ensuring accurate inbound and outbound.

In logistics and distribution, the original van-sales model could ensure real-time order fulfillment, but high vehicle empty-load rates and low per-order fulfillment efficiency were major constraints on distributor growth. By joining Zhoupu Cloud Warehouse, people and vehicles are separated; salespeople focus on terminal visits and market service, greatly improving efficiency. Zhoupu Cloud Warehouse aggregates orders from multiple distributors and delivers in multiple frequencies, reducing the distribution cost per order.

In finance, order payments are collected by Zhoupu at the time of delivery, and daily inbound/outbound data and account information can be viewed in real time through the data backend, eliminating the need for manual reconciliation.

Lv Fuxiang told New Distribution that previously, with paper ledgers, it was hard to keep transaction data for long because of the many documents each day. Now, with Zhoupu's system, accounts are easily saved, and since it's third-party real outbound data, it accurately reflects their operating conditions, and customer sales can be seen at a glance.

"Before, because the accounts weren't clear, I felt I was making money at the end of the year, but I never saw the cash. The business kept requiring investment, and I never saw a way to withdraw money. To clarify the accounts, I hired four accountants to check all the documents, but in the end, it failed. At that time, I felt the distributor business was unsustainable—just losing money with no hope of profit. After using the system, we clearly felt that our funds were in a positive flow, and we could gradually withdraw some funds from the existing pool without affecting normal operations. Now, although we're still investing, it's to expand the market for the newly acquired brands."

3
**The Changing Role of Distributors After Joining a Cloud Warehouse**

After joining Zhoupu Cloud Warehouse, the number of internal staff at Fu Xiang Trading was significantly optimized. Originally, the company had 11 vehicles, plus finance, warehouse, and clerical staff, meaning nearly 30 employees in total. This placed high demands on Lv Fuxiang's management capabilities. After joining the cloud warehouse, most back-end personnel and processes were optimized, laying the foundation for refined internal management.

Furthermore, Lv Fuxiang's role as a distributor has changed significantly. "Before, I had to do everything—finance, porter, driver, sales—whatever position was short-staffed, I had to fill in, leaving me no time for myself. But through cooperation with Zhoupu, warehousing, distribution, and finance are all handled by Zhoupu, so I have more time and energy to analyze the market and think about how to grow the business. Now my main daily work is to hold meetings with our salespeople, analyze the reasons for sales fluctuations, and optimize visit routes. For difficult customers, I often go with them to communicate," Lv Fuxiang said.

When discussing future development plans, Lv Fuxiang told New Distribution that he hopes to continue growing the business through ongoing cooperation with Zhoupu, take on more brands, and eventually reach a business scale of around 100 million yuan, which is his goal for the next two years.

**Final Thoughts:**

Undoubtedly, traditional distributor business has become increasingly difficult in the past two years. On one hand, profits continue to decline; on the other, young people are no longer willing to enter the FMCG industry, making recruitment harder. Coupled with the continuous increase in manufacturers' sales targets, these constitute three major pressures on traditional distributors. In this context, more and more distributors are beginning to 'increase revenue and reduce expenditure' by implementing centralized warehousing and distribution.

The pain point in high-tier markets is warehousing, while in low-tier markets it's distribution. But can professional, standardized warehouses truly compete with distributors in low-tier markets where warehousing costs approach zero? Can unified order distribution logistics costs truly outperform wholesalers in high-tier markets who use electric bikes and tricycles for delivery? If not, where is the value of centralized warehousing and distribution?

New Distribution believes that the essence of centralized warehousing and distribution lies in using professional warehousing, distribution services, and information tools to free distributors from complex and tedious functions, allowing them to focus more on market service. In the past, distributors had sufficient profit margins to survive by handling all functions—warehousing, distribution, capital advances, and market service. But with the emergence of specialized division of labor, distributors can only have enough development space by focusing on market service functions.

**On October 23-24, during the Autumn Sugar and Wine Fair, New Distribution will host the '2018 FMCG City Distribution Logistics Conference'.** We will invite industry experts, FMCG warehousing and distribution specialists, and distributors who have transformed to centralized warehousing and distribution platforms to discuss and answer questions about the future development trends of FMCG city distribution logistics and practical cases of distributor transformation to centralized warehousing and distribution, under the theme 'New Distribution, New City Distribution'. We hope it will bring you different inspiration and thinking! The specific agenda is as follows:

**List of Participating Companies**
(In no particular order)

Hunan Zonglan Diandan Network Technology Co., Ltd.
Jingbang (Wuhan) International Freight Forwarding Co., Ltd.
Mengniu Dairy
Qinghai Hanxiang E-commerce Co., Ltd.
Unilever Service (Hefei) Co., Ltd. Shanghai Branch
Huicong
Hunan Xuan'ang Food Co., Ltd.
Guangzhou Tongdaoren Information Technology Co., Ltd.
Qingdao 888 Trading Co., Ltd.
Uni-President Enterprises (China) Investment Co., Ltd.
Hunan Province Zhongxiang Gongpei Logistics Co., Ltd.
Shenglong Ingredients
COSCO Shipping Logistics Warehousing and Distribution Co., Ltd.
Guangxi Yongpai Liquor Co., Ltd.
Shangqiu Kangrong Trading Co., Ltd.
Jinan Dingzhong Economic and Trade Co., Ltd.
Liaoning Bimai Agricultural Technology Co., Ltd.
Kunming Xiongjia Trading Co., Ltd.
Shaanxi Houheng Trading Co., Ltd.
Guangzhou Dingwo Enterprise Information Consulting Co., Ltd.
Shaodong Jiajiale Store
Boda Trading
Industrial Bank Changsha Branch
Wuhan Muchen Convenience Store Chain Co., Ltd.
Fujian Fuxing Yun Warehouse Logistics Co., Ltd.
Guizhou Yilimi E-commerce Co., Ltd.
Jiangxi Xiao Laoer E-commerce Co., Ltd.
Jinshan Koufu
Shanxi Taihang Yuanjing Supply Chain Management Co., Ltd.
Shanxi Dezhun Supply Chain Management Co., Ltd.
Shaoyang Tongdeli Trading (Xiangbang Logistics)
Huanfu
Tongda Express City Distribution
Beijing Xinjingxiang Food Co., Ltd.
Wuhan Huizhong Tianhong Liquor Co., Ltd.
Changsha Paide Biotechnology Co., Ltd.
Chao'an Tuqiang
Guizhou Yihe Bopin Supply Chain Management Co., Ltd.
Jiangxi Kang'en Industrial Development Co., Ltd.
Xiangtan County Yisuhe Town Yuhua Paper Store
Luoyang Yuanlang Trading Co., Ltd.
Tongchuan Yaozhou District Huayuan Supermarket Co., Ltd.
Hunan Yongfu Jiujiu Trading Co., Ltd.
Zhejiang Chengchengtong Logistics Co., Ltd.
Chongqing Kaiguo Materials Trading Co., Ltd.
Beijing Xianmaixianmai Data Technology Co., Ltd.
Hanchuan Qixing Trading Co., Ltd.
Tongxin Jiuzhiru Trading Co., Ltd.
Guizhou Meiguo Guoguo Network Technology Co., Ltd.
......

**Distributor Transformation Representatives (Proposed)**
(In no particular order)

Rong Jun, Chairman of Jiangsu Huashang City Distribution Network Co., Ltd.
Wang Bo, Chairman of Hubei Yijiaren Logistics Co., Ltd.
Jiang Shuming, General Manager of Sichuan Chengdu Xingrenxing Trading Co., Ltd.
Liu Jichen, Chairman of Shandong Yunbang Warehousing and Logistics Co., Ltd.
Tu Mingyu, Chairman of Chongqing Lingyu Consumer Goods Supply Chain Management Co., Ltd.
Yang Su, Chairman of Guangzhou Zhongshan Wanrong Marketing Co., Ltd.
Yuan Xia, Chairman of Sichuan Bajie Supply Chain Management Co., Ltd.
Li Qiangyun, Co-founder of Hubei Pengdun Meiyitian Supply Chain Management Co., Ltd.
Zhang Jianyong, Chairman of Henan Xuchang Jiulegou E-commerce Co., Ltd.
Ma Haichao, Founder of Hebei Changyi Logistics Co., Ltd.
Meng Yucun, General Manager of Hebei (Chengde) Wulian Cloud Warehouse Co., Ltd.
Zhang Xun, Chairman of Xinjiang Urumqi Su'an Jinchi Logistics Co., Ltd.
Zhang Hailing, Chairman of Jilin Sanxing Lian'gou
Qiang Huitao, Founder of Hebei Dunjie Supply Chain Management Co., Ltd.
Liao Lei, General Manager of Hunan Damei Supply Chain Management Co., Ltd.
......

-END-


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

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