During this period, through exchanges with some distributor friends, I've become increasingly certain of one thing: the most important lesson distributors need to learn today is not about transformation or people management, but category management. On the surface, the biggest changes in the industry over the past two years have been at the retail end: supermarket overhauls, accelerated discounting, the rise of instant retail, chain convenience store expansion, and the explosion of private labels... But ultimately, we find that these changes all land in the same place: the rules of the shelf are being rewritten. All retail changes are doing the same thing: re-screening SKUs, re-aligning price bands, and finally re-matching assortments based on demand. And who are distributors' customers? Retail. When the retail end changes, distributors' business logic must follow. Previously, distributors only needed to "deliver goods, do adequate displays, and set prices right," and sales wouldn't be too bad. Now stores are more concerned about whether goods move, whether there are repeat purchases, and whether it's sustainable. In other words, today we are in an era of oversupply. Retail no longer lacks supply; it lacks "better supply." It no longer lacks products; it lacks better product assortments. Therefore, distributors must fill the gap in category management; otherwise, no matter how big they get, they'll only be pulling themselves faster into inefficient business. Why distributors have generally neglected category management in the past I've discussed a topic with many distributors: Does your company currently have a product selection mechanism? Many distributors answer yes. What is that mechanism? I have several buyers specifically responsible for product selection. Do they have standards? These buyers were poached from a retailer or a channel, and they are very experienced. In plain terms, there are still no standards. But compared to most distributors, this is already quite good. Many distributors don't have true procurement at all. So-called product selection is just manufacturers proactively approaching them; if the distributor boss thinks the product is decent and there are fees and support, they'll take it on. After taking it on, if the product doesn't sell well at the terminal and isn't profitable, they label it as a bad product, gradually abandon it, and then repeat the cycle. This method worked well in the past; as long as you encountered reliable manufacturers, sales would grow. This is directly related to the past market environment. First, supply was insufficient. A notable feature of the past market was relative scarcity of goods. For stores, the core need was not whether you could supply steadily, but whether you could help them turn over quickly and make money. At that time, the value structure of distributors was very clear: do three things well: Coverage: have personnel Stable supply: have products Manage accounts receivable: have capital As long as you could supply stably, visit frequently, and offer stores some credit terms, you had an irreplaceable position. In contrast, how to configure category structure and price bands was not the most urgent need for stores at that time. Second, demand was relatively concentrated. Consumers had fewer choices, and demand was relatively concentrated. Within a category, one or two big SKUs often defined the entire category. As long as distributors placed the leading brands and leading SKUs well, they could ride the wave of brand growth. This is a typical brand-driven model: brand manufacturers do marketing, distributors do distribution coverage, and stores are responsible for selling the goods. In this model, distributors follow the strategies set by manufacturers, executing obediently. Distributors were more like operating "brand momentum" rather than "category structure." At this time, the incremental gains from optimizing product structure were far less direct than the gains from expanding big SKUs. Third, the channel structure was stable. In the past, changes at the channel end were slow. KA, mom-and-pop stores, wholesale, convenience stores, etc., and e-commerce logistics delivery times were also long, so offline business was still decent. Store shelf rules were also more stable; distributors just needed to occupy positions—whoever distributed faster, did better displays, and ran more promotions would grow. At the channel end, distributors' daily operations were highly standardized: visits, distribution, displays, merchandising, promotions, maintenance, and restocking. Fourth, profit sources were clear. In the past, distributors' profits came from three types of dividends: Price spread dividends: product price differences, regional price differences, channel price differences; Fee dividends: rebates, display fees, promotion fees, etc.; Scale dividends: the larger the sales volume, the lower the unit costs and the stronger the bargaining power. Conversely, the structural dividends (higher gross margin structure, more reasonable price bands) and efficiency dividends (higher turnover, lower shrinkage, lower capital occupation) that category management could truly bring were often overshadowed by scale growth in the era of incremental growth. Naturally, distributors wouldn't spend time and energy building a category management system. In the final analysis, the past market environment made the value of category management less visible, covered by extensive growth. Category management is the capability distributors must develop today What changes have occurred in today's market? Let's look at the same four dimensions. First, supply has shifted from insufficiency to oversupply. One indicator to understand this is PPI, the Producer Price Index. It mainly tracks the price changes when industrial enterprises sell products "out of the factory" (ex-factory prices). Simply put, it's the price level at which factories sell to channels. A continuous decline means two things: first, goods are not scarce; factories need lower prices to exchange for sales volume; second, competition will shift from product competition to price competition. Data from the National Bureau of Statistics shows that the national PPI averaged a year-on-year decrease of 2.7% from January to November. Enterprises are "exchanging price for volume" to digest capacity/inventory pressure, and upstream capacity is in a state of oversupply. Second, demand is moving from relative homogeneity to high differentiation. Consumer purchases are becoming more scenario-based, instant, and segmented: within the same category, the choice logic is completely different for tasks like family stockpiling, commuting snacks, late-night emergencies, party socializing, health sugar control, etc. Once demand differentiates, categories are split into multiple sub-tracks, each with its own highlights in taste, specification, price band, and functional points. If distributors stick to old thinking, they're likely to step on landmines, either selecting products that look good but don't fit scenarios, or selecting traffic-driving products that sell but don't make money. The core value of category management lies here: reorganizing differentiated demand into executable product assortments, letting different SKUs play their roles rather than competing with each other. Third, the channel structure is shifting from "big channels, big sales" to "fragmentation + format differentiation." Supermarkets, membership stores, discount stores, snack quantity retailers, chain convenience stores, fresh supermarkets, instant retail, community stores, restaurants, etc.—offline channels are becoming increasingly segmented. Each channel and format has its own consumer base and rules: some chase turnover, some chase gross margin, some chase extreme cost-performance, some chase fulfillment and out-of-stock rates. For distributors, this means the same category must provide different answers in different channels: restructure by channel, recombine by scenario, and redo new product introductions and delistings by rules. Fourth, profit sources are shifting from "price spreads and fees" to "structure and efficiency." Price spread dividends are getting thinner, fees are harder to obtain, and under involution competition, it's increasingly easy to erode profits. What truly supports distributor profits are two things: first, structural dividends—using more reasonable price bands, specification gradients, and sub-category ratios to create gross margin; Second, efficiency dividends—using higher turnover, lower shrinkage, and lower capital occupation to protect net profit. And these two things are precisely not solved by distributing more goods or negotiating more fees; they require a stable category management capability. Knowing which SKUs are responsible for turnover, which for profit, and which for differentiation; knowing what to add and what to remove; knowing how to order and replenish, how to control shrinkage, and how to continuously improve sell-through results. Combining the four changes, we find a clear fact: today's distributor competition is shifting from "who can supply better" to "who can manage products better." When supply is oversupplied, demand is differentiated, channels are fragmented, and profits shift to structure and efficiency, category management becomes the underlying capability distributors must possess. The most important thing in category management is having retail thinking Many distributors go astray at the start of category management. They interpret it as "selecting better brands, launching more new products, or finding stronger buyers." That's the result, not the process. Finding a better buyer won't solve all problems. The core approach of category management is to start from consumer jobs-to-be-done, work backwards to the channel's shopper base and shelf rules, and only then determine the product assortment. This is a chain relationship: if the previous link is unclear, the next link can only be guessed. First, the starting point of category management is not the brand, but the consumer's job-to-be-done. In today's market, consumers buy products not because they're familiar with the brand, but because they have a need to complete a job-to-be-done. For example, grabbing a quick energy boost on the way to work, a late-night emergency, family stockpiling, party sharing, sugar and fat control, self-indulgence and relaxation... Different jobs have different standards for products. Some want cheap, some want healthy, some want large sizes, some want small packages, some want convenience... When the job-to-be-done changes, the store's shelf rules change accordingly: display positions, specification gradients, price band divisions, promotion strategies, and replenishment frequency all adjust. Therefore, a distributor's product assortment cannot be a one-size-fits-all answer. Without understanding consumer jobs-to-be-done, you cannot make the correct product structure. Second, the closest to consumers is not the distributor, but the retailer. On the surface, there's only one retailer between the distributor and the consumer, but in reality, between these two roles, there's a vast amount of consumer data: shopper profiles, preferences and needs, price sensitivity, effective promotion methods, etc. Without this layer of insight, it's hard to truly understand consumers. To improve category management capability, distributors essentially need to develop a more fundamental capability: retail understanding—can you view categories from a retail perspective? Once this logic is explained thoroughly, the path becomes clear. For distributors to truly fill the gap in category management, the most direct and effective ways are usually two paths. Path 1: Do retail yourself, or deeply participate in retail operations. Once you stand in the store, many abstract concepts immediately become concrete problems. Ordering isn't about ordering more; it's about balancing out-of-stocks and inventory. Display isn't about making it look good; it's about what consumers need. Sell-through isn't about running promotions; it's about calculating promotion ROI. Gross margin structure isn't determined by manufacturer investment; it's determined by price bands, turnover efficiency, etc. When you're forced to calculate by the store's turnover, shrinkage, and gross margin, category management will truly become systematic. Path 2: Deeply bind with key retail customers to co-build categories. Here, "binding" doesn't mean simply binding sales volume, but binding "category results." What should this category grow (sales volume/gross margin/average transaction value/turnover)? What structures will achieve this (sub-category ratios, price band gradients, specification matrix)? Which SKUs are responsible for traffic, which for profit, and which for differentiation? How do new products enter, how much to enter, how long the observation period, and under what conditions to delist? What indicators are reviewed in sell-through analysis (out-of-stock rate, sell-through turnover, elasticity before and after promotions, returns and near-expiry)? Work with retailers to set structures, review sell-through, and optimize SKUs together. You're no longer just a supplier; you become a partner in store category management. With oversupply, channel fragmentation, and demand differentiation, the traditional distribution model relying solely on speed and distribution can no longer meet the complex demands of today's market. Distributors can only stand firm in this market of oversupply and segmented demand if they know how to precisely adjust product assortments and match consumer needs. For this reason, at the 6th China FMCG Distribution and Retail Conference in March 2026, we will deeply analyze the core strategies of category management, providing you with the most comprehensive and practical answers to help you find new growth points for your business.