--- title: "Ignoring Category Management Means Dealers Can Only Run Inefficient Businesses!" description: "This article is a supplement and extension of a previous one, continuing to explore how dealers can do category management well in combination with the retail industry. Without category management, dealers' survival space will be locked down. The article proposes three core viewpoints: choose the right stores and sell the right products, optimize resource allocation to reduce operational risks, and increase volume and profit to enhance competitiveness. It also provides specific methods for dealers to implement category management, including deciding whether to prioritize category or brand, adapting to the retail trend of 'wide category, narrow product', and deeply binding category management with retail outlets." author: "高级研究员 海游" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2025-12-03" categories: "Consumer & Categories, Dealer Operations, Management & Methods" language: "en" canonical: "https://xinjignxiao.com/en/articles/ignoring-category-management-means-dealers-can-only-run-inefficient-busi-b632b437/" markdown: "https://xinjignxiao.com/en/articles/ignoring-category-management-means-dealers-can-only-run-inefficient-busi-b632b437.md" original_source: "https://mp.weixin.qq.com/s/H9JeduAS0TbEHonnv5m-wg" translation: "https://xinjignxiao.com/zh/articles/%E4%B8%8D%E9%87%8D%E8%A7%86%E5%93%81%E7%B1%BB%E7%AE%A1%E7%90%86-%E7%BB%8F%E9%94%80%E5%95%86%E5%8F%AA%E8%83%BD%E5%81%9A%E4%BD%8E%E6%95%88%E7%94%9F%E6%84%8F-b632b437.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/ignoring-category-management-means-dealers-can-only-run-inefficient-busi-b632b437/" citation: "高级研究员 海游. “Ignoring Category Management Means Dealers Can Only Run Inefficient Businesses!.” New Distribution, 2025-12-03. https://xinjignxiao.com/en/articles/ignoring-category-management-means-dealers-can-only-run-inefficient-busi-b632b437/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Ignoring Category Management Means Dealers Can Only Run Inefficient Businesses! > This article is a supplement and extension of a previous one, continuing to explore how dealers can do category management well in combination with the retail industry. Without category management, dealers' survival space will be locked down. The article proposes three core viewpoints: choose the right stores and sell the right products, optimize resource allocation to reduce operational risks, and increase volume and profit to enhance competitiveness. It also provides specific methods for dealers to implement category management, including deciding whether to prioritize category or brand, adapting to the retail trend of 'wide category, narrow product', and deeply binding category management with retail outlets. This article is a supplement and extension of the previous one, continuing to explore how dealers can do category management well in combination with the retail industry. Without category management, dealers' survival space will be locked down. In general, products are the core element in the supply relationship among dealers, retail outlets, and consumers. Above products are brands, and above brands are categories. If dealers fail to manage categories well, they cannot control brands, let alone operate products effectively. Here I put forward three core viewpoints: **1. Choose the right stores and sell the right products.** In recent years, business has become increasingly difficult. Dealers' sales have shrunk and profits have been halved. Besides the often-cited poor macro environment, the bigger problem is the mistake of these six words. In the era of shrinking volume, they still use the tactics of the era of growth, without precise positioning of outlets or products, resulting in difficulty in increasing volume and a continuous emergence of aged inventory. Take instant noodles as an example: In what scenarios should five-pack products be sold in campus channels? In what scenarios should cup noodles be sold at highway service areas? If you don't understand the situation and don't deeply study the category logic, the more you distribute, the greater the loss. **2. Optimize resource allocation and reduce operational risks.** Market competition is fierce, and dealers have limited resources. Category management can accurately identify which categories are profit cores (such as high-margin profit products) and which are traffic entrances (such as high-frequency essential traffic products). Reasonably allocate funds, inventory, manpower, and other resources to avoid wasting resources on inefficient or loss-making categories, maximizing resource utilization. At the same time, if a dealer relies solely on a single category, once that category faces a cold market or intensified competition, the business may collapse. Multi-category operation and optimizing the category portfolio through management can diversify risks. For example, when sales of one category decline, other categories can make up for the loss, ensuring overall business stability. **3. Increase volume and profit to enhance competitiveness.** Through data analysis and optimization, category management can discover potential best-selling categories or growth points. Targeted promotion and marketing, reasonable pricing, and combined sales (such as pairing profit products with traffic products) can increase average transaction value and sales, ultimately achieving profit growth. At the same time, effective category management helps build differentiated advantages. By introducing unique categories and optimizing the category structure, dealers can stand out in the market. For example, focusing on high-end categories can build a brand image, while low-price defensive products can resist competitors' price wars, forming multi-dimensional competitive barriers. How can dealers do category management well? 1. Category first or brand first? A characteristic of regional leading trading companies is the combination of multiple categories and multiple brands. For example, a dealer may operate beverage categories such as Nongfu Spring or Snow Beer, and convenience food categories such as Master Kong or Baixiang. They operate many categories, each with head, waist, and lower-tier brands, forming a product matrix of traffic products, profit products, competitive products, and image products, ensuring business stability. So how can ordinary dealers develop into leading dealers through category management? There are roughly three paths. First: Develop multiple categories and multiple brands in one step. This path requires strong capital reserves and even more complete management and team mechanisms. Dealers simultaneously represent several categories, each with a leading brand. In this case, the capital requirements and market operation requirements of leading brand manufacturers are very high. Many dealers have tried and failed, so **it is not recommended.** Second: Develop a single category with multiple brands first. This path is more difficult. For example, if you operate the beverage category and already represent Nongfu Spring, the brand manufacturer will absolutely not allow you to also represent C'estbon, Ganten, etc. So before becoming a leading dealer, it is unnecessary to engage in such games with brand manufacturers. Third: Develop multiple categories with a single brand first. This path is relatively easier. **Dealers can first develop multiple categories, then multiple brands.** For example, first represent Nongfu Spring in the beverage category, then represent Master Kong in convenience food. When the business is relatively stable, expand to Dayao Jiabin in beverages and Samyang in instant noodles. Doing business this way, the brand exclusion pressure from Nongfu Spring and Master Kong will be much less, reducing unnecessary communication and internal friction costs. Summary: I personally believe that the third path can more easily achieve the multi-category + single-brand operation model. 2. Adapt to the retail trend: wide category, narrow product. 'Wide category, narrow product' is currently particularly evident in the retail industry, meaning that stores must meet the category needs of the vast majority of consumers, even achieving deep category segmentation. But within each segmented category, the product demand is extremely limited. Many stores subdivide dozens of categories into hundreds, but compress tens of thousands of SKUs into a few thousand. For example: Excellent stores and chain convenience stores need to subdivide beverages into bottled water, sugar-free series, sugary series, functional series, etc. Each series must weigh factors such as brand, sales, and profit to select a few single items to put on shelves, rather than as before, when a beverage category could have hundreds or thousands of SKUs, and as long as you paid the slotting fee, it could be listed. As the retail industry matures, traditional A and B class stores in the traditional circulation sense will also follow suit, after all, in the era of shrinking volume, it is their only way out. So how should dealers, who previously survived on full categories, change and adapt? **Secondly, insight into regional market category and product opportunities to do addition** – simply put, don't blindly follow trends. Some categories and products are hot, but not necessarily in your region. Some smart dealers, when optimizing their category structure, first go to the largest local stores and snack shops to talk to purchasing managers to understand their operations and recent sales, using data to make decisions. They seek agency rights for categories and products with high growth potential, and begin to plan the elimination of categories that have seen continuous sales decline. **Finally, efficiency first to do multiplication** – after dealers sort out and adjust the combination of 'category structure + brand structure + product structure', they should focus resources such as people, vehicles, and money on those few star products with traffic and profit. Make these products refined and thorough. The result is faster inventory turnover, higher capital utilization, lower aged inventory, and sales and profits not falling but rising, ultimately forcing dealers to transform into supply chain service providers who understand operations and services. 3. Deeply bind category management with retail outlets. Optimizing the product mix is the foundation for binding terminals. Dealers can analyze the consumer profile of the area where the terminal store is located and provide a product mix that matches local demand, including both traffic-generating products to attract customers and profit products to ensure store revenue, while also configuring differentiated products to establish competitive advantages. First, precise category planning and demand matching. Dealers should drive product selection through data analysis, using terminal sales data and consumer research to analyze the consumption characteristics, preferences, and demand trends of the terminal area, and plan the category structure accordingly. For example, community stores can increase family packs and basic products; business district stores focus on fashionable and convenient products. At the same time, dynamically adjust the category mix based on seasons, promotions, market changes, and other factors. For example, increase beverages and ice products in summer, and increase warm supplies and hot drinks in winter. Second, establish deep cooperative relationships. Generally, there are agreements between dealers and enterprises. Through the cooperation and constraints of agreements, an organized and planned strategic alliance can initially be formed. However, secondary wholesalers and retail terminals are often scattered individual operators. They sell whatever sells well, whatever is profitable, and whoever offers cheaper prices, timely delivery, and good service for the same product. Therefore, dealers should sign exclusive or priority supply agreements with high-quality terminal outlets for core single products, clarifying the rights and obligations of both parties, ensuring the stability or exclusivity of product supply, and enhancing the terminal's dependence on the dealer. Also, establish a profit-sharing and commission mechanism. Work with terminals to formulate profit distribution plans, such as sharing based on sales volume, gross profit, and other indicators, to incentivize terminals to actively promote products and achieve mutual benefit and win-win. Third, value-added services and support for core categories. First, display support: provide terminals with professional display design solutions, including shelf layout, stack placement, end-cap displays, etc., to enhance product exposure and attractiveness. Regularly arrange display teams to provide on-site guidance and adjustments at terminals. Second, promotion planning and execution: customize promotion plans based on terminal characteristics and market demand, such as discounts, full reductions, gifts, and tastings. Provide promotional materials, personnel training, and event execution support to ensure maximum promotional effectiveness. Finally, inventory management and replenishment support: use digital tools to monitor terminal inventory levels in real time, replenish in a timely manner, and avoid stockouts or overstocking. Provide inventory management advice to help terminals optimize inventory structure and reduce inventory costs! The key to a dealer's business is no longer how much product they can distribute, but 'whether they can get the category right, smooth the structure, and control risks'. In March 2026, 'New Distribution' will hold the CFC 11th China FMCG Conference and the 6th China FMCG Distribution and Retail Conference with the theme 'Advance Towards the C-End'! Ticket consultation: Zhuang Jiting --- ## Citation metadata - Publisher: New Distribution - Author: 高级研究员 海游 - Published: 2025-12-03 - Canonical: https://xinjignxiao.com/en/articles/ignoring-category-management-means-dealers-can-only-run-inefficient-busi-b632b437/ - Original source: https://mp.weixin.qq.com/s/H9JeduAS0TbEHonnv5m-wg ## 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