Greetings, I am Yuan Lai from New Distribution. Recently, after touring the market and meeting with distributors and brand owners, I increasingly feel that the retail frontline is undergoing dramatic changes. Against the backdrop of supermarket renovations, direct sourcing, bare sourcing, and direct cooperation with first-tier manufacturers have become the norm across supermarket chains nationwide. A distributor friend shared with me that he initially thought supermarket renovations would proceed gradually, starting with fresh produce, bakery, and prepared foods. He thought FMCG standard products wouldn't be adjusted so quickly, given the various services and costs involved. But unexpectedly, that's not the case at all—the determination for supermarket renovation is strong. Community discount supermarkets, from snack quantity stores in 2023-2024 to today's wholesale discount supermarkets, along with local community fresh produce chains, have severely squeezed the business of traditional BC independent supermarkets and mom-and-pop shops. The chain-ization of community retail is also approaching. It's certain that independent supermarkets and mom-and-pop shops won't be completely eliminated due to their cost, location, and flexible operations, but erosion of market share is highly likely. Beyond what's visible offline, there's also the invisible online shift. With JD.com's food delivery and Taobao's Flash Purchase heavily entering instant retail O2O, the billion-yuan subsidy war has begun. Although short-term subsidies target food delivery, this will undoubtedly further influence and deepen young consumers' instant consumption habits. Categories like milk, grain and oil, paper products, beer, personal care, beverages, and snacks, which were previously purchased in offline retail settings, are now being siphoned off by instant retail O2O. At this point, some might jump out and say, "You're exaggerating and creating anxiety. Can direct sourcing and bare sourcing really succeed? Can community discount supermarkets last? Instant retail is just short-term subsidies; it won't affect the big picture." Indeed, I admit it might not happen that fast, and there are many variables. But what I want to say is: for distributors currently in the middle of the supply chain, if you still want to be in the trading business for 3, 5, or even 10 years, you must now think strategically about how your future business should align with retail changes. At the very least, you can't simply think about adding a few more brands, optimizing costs, or improving operational efficiency. These are necessary but can be part of daily operational iteration. Let me now share my recent strategic thinking on distributor operations, which is also the result of discussions with major distributors across various regions. We believe that in the future, there are only three mainstream business models for distributors: 1. Regional Category Operator 2. Retail Channel Operator 3. B2b Platform Operator Before breaking down these three models, let me explain why we call them "operators" rather than "distributors." There are three core reasons:

First, the concept of distributor originates from upstream brands, where the brand authorizes you to act as a regional distribution agent, handling basic functions like warehousing, capital advance, and delivery. But now, distribution agency is no longer a scarce function.

The historical mission of distributors has ended!

Second, the concept of operator emphasizes autonomous operation, with the primary perspective on downstream retail stores, shifting from brand agency to retail product operation.

Third, changing the term is a way to bid farewell to the past and start anew. Regional Category Operator Simple understanding: Deeply develop a specific category, providing product selection, assortment, pricing, promotion, and display for different local channels (retail types). Today's supermarket chains cannot go far with simple direct sourcing or bare sourcing. The products sourced may be cheaper and have gross margin, but can they be sold? Sourcing the right products is a professional skill. Signing direct contracts with first-tier manufacturers, but without service or promotion, even if the manufacturer invests in promotions, who will follow up and implement stage-based project promotions? Each supermarket's location differs, and promotion methods must vary, requiring dedicated personnel to operate and implement. The role of distributors today is not unnecessary; rather, there are too many distributors. With just a few brands, one can start a distribution business, but efficiency is too low. For a major category (snacks and side dishes, grain and oil seasonings, beverages and instant drinks, dairy, daily chemicals and paper products), 1-2 major distributors or operators are sufficient. Direct sourcing and bare sourcing under supermarket renovation are not the way out. Establishing a core category operator system under supermarket renovation is the future. Retail Channel Operator Simple understanding: Focus on a specific retail format, operate across regions, and leverage professional capabilities in advantageous categories to help that type of retailer with "whole-store output" for certain categories, even going deep into production for OEM development, deeply linking production and sales ends. Based on deep understanding of consumer needs and scenarios behind specific retail formats (e.g., hypermarkets, community chains, CVS convenience stores, instant retail O2O platforms), collaborate with upstream factories for OEM development. Effectively combine brand-advantage products (flagship brands), cost-advantage products (OEM custom-developed products), and differentiated products (niche specialty brands). What's the difference between retail channel operators and regional category operators?

  1. Regional category operators are based in local cities, covering multiple channels. We divide a mainstream city into ten retail formats, and category operators must match and organize different product assortments based on different retail formats.
  2. Retail channel operators focus on a type of retail system. For example, a distributor provides one-stop daily chemical category supply to independent BC supermarkets, operating across regions with "whole-store output" for daily chemicals. Another example: a distributor provides product supply, product operation, and some custom development for O2O retail platforms like PUPU Supermarket.
  3. Regional category operators emphasize local city presence, while retail channel operators emphasize channel specialization. B2b Platform Operator B2b platform operators provide one-stop FMCG standard product supply chains to local mom-and-pop shops and small community supermarkets. In fact, strictly speaking, B2b platform operators should be considered a type of retail channel operator. They are listed separately because many major local distributors are trying this path, especially those familiar with local mom-and-pop shops, particularly beverage and snack distributors. Regarding B2b supply chain platforms, I've noticed a bad phenomenon today. Seeing the direction of B2b platforms, many distributors, regardless of size, whether their categories are suitable, or whether they have the capital, rush into B2b. I want to remind everyone: B2b platform business is for a few. In a mainstream second- or third-tier city, two or three B2b platforms are enough. B2b platforms are capital-intensive, warehouse-intensive, and personnel-intensive. Don't rush into B2b on a whim. With 3,000 SKUs, 5,000 square meters of warehouse, and software costing 300,000-500,000, you might neglect your original trading business. Be rational and calm.

Mainstream distributor business is centered on brand agency.

Category operator business is centered on category operation.

B2b supply chain platform business is centered on store needs. The leap from brand agency to store needs is too large. Although B2b platforms are for a few, it's undeniable that this is a definite direction and trend in the distribution field. To date, New Distribution has included over 100 B2b supply chain platforms. Summary From distributor to operator is not just a change in title, but a reflection of market changes that force distributors to rethink their business direction. Today's market lacks not products or distributors who can provide capital and delivery, but operators who truly understand downstream retail formats and effectively organize products (assortment, pricing, promotion, display). At the 5th China FMCG Distributor Conference on August 21, we invited typical benchmark cases of the three types of distributors: Chongqing Jie Cang Wang Gou and Home Convenience—representatives of regional B2b platforms; representatives of regional category operators and retail channel operators—Tianjin Shicheng Bofa, Zhengzhou Dapeng Trading, and Xuzhou Runzhong Supply Chain. Swipe left and right to see more images⬇️ At the conference, we will also release the exclusive industry report "2025 China FMCG Distributor Operating Conditions Survey Report" to see who is growing and who is being eliminated among distributors this year, the reasons for growth, and where operational focus lies. If you are a distributor boss, you must not miss the distributor conference in Shanghai in August! 🔺