--- title: "In the Next Three Years, a Large Number of Traditional Distributors Will Die Out. If You Don't Change Your Game, the New Game Will Kill You!" description: "This article discusses the transformation of traditional distributors in the FMCG industry, highlighting the need to embrace internet thinking and adapt to new business models. It outlines seven key changes, including the integration of mobile internet with sales, the shift to service-oriented enterprises, and the rise of online distribution, warning that those who resist change will be left behind." author: "李政权" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2014-09-25" language: "en" canonical: "https://xinjignxiao.com/en/articles/in-the-next-three-years-a-large-number-of-traditional-distributors-will-c458ce4c/" markdown: "https://xinjignxiao.com/en/articles/in-the-next-three-years-a-large-number-of-traditional-distributors-will-c458ce4c.md" original_source: "https://mp.weixin.qq.com/s/N0wEU90QK8Gl6dXjSCranQ" translation: "https://xinjignxiao.com/zh/articles/%E6%9C%AA%E6%9D%A5%E4%B8%89%E5%B9%B4-%E5%A4%A7%E6%89%B9%E4%BC%A0%E7%BB%9F%E7%BB%8F%E9%94%80%E5%95%86%E5%B0%86%E6%B6%88%E4%BA%A1-%E4%BD%A0%E4%B8%8D%E6%94%B9%E5%8F%98%E7%8E%A9%E6%B3%95-%E6%96%B0%E7%9A%84%E7%8E%A9%E6%B3%95%E5%B0%B1%E4%BC%9A%E6%8A%8A%E4%BD%A0%E7%8E%A9%E6%AD%BB-c458ce4c.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/in-the-next-three-years-a-large-number-of-traditional-distributors-will-c458ce4c/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # In the Next Three Years, a Large Number of Traditional Distributors Will Die Out. If You Don't Change Your Game, the New Game Will Kill You! > This article discusses the transformation of traditional distributors in the FMCG industry, highlighting the need to embrace internet thinking and adapt to new business models. It outlines seven key changes, including the integration of mobile internet with sales, the shift to service-oriented enterprises, and the rise of online distribution, warning that those who resist change will be left behind. Friendly reminder: Click the blue text above to follow "FMCG Distributor Professional Consulting" for more marketing and distributor internal management content. First, let's look at what changes will occur in the traditional distributor community. 1. More distributors are thinking big but starting small, infusing internet thinking. Don't mock that "internet thinking" has become a cliché used for showing off. In the process of the internet changing the world, work, life, and business, commercial forces in China and globally are all feeling their way forward. Although the dust has not settled, Li Zhengquan believes that any internet-like thinking, behavior, or practice that can make traditional business more efficient and effective can be called internet thinking. It requires us to start small and use it pragmatically. 1.1. The close integration of mobile internet and channel sales behavior. For example, introducing handheld terminals (mobile phones) with functions such as mobile ordering, visit tracking, and GPS positioning. Sales personnel can record how many stores they visited on their route, how many SKUs they distributed, and how many orders they took. Orders are transmitted in real-time to the backend, and the system immediately generates rankings of visit terminals and order volumes. Who is good or bad, who is diligent or lazy, is clear at a glance. The traditional monthly evaluation and performance management system can now be broken down to daily units. This smaller unit, like a day, forms smaller process control modules that are easier to manage and less prone to errors. The warehouse also prepares and picks orders immediately based on the orders—note that this is like the backend sorting center of an e-commerce company. 1.2. Backend sorting, separating people from vehicles. Previously, we used a vehicle sales model: one vehicle, one driver, and one salesperson (sometimes the driver doubled as the salesperson). On the visit route, wherever they stopped, they asked stores whether they wanted to order or replenish. Because orders and the specific SKU items within them were not clear, costs were high, efficiency was low, and accuracy was poor. Now, with people and vehicles separated, salespeople take orders in front using the mobile ordering system. As order data is transmitted in real-time to the backend, the warehouse sorting center backs up and prepares orders. They sort and pack the goods for Zhang San, Li Si, Wang Ermazi, etc., whether in boxes or packages, and label them before delivery. Based on route planning, the first deliveries are loaded at the back of the vehicle. The vehicle follows the salespeople, delivering efficiently along the route. This is progress! 1.3. A large number of traditional distributors will transform into service-oriented enterprises focused on offline execution. Whether it's companies that do their own logistics and distribution or those that entrust traditional third-party logistics, they all face this dilemma: in the e-commerce era, a pair of socks worth a few yuan on Taobao can be delivered within 24 hours, and from the moment of ordering, the process is clear, even allowing self-set delivery times to the day and hour. Our logistics and distribution costs are not low, goods are lost, and damage is not uncommon. Why can't we achieve this? What I want to express here is: traditional enterprises will not only soon say goodbye to the traditional enterprises they are still cooperating with, but in the near future, they will also say goodbye to those distributors that have transformed into logistics and distribution, or those that only have warehousing, logistics, and distribution functions but still receive full rebates from distributors. Distributors who have been trying to transform for years will face a new transformation: shifting to service-oriented distributors focused on offline execution, such as those with promotional capabilities and the ability to deliver to consumers' homes. 1.4. Traditional distributors will compete more with terminal stores for business. Even if traditional distributors transform into service-oriented distributors and organize "express-style" delivery teams, they will find that the scattered community supermarkets, convenience stores, and other terminal stores are competing with them for business—and they have advantages such as nearby delivery and even consumer self-pickup. To achieve this transformation, traditional distributors must now break before building, by integrating, acquiring, or cooperating with competitive stores to improve their competitiveness in the new distributor role. 1.5. A large number of traditional distributors will disappear. Consumers' online shopping on PCs or mobile phones can be understood as placing orders via the internet. Extending this to terminals placing orders directly with enterprises via the internet is not a difficult or distant future. Now that terminals and consumers can order directly from manufacturers via the internet, why do we need so many middleman distributors to share the spoils and count money? Therefore, a large number of traditional distributors will disappear as a result. 1.6. More distributors are engaging in online distribution and practicing O2O. When Li Zhengquan previously served By-Health, the champion enterprise in China's non-direct-selling dietary supplement field, he experienced something like this: By-Health had never authorized any online distributor to sell any of its products, but on Alibaba's Taobao and Tmall, a quick search could find thousands of online merchants selling By-Health products. Rough estimates put their sales at around 30 million yuan. Friends, this was in 2011, when By-Health's sales scale was just over 300 million yuan. Where did the 10% of By-Health products sold on Taobao come from? Offline distributors! In other words, a considerable number of our distributors have almost innate business intuition and acumen, sensing changes in life and business, and taking the lead in laying out and practicing on e-commerce platforms—this "leadership" even precedes upstream enterprises or is without their permission. Now, many traditional distributors have tasted the sweetness of embracing the internet and e-commerce, and some have even shifted their business focus to online distribution and building their own e-commerce brands. Proactively embracing and practicing change, as well as the successful demonstrations and guidance of pioneers, will also lead more distributors to become e-commerce players and new types of distributors that integrate online and offline. Having done offline for years and now online, if these distributors also build a "2" in the middle, O2O-type distributors will appear more around us. However, it is worth noting that those transforming in this direction are mostly new-generation distributors or the children of old distributors. Many middle-aged and elderly traditional distributors, whether in vision, entrepreneurial spirit, or innovative practice, find it difficult to adapt to this change. 1.7. With transformations different from the past, the distributor community has seen more new divisions. Ten years ago, the distributor transformations we discussed were: upward—turning to manufacturing, making their own products, or building their own brands through OEM; downward—turning to traditional retailers; or more specialized—turning into logistics providers. Now, these options still exist for distributors. But as mentioned earlier, new transformation directions that align with future trends have emerged. Because of these new directions, some traditional distributors and those who have transformed traditionally will inevitably say goodbye to the so-called traditional, leading to new divisions within the distributor community, and these divisions may even have regional characteristics. For example, if we want to find health product distributors, we now face traditional distributors, execution-oriented service distributors, and online distributors. If we want to find online distributors, given the borderless nature of online shopping, we will break through the regional restrictions of traditional distribution cooperation and go to Guangzhou, Dongguan, Shenzhen in the Pearl River Delta, Shanghai, Hangzhou, Nanjing in the Yangtze River Delta, or even Beijing to find partners, because most of China's well-performing health product online distributors are concentrated in these areas. The new era has put forward new capability requirements for traditional enterprises, including distributors. Our so-called core competitiveness in the past has become sparse and elusive due to the renewal and upgrading of these new capability requirements. It sounds like we are in the most beautiful era but experiencing the worst experiences. But Li Zhengquan wants to remind every distributor friend: the essence of business is the same as it was 10 or 20 years ago; it's just that new technologies and new platforms have changed our ways of playing. So, don't cling to the value you may assume in the channel chain, such as being a fund provider, logistics provider, distributor, or reseller. It's time to change. Otherwise, if you don't change your game, the new game will finish you off! -------------------------------------- Like this article? Feel free to share it to your Moments by clicking the top right corner. 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