When seeing this title, I think 90% of people will be convinced that 'the distributor's business is getting harder!' But is that really the case? Are all distributors' businesses getting harder? If that were the only answer, there would be no need to discuss this topic. Before discussing whether distributors' businesses are good or bad, let's talk about two stories. In all low-income countries worldwide, what percentage of girls complete primary school? A. 20%; B. 40%; C. 60%. What is your answer? In a survey, only 7% chose the correct answer: 60% of girls can complete primary school. Another story: what percentage of the world's population lives in low-income countries? According to statistics, among respondents, over 90% believed the answer should be 59%. However, the real figure is 9%; only 9% of the world's population lives in low-income countries. In fact, it's far less dire than people imagine. Why do so many people get the wrong answer, including famous sociologists? These two stories are mentioned in the book Factfulness by Hans Rosling, who also explains the reason behind our misjudgments: our tendency to think negatively. In short, we are more likely to notice bad things than good ones. Returning to distributors' businesses, when a friend tells you that a distributor went bankrupt due to a broken capital chain, wouldn't you pay more attention? At the same time, the external information environment, such as media news, also tends to report negatively. The instinct of negative thinking, coupled with humans being emotional creatures, Eventually, 'business is getting worse' gradually becomes a common belief among almost all distributors, deeply held. We need to face the fact that judgments about things are never binary, right or wrong. Things can be bad, but at the same time, they can also get better; bad and better coexist. ** So I believe some distributors' businesses are getting better; it's just that 'good news is not news' and isn't widely spread. When we rationally recognize this and carefully analyze distributors' businesses, seeing why they are bad and how they can improve, that is the correct path for distributors to think. -01- Why do we feel business is harder? The difficulty often comes from comparing with the past. From the outside, upstream products have increased, competition among manufacturers is intensifying, supply exceeds demand, and with a fixed number of people, naturally some grab more and some less; Midstream peers have increased, not only same-category distributors and cross-category distributors, but also JD New Channel and Alibaba Retail Link, all supplying retail stores. If you supply, they supply too; offline stores are limited, and if they take your goods, they won't take others'; Downstream, the ways to sell to consumers have multiplied: national e-commerce, community group buying, even WeChat and Douyin can sell goods, so fewer goods are sold through physical stores. Full competition at every level divides market sales, and distributors, as an intermediate link, are inevitably affected. This is the objective external environment compared to the past, causing business difficulties. From the inside, distributors have evolved through four roles since the 1990s: capital provider → logistics provider → coverage provider → operator. In the past, doing distribution business meant having money to get goods, finding a good location in the market, and waiting for business to come; there was almost no barrier to entry. Later, as peers increased, under pressure from manufacturers, they began delivering goods, either actively or passively. Then, more operationally aware distributors proactively covered stores, made regular and periodic visits, built relationships, and took orders. Of course, some distributors also started doing operational work, such as brand promotion and product experience in modern KA channels; in circulation channels, they occupied prominent positions, focused on sell-through, and used various POSM to maximize sales. From capital provider to operator, in fact, this places higher demands on distributors' businesses. Both management difficulty and market operation difficulty are increasing. It's not hard to understand that the work is more detailed, and those who don't adapt will inevitably be eliminated. This is the law of the market and the rule of survival. Combining internal and external factors, distributors' businesses naturally become harder. On the other hand, how do some distributors do well? I think the core lies in two points: selling and efficiency. -02- How to improve business? Currently, distributors are transitioning from 'coverage provider to operator.' Those who can't make it will continue to be eliminated. Those who cross over will usher in a new spring. The two keys to being a good operator are selling and efficiency. 1. Selling: Make consumers buy your product, not competitors'. In the past, distributors only needed to do coverage, distributing products to outlets and ending there, relying on probability and brand. But now that's not enough because external competition is fierce. Not only do you need to do distribution, but also sell-through; the action of sell-through is selling. How to sell well? Common methods like vibrant displays are basic. But when every brand does it, it often fails. So, we don't necessarily need to make beautiful displays, but we must think about how to maximize the likelihood of being sold, especially in today's homogeneous products. Back to the origin of consumption: whether you can attract consumers' attention, whether you can converse with consumers, and whether you are closest to the point of purchase determine the probability of the product being sold. For distributors, the product isn't yours, and you can't set the price. The only thing you can do is increase the attention between the product and consumers, raising the likelihood of purchase. For example, in traditional small circulation stores, occupying the most prominent position is something distributors understand. But that's not enough; you need to think further. Suppose you sell energy drinks; besides placing them in the cooler, are there other better positions, like placing your product to the right of Red Bull, 'hitching a ride on a big name'? For 2L/5L bottled water, the best way is to place it on the floor in the beverage section so consumers can pick it up and go. In KA stores, besides occupying positions, distributors also need planning capabilities, using what kind of copy, images, and text to converse with consumers and move them. For example, during the pandemic, milk inventory was high. To clear inventory, direct discounts in stores might have boosted sales, but it wasn't the best way. Instead, making consumers feel that 'during COVID-19, drinking milk boosts immunity, brand, strengthens the body, and keeps all diseases away.' Conversing with consumers and giving them a reason to buy your product is sometimes more important than discounts and low prices. This is the logic of selling: from the consumer's perspective, in the retail store scenario, how to choose my product. Of course, for distributors, accurately insight into consumer behavior and needs may be difficult, but a 'selling mindset' is essential. For example, Hongye Hengda Trading, a distributor for Arawana, directly sold grain, oil, rice, and flour into factories, holding a 'factory internal purchase event' at relatively favorable prices, directly selling to consumers with impressive sales. This is also a selling mindset: how to get closer to consumers and attract their attention. Similarly, milk and dairy products, daily chemicals, can also enter such special channels. It should be emphasized that the competition intensity and consumer behavior at the shelf level differ for each FMCG category, so even in the same store, the selling logic is different. A braised snack product might see a significant sales increase with a hanging display, but a beverage might not see much improvement even with a prominent position. Therefore, the form of selling varies by category, and distributors need deep insight. 2. Efficiency: More efficient operations, better profitability A salesperson works 8 hours a day, visiting 30 stores. Your salesperson can work 10 hours and visit 40 stores; that's not efficiency. The extra 2 hours must be compensated by other costs. If your salesperson can visit 40 stores in 8 hours, that might not be efficiency either; if they stay less than 2 minutes per store, just saying hello and leaving. What is efficiency? It's increasing quantity while maintaining the same quality. Using digital tools, following regular routes, for active stores with good relationships, based on historical order data, 5 minutes in-store is enough; for stores with poor relationships and low activity, no orders for a month, even 30 minutes in-store is not excessive. This is based on digital tools, mastering historical sales data to determine visit frequency, in-store duration, and in-store execution actions; that's efficient visiting. Rongcheng Yigou, a traditional distributor transformed into a digital distributor, went from distributing only a few brands to 400 brands, with 2019 sales increasing over 500% year-on-year. That's the efficiency of product distribution. Some might think that this distributor handles so many brands, they can't be specialized. That's viewing from a deep distribution perspective. If it's snacks, daily chemicals, or general merchandise, manufacturers themselves can't achieve deep distribution, but Rongcheng Yigou can not only distribute but also do periodic in-store marketing actions. Who wouldn't welcome that? Why emphasize efficiency? As a distributor, the product isn't yours, and the store isn't yours. The core work is moving goods, getting goods into stores, and selling goods. If you can't move goods at lower cost and faster, can't get more goods into more stores, and can't sell quickly, what is your value? Don't always complain that business is hard. Don't feel empathetic just because you heard a distributor say business is bleak and they're ready to close, comforting yourself that everyone's business is bad, so you can muddle through. Don't pay too much attention to negative voices; listen more to how excellent distributors do it. Some distributors, when they hear about a distributor doing well, always dismiss it, thinking it's because of the brand, connections, or resources... In my exchanges with successful distributors, my biggest feeling is: they always tell me, 'I learned this from so-and-so; there's a distributor doing very well, and I've always wanted to go see...' That's the difference. Is business getting better or worse? My answer is that many distributors' businesses are getting worse because of external competition; these distributors haven't kept up with the pace of environmental competition, and their value has weakened. Without value, business naturally suffers. For brand owners, they don't cover or sell; for retail stores, they don't provide after-sales, don't do displays, just put goods on shelves. They're dispensable; new channels and retail links have everything, so they don't need to beg you. These distributors did well in the past only because of market dividends and brand dividends, relying on courage, not really related to their own abilities. Of course, a small portion of distributors are doing better: they can do coverage, operations, have a selling mindset, and help brand owners launch new products. Or they can help stores achieve one-stop shopping for a category, such as snacks/daily chemicals/general merchandise/condiments, and without their supply, stores can't function. I believe that the elimination of some distributors is inevitable, but behind the elimination, we should also see opportunities. Some distributors will rise and become major distributors, helping manufacturers sell more goods while developing themselves, focusing on stores, with multi-brand and multi-category operations!