---
title: "Is There Still a Dividend for Distributors?"
description: "Data broadens distributors' understanding of their business, shifting focus from operations to strategic thinking. The next dividend for distributors lies in data, which helps them find growth opportunities and improve efficiency."
author: "周群"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2023-02-20"
language: "en"
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# Is There Still a Dividend for Distributors?

> Data broadens distributors' understanding of their business, shifting focus from operations to strategic thinking. The next dividend for distributors lies in data, which helps them find growth opportunities and improve efficiency.

**Introduction:** The role of data is to broaden distributors' understanding of their business, from focusing on operations to strategic thinking, and to keep looking forward.

Distributors, where is the next dividend?

Over the past three decades, the distribution industry has experienced several major dividend periods. The product dividend, in an era of material scarcity, where supply fell short of demand, and products basically sold themselves; the channel dividend, with the emergence of retail formats such as KA stores and convenience stores, making channel dominance the main theme; and the e-commerce dividend, starting in 2012, with rapid growth in online shopping, becoming one of the mainstream market channels.

Distributors that have survived to this day have, to varying degrees, captured one or two of these dividends.

**But at present, is there still a dividend for distributors' businesses?**

I have asked many distributors this question during market visits. 90% of distributors answered that business is increasingly difficult, so where is the dividend?

However, some distributors still answered affirmatively, saying that dividends still exist. The most frequently mentioned was the digital dividend: in a stock market, whoever has higher efficiency gains the advantage and captures more market share.

But digitalization is not concrete enough; it can be further summarized as **the data dividend**.

**Data Dividend**

During a visit to distributors before the Chinese New Year, while discussing digital tools, I noticed a very interesting phenomenon. When interviewing distributors, I ask two questions. **First question: Have the digital tools you use changed in recent years?** The answers varied; some distributors change tools every year, some every two to three years, but some have used the same tool for more than five years, occasionally adding features. **Second question: How much do you spend on digital tools each year?** The answers also varied. On software investment, some distributors spend only a few thousand yuan a year, while others spend tens of thousands or even hundreds of thousands, such as Anshan Hongye Hengda and Chengdu Rongcheng Yigou. **But after comparison, you will find: the larger the distributor, the more stable their use of digital tools and the more they are willing to invest.** The logic here is not that the more distributors invest in digital tools, the better their business will be. Rather, when distributors grow to a certain stage, they need to do business based on commercial rationality, using data to analyze the sources of business growth rather than experience. The higher the match between digital tools and their business integration and application, the higher the efficiency of management and operations, but this is only based on the convenience brought by tools replacing some manual work. Behind this lies a deeper aspect: the improvement of digital construction brings finer data granularity. Based on the operational logic of this data, potential business opportunities can be found. For example, analysis of stores, personnel efficiency, ROI, etc.

**"Small distributors rely on experience; large distributors rely on data." Data itself does not directly bring dividends; rather, it is the analysis of the logic behind the data to find methods for business growth that constitutes the data dividend.** Based on the past interviews with excellent large distributors in "New Distribution 100 People," I have summarized from three levels where the data dividend is reflected, hoping to provide some inspiration.

**Data Management Time: Focus on Strategy**

In the past, when market supply was insufficient, distributors could grab a product, gather a few vehicles and people, maintain good customer relationships, and do well. **At this stage, the capability requirements for distributors were not high; their attention was on distribution and delivery.** But as the market developed normally, the supply-demand balance tilted toward consumers, and the market gradually became oversupplied, even with overcapacity. Overwhelming competition led to a zero-sum game, directly resulting in low profits. Severe talent attrition, inability to upgrade management, and a vicious cycle ensued. Under such market conditions, distributors began to stratify. The vast majority fell into involutionary competition, wasting time on a large amount of low-level repetitive work, which was tedious and failed to generate creative premiums. These distributors' attention did not shift; in the past, they focused only on delivery, and now they have only added more trivial daily operational tasks. During research in Henan and Anhui, I saw many small and medium distributors in this state. In an interview of about an hour, four or five people came in to confirm various reports and data, not to mention the phone calls; the distributors were overwhelmed.

**Of course, a small number of distributors shifted their attention to efficiency and strategic thinking, such as Mr. Xu of Anshan Hongye Hengda and Mr. Luo of Luoyang Rongcheng Yigou.** In exchanges with these distributors, two things were evident: first, "leisure"—in nearly two hours of interviews, there were almost no interruptions; second, "depth"—they talked more about strategic thinking and future development paths. This benefits from two points: first, clear organizational structure and operational processes; second, the convenience brought by intuitive data output from digital tools. In the past, distributors had to spend a lot of time looking at sales and profit data, as it concerned whether the company was making money. This process was cumbersome and error-prone, locking distributors' time into low-level operations, leaving no time for deep strategic thinking. Digital tools provide intuitive, finer-grained data, which not only helps distributors reduce time waste but also allows them to think about the company's strategic direction based on effective data.

**From this perspective, the role of data is to broaden distributors' understanding of their business, from focusing on operations to strategic thinking, and to keep looking forward.**

**Data-Driven Teams: Improve Efficiency**

I often see on social media distributors reposting photos and videos of their teams fighting on the front lines. Whether during holidays or in rain or wind, the sales teams seem very motivated. But in field research visits, you will find that a considerable number of distributors do not manage their business well, with low salesperson efficiency, tasks being delayed, and reluctance to do more. Why can others' salespeople endure hardship and be willing to do more, while your salespeople complain every day? Is it the wrong people hired, or the wrong management approach?

**There are two key elements: performance appraisal and immediate feedback.** The importance of performance appraisal need not be overstated; it can indeed greatly improve salesperson motivation. **What is immediate feedback?** Recently, I heard an interesting story on "Dedao Toutiao." A Japanese economist named Koji Morioka was curious about why people's working hours were getting longer. According to many previous predictions, working hours should have shortened due to technological progress, as many things could be left to machines. For example, economist Keynes said that by the 21st century, your worry would not be too much work but too much leisure. Many people would be troubled by excessive leisure. In fact, there was indeed a trend of shortening working hours in history. This trend occurred around the 1980s. At that time, working hours had already shortened compared to before. But after the 1980s, this trend reversed, and working hours became longer again. Why did this happen? It was actually caused by overly advanced digital systems. Because the system is very sensitive, every action, every word, every decision you make can quickly receive feedback and rewards through data. Take the most intuitive example: if you work one hour a day and immediately see 1,000 yuan added to your account, very sensitive, never delayed, would you be happy? Immediate feedback is about whether you can quickly form positive feedback during continuous work. Returning to the distributor's business itself, whether your sales team has drive depends on the same. First, there must be a good incentive mechanism, and second, a system for immediate feedback. For example, a salesperson's core task today is distribution; the corresponding incentive method is clear. When a salesperson visits stores, for each store stocked and each box of goods placed, they can see or calculate on the system how much reward they will get. Last year, when I followed salespeople at Anshan Hongye Hengda, I could clearly feel this atmosphere. The salespeople were very attentive to terminal maintenance, whether it was display maintenance or promotion, they were proactive and willing to do it.

The core reason is that after performance appraisal is determined, every action can be fed back to the salesperson through data. In such a state, wouldn't salespeople work harder? Real-time calculable or visible incentives are definitely more stimulating than post-hoc verification.

**Data Insight into Business: Uncover Incremental Growth**

The incremental growth of a distributor's business comes from four levels: first, representing more brands; second, expanding more channels; third, expanding the operating area; and fourth, deeply mining existing business. You will find that the first three paths are relatively difficult and risky for distributors. Deeply mining existing business is about finding incremental growth in familiar areas, which presents more opportunities. How to deeply mine existing business? The most direct way is to diagnose the existing business, find areas for optimization, and solve problems. For example, restructuring the product mix, adjusting store distribution, etc. Diagnosing the business is essentially looking at data. Find the source of problems in the data, then peel back the layers to find the root cause, and through data comparison, learn from good operational methods, propose solutions, and obtain business growth. For example, Luoyang Rongcheng Yigou classifies stores based on monthly sales data and order frequency to form user profiles. When visiting, salespeople can use the profile data to diagnose the store's business, telling customers what products to buy and how to sell them. This forms a positive incentive loop: the products recommended by Luoyang Rongcheng Yigou sell well at terminals, increasing trust in the distributor, and naturally the business continues to improve. From the distributor's perspective, whether the business is doing well is about whether it makes money. The role of data is to help distributors find the source of money—from which channels, which stores, which products, and which personnel.

**Finding the source of profit is the source of business growth; that is the meaning of data.**

**In Conclusion:**

Recently, I visited many places such as Shandong, Anhui, and Zhejiang, and called on many distributors. One obvious feeling is that many distributors still find it very difficult to do business.

This difficulty is not only due to external market changes, but more importantly, it lies with the distributors themselves—whether they can grasp the certainty amid change.

The essence of the data dividend is to amplify distributors' ability to find certainty, adapt to market changes faster, and make the business bigger and stronger. What other aspects does the data dividend manifest in? Distributors are welcome to leave comments and discuss.

**About the Author:** Zhou Qun, researcher in the FMCG distributor field, FMCG industry analyst, and columnist for "New Distribution 100 People," with research areas including FMCG distributor transformation and upgrading, distributor management, and new retail in FMCG.

**If you wish to communicate with the author**

You can scan the QR code below.

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