---
title: "Is Transforming from Distributor to Service Provider Another Viable Path?"
description: "Distributors are increasingly bewildered by new retail and e-commerce platforms, questioning whether their business still has a future. However, opportunities persist if they adapt to market changes, and one promising direction is leveraging local resources and relationships to transition from a pure product distributor to a comprehensive service provider for retailers, peers, and manufacturers."
author: "潘文富"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-11-20"
categories: "Dealer Operations"
language: "en"
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# Is Transforming from Distributor to Service Provider Another Viable Path?

> Distributors are increasingly bewildered by new retail and e-commerce platforms, questioning whether their business still has a future. However, opportunities persist if they adapt to market changes, and one promising direction is leveraging local resources and relationships to transition from a pure product distributor to a comprehensive service provider for retailers, peers, and manufacturers.

Private Enterprise Internal Management Research/Pan Wenfu
Now distributor bosses are almost overwhelmed by various new retail and e-commerce platforms. Is there still a future for the distributor business? If it is certain that there is no future, then holding on is meaningless. It's time to shrink or sell.
In fact, there is always business to be done, but it requires adapting to market changes. Those who need to transform should transform, and those who need to upgrade should upgrade. Sticking to the old ways will definitely not work.
The existence of the distributor business was initially based on information asymmetry, and later on cost advantages. In simple terms, what distributors do, manufacturers can also do, but it would be too costly for manufacturers to do it themselves, so they hire distributors. Currently, the core value of distributors is lower market operation costs than manufacturers, but this cost advantage is gradually fading. Operating costs are rising: taxes must be compliant, social insurance for employees must be complete, and loose management leads to leaks and waste. The gross margin that manufacturers give distributors is barely enough to sustain them.
From a business perspective, what distributors do is essentially logistics: moving goods in and out, and doing shelf placement and display. Such work lacks core competitiveness and is easily replaced. **Moreover, the three mountains of cross-regional selling, price wars, and payment terms make it difficult for distributors to innovate.**
Currently, market information is highly transparent, product sourcing channels are diversified, and professional logistics providers can achieve more efficient product delivery, even directly to customers' homes. In fact, whether it's IT, professional delivery, or big data, most distributors cannot handle these new technologies. Even if they hastily adopt them, they cannot compete with mature enterprises and end up just cultivating the market for others.
However, most distributors are locals doing local business. They have operated in the local market for years, are familiar with the local market, have accumulated various social resources, and have extensive networks. **They can integrate these advantages to transform from distributors into service providers.**
Traditional distributors' business is centered on product sales, essentially being product suppliers, with related services revolving around the products, such as promotional activities, terminal display, and returns. **For terminal retailers, there are more and more product suppliers; in simple terms, they don't lack suppliers who deliver goods.** Of course, as a terminal retailer, they face many problems themselves, such as:
1. Market analysis and evaluation before introducing new products;
2. Optimization of product mix;
3. Upgrading and improving store hardware and decoration;
4. Comprehensive store cleaning;
5. Measures to retain old customers, especially maintaining key clients;
6. Optimizing customer service measures;
7. Handling affairs with government departments;
8. Internal personnel management;
9. Operational efficiency and cost control;
10. Competitive strategies with surrounding stores;
11. Maintaining relationships with neighboring stores;
12. Preliminary planning for opening new stores;
13. Response plans for fire, theft, fraud, counterfeit money, and extortion;
14. Shaping and disseminating store image.
These are all problems of the retail stores themselves, but they also fall into the category of needs. If distributors can provide these services and upgrade themselves to service providers, fully satisfying the various needs of retailers, the depth and stability of such cooperation would be unparalleled. Not only would product supply cooperation be more convenient, but they could even consider charging separately for these services.
In addition to serving current retailers, they can also serve retailers planning to open stores, providing full-service support for store opening, including finding premises, negotiating prices, handling registration procedures, store renovation, staff recruitment, and planning opening events.
**Besides services to downstream retailers, they can also expand to serve peers and upstream manufacturers,** such as investment promotion, market distribution, market research, personnel training, assistance in handling incidents, and design and implementation of management systems.
As traditional distributors, the ownership of product brands lies with manufacturers, and their technical capabilities are limited. They cannot compete with others in price or logistics. **Based on their years of accumulated social resources and experience in the local market, becoming a local commercial service provider is a new path worth considering.**
The author comes from a private business background, having managed a family distributor company for many years, and concurrently served as a business manager and trainer in several manufacturing companies. His research focuses on internal management of small and medium-sized private enterprises, with main topics including personnel management, cost control, management backend setup, and the integration of retired military personnel into private enterprises. He continuously breaks down over 400 topics related to internal management of private enterprises and keeps updating his material collection and solutions.
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## Citation metadata

- Publisher: New Distribution
- Author: 潘文富
- Published: 2017-11-20
- Canonical: https://xinjignxiao.com/en/articles/is-transforming-from-distributor-to-service-provider-another-viable-path-bcaf4d23/
- Original source: https://mp.weixin.qq.com/s/d2j0AA1e2VaVdS39DmxWlA

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