Distributors have been facing tough business conditions recently, with rising manufacturer targets and intense market competition. High costs and low human efficiency The current model cannot solve these issues Currently, in prefecture-level cities, distributors with annual sales between 20-50 million yuan are the mainstream. This stage is awkward: scale doesn't grow, costs don't drop, staff management is poor, profits are low, manufacturer tasks are heavy, market competition is intense, and terminal sell-through is slow. The author has seen many distributors stuck in this range for ten to twenty years, finding it hard to make significant breakthroughs. Analyzing the reasons, most are locked into their current operations by the management models of brand owners, which occupy distributors' capital, require them not to represent competing brands, not to diversify, and to focus solely on a single brand. However, the industry is highly competitive, and price increases are difficult, leaving little profit margin for agents. As a result, distributors are constrained. Of course, some distributors have broken through this scale, but even with sales over 100 million, business isn't much better. Heavy manufacturer tasks, pressure from both ends of payment, and complex terminal channel marketing management lock distributors into another range. Another serious issue is the recruitment, training, management, and retention of sales staff. Salespeople are hard to find, hard to manage once found, don't produce results when managed, and leave when they do produce. Many distributors struggle to improve human efficiency. Today's market is different from the past. Although consumer goods are still growing, high online penetration means regional growth is squeezed. Distributors wanting to expand at this stage can only do so if competitors make mistakes or if there is industry turnover; otherwise, the current model remains very difficult. Frankly, the author observes that most distributors are not even living as comfortably as wholesalers. The current distributor model Hits a scaling bottleneck that cannot be solved As mentioned, the core issue is that the current distribution model faces a scaling bottleneck. In a market with a population under 10 million, the ceiling for agency models is very low, making it hard to reach high levels. On one hand, their own management, talent, and capital are limited; on the other hand, complex terminal operations leave no room for distributors to take on more products. Many adopt a focus strategy, putting all eggs in one basket, betting on a big brand and following it exclusively. This model works well for categories like dairy drinks, grain and oil, and beer, but is hard to replicate for others. It can be said that distributors in deep-dive categories, especially those where manufacturers help with order-taking, have little chance to grow without a model breakthrough. B2B has passed the trial stage The market has generally accepted it During recent research in small shops in central and eastern China, New Distribution colleagues found that small shops have generally accepted B2B ordering. When asking distributors, they also found that direct distribution costs are too high, and they need wholesalers to complete distribution. It can be said that the market has generally accepted the existence of B2B models. Limitations of B2B The advantage of B2B is that it solves order and delivery efficiency, enabling scaled distribution, but it cannot solve marketing and multi-channel issues. The B2B model is essentially a scaled wholesaler/distributor model. In terms of capabilities, B2B is no different from wholesalers; it helps brand owners with order and logistics delivery, but B2B is larger, more efficient, data-transparent, and well-managed, much better than traditional wholesalers. However, B2B also has strong limitations. Most B2B platforms can only deliver to small shops; they cannot meet the needs of group-buy customers, credit customers, restaurant customers, special channel customers, or those with special needs. They also cannot handle terminal relationship maintenance based on sell-through logic, new product placement, display beautification, holiday promotions, and other personalized brand promotion needs. If distributors want to grow, from a business perspective, they can consider transitioning to B2B Given the pros and cons of B2B, if distributors truly want to develop, some can consider B2B based on category characteristics. For example, those in snacks, non-staple food, beverages, condiments, and household cleaning with certain small-shop distribution coverage can build a B2B model to become distributors for other brands, gradually achieving scaled transactions and providing one-stop supply to small shops. However, it is not recommended for distributors in personal care or baijiu to do B2B, as these categories are complex in market operations and far from other categories' marketing management models, making cross-industry entry very high-barrier. In any case, only by improving order and delivery capabilities can true scaled operations be achieved; this is a basic prerequisite. Some distributors may ask: B2B only solves online transaction and delivery capabilities, not market operations. How do I handle my original agency business? To solve this, if you do build a B2B platform, consider a platform + partner model. That is, separate B2B from the agency business. The distributor's B2B should be a separate company, internally treated as a distributor with order and delivery capabilities, while brand agency is run by a separate team. If the distributor represents multiple brands, they can find excellent manufacturer managers, persuade them to join as partners to jointly represent the brand, using a partnership model where work is divided but not separated, to meet manufacturers' needs for personalized market operations, thus solving the dilemma of multi-brand agency in B2B. For distributors, the franchise model is currently the best solution As mentioned, B2B operations are simple in logic: it's an online wholesale/distributor model. But it involves significant technological and operational changes. B2B requires high warehouse management and market operations; most domestic distributors rarely exceed a thousand orders per day. But on B2B platforms, a thousand orders a day is common. Once scaled, management and operational complexity rise exponentially, requiring strong operational and management capabilities and experience. These are capabilities distributors lack. If they start from scratch, the cost is too high. External mature operational experience is available, and can be solved through franchise cooperation. The author suggests finding a technology platform with proven market success and validation, mature technical modules, a validated model, certain brand effect, and rich operational experience to cooperate with, so you can avoid many detours. Many self-operated B2B platforms in China have opened cooperation after validating their models and becoming profitable. Examples include Chengdu's Rongcheng Yigou, Shanghai's Kuaile Laizhanggui, and Beijing's Zhongshang Huimin. These platforms generally do not charge franchise fees and offer flexible cooperation. Of course, if distributors are unwilling to share operational data, they can also consider software companies like Guanjiapo, which has been promoting the Kuaima B2B system in recent years, seamlessly upgrading with existing inventory systems, and is also a viable technology platform. You can also consider the POP model, using large platforms' logistics to complete distribution Of course, some distributors do not intend to transform into channel distributors and still want to focus on current categories or brand agency. They can consider cooperating with B2B platforms, supplying goods to them, or using the platform's POP model. The so-called POP (pctowap open platform) model refers to a business model where an open platform provides services to users outside its own platform. This model was first proposed in China by JD.com, so the JD POP model is called "JD Mall Merchant Open Platform," offering merchants more cooperation options beyond supplying to JD Mall, allowing other merchants to open online stores on JD Mall. Some B2B platforms cannot complete supply chain delivery for certain categories, such as low-temperature refrigerated and frozen products, or categories they cannot handle themselves. Through the POP model, platforms can find partners to supply these goods. For distributors, the benefit is saving a lot of order-taking work. As long as distributors firmly control upstream agency rights, there is generally no risk of being replaced by platforms. Development prospects for small wholesalers In the past two years, JD and Alibaba's B2B models took orders and gave them to regional wholesalers for delivery. This process allowed a large number of wholesalers to expand their business and categories through B2B order platforms. Many wholesalers grew from annual sales of a few million to tens of millions. It can be said that B2B gave wholesalers wings to fly. But we must also see that cooperation with giants did not change the essence of wholesalers; they are still logistics distributors. The giants did not renovate their warehouses and logistics, nor provide real technical and operational support. In short, the giants need wholesalers' goods, but they don't intend to help wholesalers transform. However, in recent years, the author has noticed a phenomenon: no matter how entrepreneurs use technology to transform this traditional business, B2B is fundamentally a supply chain business. The core of supply chain business is: those who control physical assets win. What does that mean? Whoever owns the warehouse and logistics, and whoever owns the goods, fundamentally owns the business, because delivering goods at low cost is much harder than taking orders. Wholesalers achieve low costs through historical inheritance and non-standard management. Although this is a form of involution, it is not easy for internet giants to replace with technology. Whoever is closer to merchants is farther from competition. Whoever integrates can cooperate, but they all consider clever order-first approaches. In fact, this industry is essentially logistics-driven, and ownership of goods is fundamental. As long as wholesalers hold regional exclusive distribution contracts for some brands, protecting the flow of goods, they still have opportunities to grow when the time is right. Summary: In summary, the market environment has developed to this point, and distributors must seriously consider using technology to transform their businesses to achieve expansion. China's commercial circulation field is too involutionary and inefficient. It's time for change. Manufacturers are always talking about digitalization, but fundamentally, it's hard to structurally change today's distribution landscape. Only when distributors break free from dependence and control by manufacturers can they truly grow strong; otherwise, they will always be appendages of brands. -END-