---
title: "It's Time to Rethink Distributors Today!"
description: "Discussions about distributors have intensified recently, with views ranging from their increasing difficulty to their inevitable obsolescence. However, these perspectives only capture part of the reality; the true shift is a fundamental rewrite of the underlying logic of the FMCG distribution system, moving from an expansion-driven to a matching-driven market. This article argues that distributors will not disappear but must evolve into more organized, capable intermediaries to thrive in an era of oversupply."
author: "周群"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2026-03-04"
categories: "Dealer Operations"
language: "en"
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markdown: "https://xinjignxiao.com/en/articles/it-s-time-to-rethink-distributors-today-b7cb20b8.md"
original_source: "https://mp.weixin.qq.com/s/MCncsJo75RikVppUj2xeyQ"
translation: "https://xinjignxiao.com/zh/articles/%E4%BB%8A%E5%A4%A9%E5%BF%85%E9%A1%BB%E9%87%8D%E6%96%B0%E7%90%86%E8%A7%A3%E7%BB%8F%E9%94%80%E5%95%86%E4%BA%86-b7cb20b8.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/it-s-time-to-rethink-distributors-today-b7cb20b8/"
citation: "周群. “It's Time to Rethink Distributors Today!.” New Distribution, 2026-03-04. https://xinjignxiao.com/en/articles/it-s-time-to-rethink-distributors-today-b7cb20b8/"
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---

# It's Time to Rethink Distributors Today!

> Discussions about distributors have intensified recently, with views ranging from their increasing difficulty to their inevitable obsolescence. However, these perspectives only capture part of the reality; the true shift is a fundamental rewrite of the underlying logic of the FMCG distribution system, moving from an expansion-driven to a matching-driven market. This article argues that distributors will not disappear but must evolve into more organized, capable intermediaries to thrive in an era of oversupply.

In the past two years, discussions about distributors have become increasingly frequent.
Various viewpoints exist: some say distributors are finding it harder to operate; others argue that the rise of new channels is eroding the value of distributors; still others predict that traditional distributors will eventually be eliminated as platformization, chain operations, and instant retail continue to advance.
On the surface, these judgments capture part of the reality: profit margins are thinning, terminal sales are more challenging, prices are more transparent, and many old methods that used to work are indeed becoming less effective.
But if we merely interpret these changes as "channels have changed" or "business has become more competitive," we haven't yet touched the core of the issue.
What has truly changed is not a single channel, a specific business format, or the operational status of one distributor, but the underlying logic of the entire FMCG distribution system is being rewritten.
The old business model, which presupposed a growing market, was oriented toward scale expansion, and centered on distribution coverage, worked for a long time because the core market contradiction was insufficient supply. Whoever could deliver goods faster to more stores was more likely to achieve growth.
But today, the market environment has fundamentally changed. Supply is excessive, demand is fragmented, channels are splintered, and trading rules are increasingly transparent. Distributors still exist, but the logic that supported the success of old distributors is failing.
This is why we must rethink distributors today.
Rethinking is not because the distributor group has suddenly become unimportant. On the contrary, precisely because they remain deeply embedded in China's FMCG distribution system and still connect brands, channels, and terminals, it is even more necessary to see clearly.
Under new market conditions, what role do distributors actually play? Where does their value truly come from? And in what direction should they evolve?
These questions can no longer be answered with old experience. Therefore, we have compiled the research, visits, and frontline cases from the past year of "New Distribution" into the "Next-Generation Distributor White Paper - China FMCG Distribution Insights 2026."
This report is not meant to label distributors with a new tag but to answer a more practical question: In an era of oversupply, demand fragmentation, and multi-channel coexistence, what kind of distributor can continue to create value? And how can they transition from "old logic" to "new capabilities"?
**The Business Logic of Distributors Has Indeed Changed**
The most realistic state in the industry today is not that there is no business, but that business is still ongoing, scale is still running, but money is increasingly hard to earn, efficiency is increasingly hard to improve, and organizations are increasingly hard to sustain.
In the past, the operating logic of distributors was relatively simple. Get a good brand, distribute to more terminals, grab more outlets, achieve greater coverage, and sales would naturally be pushed up.
As long as the overall market was still growing, this logic basically held. Distributors worked hard, but the direction was clear, actions were effective, and many problems could be masked by growth.
High inventory was okay; it could be pushed through. Loose cost control was okay; as long as goods moved fast. Loose organization was also okay; the boss charged ahead, the team followed, and scale could still be achieved.
But today is different.
In the "2024-2025 Distributor Operating Status Survey Report" released by New Distribution in 2025, from a revenue perspective, 41.3% of distributors saw revenue growth, 19.4% remained flat, and 39.3% saw declines. On the surface, growth and decline are roughly balanced.
But if we look at profits, the situation is completely different: only 26.0% of distributors saw profit growth, 20.5% remained flat, and as many as 53.6% saw profit declines.
This reflects a general decline in the operational quality of distributors.
**First, profit margins are thinning.**
In the past, many distributors could live well not just because of high sales volume, but because there was enough profit space throughout the entire chain.
Manufacturers had growth, distributors had price differences, terminals had sell-through, and everyone could get a share.
But today, supply has increased, prices are more transparent, channels are more dispersed, and terminals are more demanding. The old ways of profiting from information asymmetry, regional price differences, and channel price differences are increasingly unsustainable.
**Second, cash flow is tightening.**
Many distributors today face not just sales pressure, but a chain reaction of slow inventory turnover, long payment cycles, extended credit periods, upfront costs, and declining willingness of terminals to stock up.
Problems that could previously be alleviated by high turnover are now being amplified by "low turnover + long credit periods + high costs." Once scale grows, these issues quickly evolve from operational problems into financial problems.
**Third, operational divergence is becoming more pronounced.**
The gap between distributors is no longer mainly due to diligence but to the operational structure itself. Brand structure, channel structure, product portfolio structure, organizational capability, and financial capability are beginning to determine the success of different distributors.
The market has changed, terminals have changed, and trading rules have changed. You can't find a new world with an old map.
This is the most realistic situation for distributors today. Distributors today are not failing; rather, the success logic of old distributors is becoming increasingly inefficient in a new market.
**The Biggest Change in Today's Market Is Oversupply**
Many people talk about market changes today, often using terms like "shrinking volume" or "stock market."
This is a highly misleading term because it creates a subtle illusion: "The market is this big, demand is no longer increasing, so everyone can only compete on price to grab share."
The truth today is the "era of oversupply."
Here, "oversupply" does not simply mean overcapacity in production, nor does it mean consumers are not buying. Rather, the entire market has shifted from an expansion-oriented market characterized by "insufficient supply, single channels, and relatively concentrated demand" to a matching-oriented market characterized by "abundant or even excessive supply, fragmented demand, parallel channels, and rule reconstruction."
The demand for standardized, mass-produced goods centered on production is decreasing, replaced by fragmented, diversified, and personalized new demands.
This leads to a fragmented situation: there is ample supply that is not needed, and there is real demand that cannot be met.
At this stage, there are more products and more touchpoints, but effective supply-demand matching has become difficult.
In this sense, "oversupply" is not a negative word; it is more like a watershed.
In an era of insufficient supply, growth rewarded coverage capability; in an era of oversupply, growth begins to reward matching capability.
Whoever can match supply and demand more accurately, brands and channels more accurately, prices and scenarios more accurately, and transactions and fulfillment more accurately, will have a better chance of navigating through this stage.
This is also why the problems of distributors today cannot be explained solely from the distributors themselves. It is not the result of a certain type of company's operational mistakes, but a necessary reaction to the shift in the underlying logic of the entire market.
Traditional distributors generally feel strained not because they are not working hard, but because the methods they are most familiar with were originally suited to an expansion-oriented market; today, they face a matching-oriented market in an era of oversupply.
Understanding this is very important.
Because only by first acknowledging that the market has changed can we further answer the next question: In such an era of oversupply, do distributors still have opportunities in the future?
**Eliminating Distributors Is a False Proposition!**
Since the market has moved from an incremental era to an era of oversupply, since channels have been fragmented, rules rewritten, and profits compressed, does that mean distributors are no longer valuable?
The answer is quite the opposite.
Distributors will not disappear, but old distributors will be eliminated; the middle layer will not disappear, but old intermediary logic will fail.
The problem today is not that brands no longer need a middle layer, nor that retail no longer needs a middle layer, but that the old middle layer, whose core value was distribution, stocking, and price differences, is increasingly unable to adapt to the new market environment.
At the same time, the new market structure has raised more complex matching requirements. Supply is more abundant, demand is more fragmented, channels are more numerous, rules are more complex, and fulfillment requirements are higher.
In this case, the market does not not need a middle layer; rather, it needs a new middle layer that is more efficient, more professional, and more organized.
In other words, the opportunity for distributors today does not come from the old distribution model lasting a few more years, but from the strong demand for "matching nodes" in the new market itself.
Why do distributors still have opportunities in the future? There are at least three reasons.
**First, China's FMCG market is still large enough and complex enough.**
Brands can become stronger, platforms can become bigger, and chain terminals can become more concentrated, but none of them can independently complete the penetration of such a huge and fragmented market as China.
Differences between cities, counties, townships, communities, stores, scenarios, and populations still exist, and these differences are not shrinking but expanding. The more complex the market, the less likely it is that a single entity can digest it all at once. The value of distributors lies precisely in absorbing and organizing this complexity.
**Second, the core of future competition is not whether you have goods, but whether you can match goods to the right places.**
In the era of oversupply, what is truly valuable is the ability to put the right supply into the right channels, sell to the right people, and complete transactions with the right prices and fulfillment methods.
This process is essentially matching.
Brands cannot personally complete the fine-grained matching of all regional markets, all channel structures, and all terminal scenarios; nor can the retail side reverse-engineer the screening, reorganization, and coordination of upstream massive supply. This is the fundamental reason why distributors still have opportunities.
**Third, the future distribution system is not about disintermediation but about restructuring the middle layer.**
In the past, there was a common misjudgment in the industry: whenever platformization or chain operations were mentioned, people would easily think about whether distributors would be bypassed.
But the reality is that the more multi-channel, complex, and instant-fulfillment the market, the more it needs a middle layer to undertake more complex organizational functions.
However, this middle layer can no longer just move goods; it must begin to undertake tasks such as organizing supply, layering channels, managing price systems, improving fulfillment, and coordinating resources.
What the market truly eliminates is not the role of the distributor, but the role definition of the old distributor.
**What Does the Next-Generation Distributor Look Like?**
The next-generation distributor is not a conceptual packaging, nor is it just a nicer name for traditional distributors.
It truly refers to a type of distributor that, under new supply, new demand, and new channels, can adapt to new trading rules and complete efficient matching.
This definition may seem abstract, but if you break it down, it becomes very clear.
**First, it means the operating goals of distributors have changed.**
In the past, the most important task for many distributors was to increase scale. Today, they must first ask: Does this business have profit? Can this growth be converted into cash flow? Is this scale built on healthy turnover and sustainable operations?
**Second, it means the channel logic of distributors has changed.**
No single playbook can apply to all channels. Traditional grocery stores, small and medium supermarkets, chain convenience stores, discount channels, instant retail, e-commerce platforms, and community group buying—each channel serves different needs and uses different rules.
**It also means the supply capabilities of distributors have changed.**
In a market with oversupply, having more goods in your warehouse does not naturally mean you are stronger. What is truly scarce is not "having goods" but "knowing how to build a product portfolio."
Which categories should be introduced? Which SKUs should be kept? What price bands suit which stores? What product portfolios suit which channels? Which products can drive volume? Which products are for profit? Which products should be eliminated?
These capabilities are becoming the true barriers for next-generation distributors.
**More importantly, it means distributors must adapt to new trading rules.**
In the past, information asymmetry, regional price differences, and channel price differences could still generate decent profits. Today, these spaces are being rapidly compressed.
Platform allocation, price transparency, instant fulfillment, and dynamic feedback are turning transactions into a more transparent, systematic, and real-time process.
**And all these changes ultimately converge on a more fundamental requirement: organizational capability.**
Today's market has become so complex that relying solely on the boss's personal ability is increasingly unsustainable. The distributors that truly have opportunities in the future are no longer just bosses who are better at doing business, but a more mature operating system.
Business, procurement, warehousing and distribution, finance, and operations must form synergy; prices, inventory, receivables, and costs must form mechanisms; data, processes, and feedback must become part of daily operations.
**The next-generation distributor is not a harder-working distributor, but a more organized distributor.**
If we go a step further, you will find that the next-generation distributor will not have a single fixed form.
> There is the brand operation route, deeply binding core brands and converting brand power into regional operational power;
>
> There is the category operation route, building a multi-brand matrix and product portfolio structure around a core category;
>
> There is the professional channel operation route, deepening a certain type of channel to form rule understanding and fulfillment barriers;
>
> There is also the B2b platform operation route, using digital transactions, standardized fulfillment, and credit risk control to connect upstream supply with the replenishment needs of numerous small stores.
>
> ......
The paths differ, and the capability focus differs, but the commonality behind them is consistent. They are all transitioning from traditional transactional intermediaries to operational intermediaries with stronger operational, organizational, and collaborative capabilities.
Opportunities still exist, but they will increasingly concentrate on those distributors who complete transformation earlier, focus capabilities earlier, and upgrade organizations earlier.
In other words, the future differentiation of distributors will not just be scale differentiation, but role differentiation, capability differentiation, and path differentiation.
Therefore, when discussing the future of distributors today, the most important thing is to first see a reality: the role of the distributor will not exit the stage, but it must change its way of life.
For this reason, rethinking distributors today cannot stop at opinion judgments; it is even more necessary to return to the real market, real cases, and real samples to find answers.
At the "CFC 11th China FMCG Conference and 6th China FMCG Distribution and Retail Conference" to be held in Chengdu from March 16-18, 2026, we have invited several outstanding distributors to the scene to share their practical experiences and transformation paths in frontline markets, focusing on core topics such as channel changes, organizational upgrades, category operations, instant retail, and regional market deepening.
  * Zhang Jun, General Manager of Shaanxi Jiapin Yunshi E-commerce Co., Ltd.
  * Liu Liang, General Manager of Shenzhen Guanduoduo Trading Co., Ltd.
  * Liu Fen, General Manager of Hubei Quanjielai Trading
  * Zhou Shenghua, Deputy General Manager of Zhenshimei
  * Wu Jinghe, Deputy General Manager of Caihua Trading and Head of Manfen Retail
  * Guo Liang, General Manager of Chongqing Jihe Supply Chain Management Co., Ltd.
  * Chen Yishen, General Manager of Hangzhou Yishang Supply Chain
  * Fan Zhijian, Mr. Jiuji Brand Supply Chain
  * Nie Biquan, General Manager of Baihui Trading Co., Ltd.
At the same time, the "Next-Generation Distributor White Paper - China FMCG Distribution Insights 2026" will also be officially released at the forum. We hope that through this white paper, we can provide a more systematic sorting and expression of the realistic situation distributors face today, the changes in the underlying logic of the market, and the evolution direction of next-generation distributors.
If you also want to see the future clearly, find a path, and seize the next round of opportunities, this conference is worth attending and listening to carefully.


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## Citation metadata

- Publisher: New Distribution
- Author: 周群
- Published: 2026-03-04
- Canonical: https://xinjignxiao.com/en/articles/it-s-time-to-rethink-distributors-today-b7cb20b8/
- Original source: https://mp.weixin.qq.com/s/MCncsJo75RikVppUj2xeyQ

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