---
title: "Key Capabilities Needed to Become a Major Distributor"
description: "This article discusses the key capabilities required for a distributor to grow from tens of millions to over 100 million in sales, based on interviews with regional major distributors. It highlights strategic, operational, and organizational abilities as common traits among successful large distributors."
author: "周群 道农"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-08-21"
language: "en"
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# Key Capabilities Needed to Become a Major Distributor

> This article discusses the key capabilities required for a distributor to grow from tens of millions to over 100 million in sales, based on interviews with regional major distributors. It highlights strategic, operational, and organizational abilities as common traits among successful large distributors.

**Click to read the original article for details**
In a previous article, New Distribution discussed the topic: **What is a major distributor?** “Simply put, it means having a large sales scale. For example, in a prefecture-level city, a distributor's sales scale can exceed 100 million. In other categories, such as grain, oil, and daily chemicals, annual sales of 200-300 million are very common. Additionally, through cross-regional agency operations, sales can reach over 1 billion.”
Exceeding 100 million in sales should be the simplest definition of a major distributor. Going from 50 million to over 100 million is a significant threshold; many distributors have been in business for over a decade without crossing it. How to go from tens of millions to over 100 million? This is a question many distributors are pondering. Recently, I intensively visited some regional major distributors and had in-depth exchanges with them. I found that while each has their own unique methodology, they also share many common capabilities. I will explore these common capabilities to provide some inspiration and food for thought for fellow distributors.
**Strategic Capability**
For most people, strategic capability is a relatively abstract concept. We can make an analogy: what is the difference between a general and a platoon leader? Both are managers, but a general can command thousands of troops, weigh pros and cons based on the overall situation, set strategic goals, and issue tactical tasks; the latter can only manage a few dozen people and execute simple orders. For example, in a battle, if the enemy makes a tactical retreat, the general will compare strengths, analyze the enemy's front and rear states, and issue an order to stop pursuit, while the platoon leader might think that seeing the enemy retreat means they should pursue and attack. This is the gap in strategic capability: the general sees the whole picture, the platoon leader sees only one area. The same applies to distributors: strategic capability is the ability to make optimal decisions by controlling the overall situation, then break down those decisions into executable actions. For instance, in the case above, a distributor seeing the trend of short-shelf-life products chooses to transform into that category—this is the big strategic direction. How to do it specifically: first, invest capital; second, select products; third, build cold storage... This complete set of executable actions reflects strategic capability. Essentially, it is the ability to break down a goal into executable steps to achieve it.
**Operational Capability**
These are marketing capabilities that go beyond the role of a middleman, enabling independent operation. They no longer rely on brands; even if representing unknown products, sales can still be maintained without decline. **2. Digital Operations**
Currently, most distributors, regardless of size, have basic financial software systems for inventory management. In the early stages, when business is around 30-40 million in sales, these systems are sufficient. But when scale exceeds 100 million, they become a drag. When discussing digitalization with a major distributor in Wenzhou with annual sales of several hundred million, he mentioned three empowerments of digitalization, which are worth referencing. **1) Empowering the Organization.**
The core of digitalization is the granularity of information. In the past, data remained at a shallow level; distributors knew basic data like costs and profits, but entering the refined digital stage requires finer granularity. For example, product gross margin, brand gross margin, per capita contribution, per-store contribution, cost-effectiveness ratio, etc. These detailed data can empower the entire organizational structure, giving everyone within the organization more successful information and clarity on their goals. **2) Empowering Employees.**
Many distributors have a misconception about digital tools, turning digital software into a tool to monitor salespeople, with real-time location tracking, storefront photos, etc., no different from a "surveillance camera." Digitalization empowers employees by using data to guide them in doing business. For example, if a certain store performs well in all metrics during new product promotions, the system will automatically remind the salesperson that this store deserves special attention and more new product pushes. **3) Empowering Logistics.**
In the first half of the year, I visited over a dozen distributors, and more than 80% still consider logistics extremely important. When visiting their warehouses, the biggest impression was the high degree of digitalization, from front-end orders to back-end warehouse picking and distribution, with integrated digital systems. For businesses with hundreds of millions in sales, warehouse inventory discrepancies are only tens of thousands. Additionally, rapid information transmission in logistics boosts the efficiency of warehouse picking and distribution, enhancing the distributor's fulfillment capability.
**Organizational Capability**
Organizational capability is about leveraging people through organization and management to rapidly amplify the company's business leverage. Professor Yang Guoan, in his book "Organizational Capability Yang Triangle," proposes a formula: Enterprise Success = Strategy × Organizational Capability. The core of building organizational capability is personnel management. The "Yang Triangle" divides the pillars of organizational capability into three parts: employee capability, employee mindset, and employee governance. **First, employee capability: do employees have the necessary professional knowledge and skills?** Distributors should consider: besides providing material satisfaction, can they also enhance employees' abilities? At this level, major distributors are more conscious; they not only learn themselves but also encourage employees to learn. At every New Distribution conference, many distributor friends attend in groups. **Second, employee mindset: do the issues employees care about match the distributor's goals?** This is closely related to corporate culture. For example, Haidilao continuously instills the concept of "service first, customer first" in its employees, and you'll find that most Haidilao stores provide excellent service. Distributors are the same: don't treat yourself as a "ragtag team" but as an enterprise. As an enterprise, there must be a corporate culture, and under its influence, employees' thinking can truly align with the company. **Third, employee governance: the company's management systems and resource support for employees.** Can the compensation design, organizational structure, and work processes encourage employees to act proactively and positively? For example, Shaanxi Baihui's partnership model and Anshan Hongye Hengda's points system are excellent management systems. **The above four capabilities are summarized from my visits. What capabilities do you think are needed to become a major distributor? Feel free to comment below and interact with the author.**
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**PS**: From September 23-25, 2021, the 2021 (4th) China FMCG Conference hosted by New Distribution will open in Shanghai. **Focusing on industry trends + practical cases + growth connections** , **3000** FMCG practitioners will gather. 10 thematic forums cover **new retail O2O, community group buying, short video live e-commerce, distributor transformation, rise of new consumer brands, new wine and beverage interpretation, distributor B2B supply chain, omni-channel marketing, B2B2C new technology applications** , etc., with operators from various segments bringing the latest case studies. Confirmed heavyweight guests so far include: **1. Tao Shiquan, founder of Jiangxiaobai; 2. Yao Xuhong, General Manager of Meiyijia Holdings Co., Ltd.; 3. Lu Xiuqiong, Global Expert Partner at Bain & Company, former VP of Marketing for Coca-Cola China; 4. Chen Xiaodong, Senior VP of Nestlé Greater China; 5. Zhang Fujun, President of Lee Kum Kee Sauce Group China; 6. Bi Chaojiao, General Manager of China Resources Snow Breweries (China) Marketing Center; 7. Yang Hongbin, VP of Junlebao Dairy Group; 8. Yang Shun, COO of Lipton Greater China; 9. Zhang Yipeng, General Manager of Kuaishou E-commerce SKA Brand Operations Center; 10. Li De, E-commerce General Manager of Gold Hongye Paper Group** ....
**A grand gathering for FMCG professionals—you must be there!**
**Are you "watching" me?**


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