---
title: "Looking Ahead to 2022: 8 Changes Distributors Should Watch"
description: "As 2021 ends and 2022 begins, New Distribution reflects on visits with dozens of FMCG distributors over the past year, observing shifts such as the trend toward larger distributors, second-generation succession, digitalization, logistics specialization, private labels, private domain traffic, livestreaming, and community group buying. These insights aim to help distributors find direction in an uncertain 2022."
author: "周群"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-01-21"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/looking-ahead-to-2022-8-changes-distributors-should-watch-0290ca92/"
markdown: "https://xinjignxiao.com/en/articles/looking-ahead-to-2022-8-changes-distributors-should-watch-0290ca92.md"
original_source: "https://mp.weixin.qq.com/s/fahvhF4J8Rjrn2iVfgzS9A"
translation: "https://xinjignxiao.com/zh/articles/%E5%B1%95%E6%9C%9B2022-%E7%BB%8F%E9%94%80%E5%95%86%E8%A6%81%E5%85%B3%E6%B3%A8%E7%9A%848%E4%B8%AA%E5%8F%98%E5%8C%96-0290ca92.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/looking-ahead-to-2022-8-changes-distributors-should-watch-0290ca92/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Looking Ahead to 2022: 8 Changes Distributors Should Watch

> As 2021 ends and 2022 begins, New Distribution reflects on visits with dozens of FMCG distributors over the past year, observing shifts such as the trend toward larger distributors, second-generation succession, digitalization, logistics specialization, private labels, private domain traffic, livestreaming, and community group buying. These insights aim to help distributors find direction in an uncertain 2022.

2021 has ended, and 2022 has begun.
Over the past year, New Distribution visited dozens of FMCG distributors.
We saw some distributors suffer heavy losses due to the pandemic, some saw negative growth because of community group buying, others achieved counter-trend growth under new business formats, and still others ventured into private domain traffic...
Here, New Distribution also offers a brief summary. In 2021, what changes did we see? What is worth distributors' deep reflection?
We hope these thoughts can help distributors find some certain direction in the uncertain 2022.
**Trend Toward Larger Distributors**
"Eliminating the middleman" has always been a hot topic in the industry, but in fact, distributors play a pivotal role in the circulation of goods.
China has a market of 1.3 billion people. Facing such a vast and complex market, if brands were to directly cover all consumers, the labor, logistics, and sales costs would be incalculable.
Distributors are the key link connecting producers and consumers; their value lies in creating information, facilitating transactions, and reducing transaction costs.
From this perspective, distributors will not disappear, but they will undergo further survival of the fittest.
The current market environment has seen significant changes. **Three retail scenarios—traditional retail, e-commerce, and social retail—combined with N channel combinations, give rise to various new scenarios, models, and playstyles.**
The emergence of diversified scenarios places higher demands on distributors' organizational systems. The past model of a large army operating in a single model with ultra-large-scale channels and single-arm operations is no longer suitable for today's multi-dimensional and diverse channels.
**In such an environment, traditional distributors must match more capabilities to survive: covering retail outlets, serving market terminals, marketing to consumers, and managing the supply chain.**
Distributors with these capabilities will naturally become major players, while those who cannot adapt will be eliminated.
In the past year, we have seen many excellent distributors realize this and form their own management systems in terms of organizational structure and scale, with strong resilience against risks.
**Second-Generation Succession**
During our visits, we saw that a group of post-80s and post-90s distributors have already stepped to the forefront, and some distributors proactively invited younger generations to listen during exchanges.
The first batch of distributors since reform and opening up have now been in business for 20 to 30 years. Limited by age, time, and energy, they find it difficult to keep up with market changes.
At the same time, the rapid development of the internet has driven the fast iteration of China's retail scenarios. From traditional small stores to KA hypermarkets, and now to online, social, community, O2O, etc., retail scenarios are changing extremely rapidly and complexly.
Facing new things and new technologies, many distributors still do business with old ideas and methods, resulting in poor business sustainability. In contrast, second-generation distributors have an internet gene, pay sufficient attention to and understand new technologies and models, and are willing to actively engage and try. In the coming years, it is highly probable that the older generation of distributors will hand over the baton, and the new generation will step to the forefront. Distributors need to think about how to smoothly pass the baton.
This topic can be explored jointly with excellent brand owners, such as China Resources Snow Breweries' "Snow Beer Second Generation Successor Plan" and Qiaqia's second-generation distributor training.
**Digital Distribution**
Distributor digitalization generally falls into two types:
**The first is brand-led digitalization.**
Its starting point is good: **by leveraging digital systems, it improves distributor operational efficiency, while brand owners can also obtain effective terminal data for management.**
The original intention is beautiful, but the actual implementation is unsatisfactory. Distributors are certainly unwilling to expose core data such as terminals, sales, inventory, and customers, leading to serious data falsification. Only a few successful cases exist, such as Jinmailang's "Four-in-One."
**The second is distributor-led digitalization.**
Its purpose is **to make customers, brands, business, and management quantifiable and visual through digital system software, achieving cost reduction and efficiency improvement.**
**The core of distributor digitalization is to achieve personnel online, customers online, expenses online, orders online, and inventory online.**
When the entire sales process is digitized, distributors can intuitively observe the business status and make correct decisions accordingly.
Digital distribution is **directly starting from business, improving operational efficiency and management level, and achieving business growth.**
**Logistics Specialization**
The essence of a distributor's business is to earn money from moving goods; in a sense, the efficiency of moving goods determines the scale of the business.
Therefore, the strength of logistics capabilities plays a pivotal role in whether distributors can grow in the channel. Especially in today's high inventory environment, professional logistics operations are particularly critical.
Currently, distributors mainly adopt two logistics methods: self-operated logistics and third-party logistics.
**Self-operated logistics** is the mainstream method in the market. Its advantage is relatively simple management; distributors can effectively adjust all aspects of logistics and solve problems in the logistics process in the first time.
The disadvantage is high infrastructure investment, including logistics systems, warehousing equipment, transportation equipment, and related human capital, which is not conducive to resisting market risks. On the other hand, self-operated logistics has limited scale, low specialization in distribution, and higher costs.
**Third-party logistics** is a professional logistics transportation method. Its advantages include professional standards, corresponding logistics networks, economies of scale, and effective cost control.
**Especially in terms of professional qualifications, it can effectively help distributors. For example, during the Xi'an lockdown due to the pandemic, many distributors could not get their vehicles out of the warehouse because they lacked logistics qualifications, causing goods to pile up in warehouses. In contrast, some professional third-party logistics companies had supply guarantee qualifications, and distributors cooperating with them could ship goods normally.
Its disadvantage is that distributors have reduced control over logistics, and if coordination issues arise between the two parties, there may be a risk of logistics losing control, thereby lowering the service level of the enterprise.
Both models have pros and cons, but overall, relying solely on self-operated logistics is disadvantageous for distributors, not only due to high costs but also low operational efficiency. **Relatively speaking, introducing third-party logistics on the basis of self-operated logistics is better.**
**Private Label**
Many distributors have over a decade of operational experience and have established a complete logic in both channel control and market operations. On this basis, distributors have the capability for brand operations. Distributors generally pursue private labels for the following reasons:
**1. Role transformation: from middleman to operator**
Under the trend toward larger distributors, distributors have basically acquired these capabilities: coverage of local retail outlets, service to market terminals, consumer marketing, and supply chain management.
Whether in internal organizational management or external business management, they have completed the role transformation from middleman to brand operator. Creating private labels is a sign of distributors' confidence in their operational capabilities.
**2. Increasing profits**
First-tier brands have transparent prices and low profits, and come with issues like forced inventory and difficult expense verification. Second- and third-tier brands ensure profit margins, but distributors need to invest significant effort in market building, and the input-output ratio is not proportional.
In such circumstances, distributors creating private labels is indeed a good choice. **Previously, the chain was brand → distributor → terminal → consumer; now the distributor becomes the brand owner, reducing an intermediate link in local coverage, thus lowering costs.**
Moreover, private labels are not constrained by manufacturers, giving distributors pricing autonomy, ensuring product profits, and eliminating inventory pressure.
**3. Expanding marketing power and enhancing channel bargaining power**
Channels have always been the core asset of distributors, but their control over channels is built on products. Through private label development, distributors can expand terminal penetration and channel control.
More importantly, private label operations require distributors to think from a higher dimension, building their own key core resources, channel resources, and team resources. These resources, in turn, can help distributors' existing business develop better.
**Of course, it should be emphasized here that private labels are relatively more suitable for categories with low brand concentration, such as snacks and condiments.**
**Private Domain Traffic**
Private domain has always been a common topic for brand owners, but distributor participation is relatively low.
Why include private domain in the changes distributors should pay attention to?
In numerous visits, we found that some excellent large distributors use private domain to empower their business with good results. For example, a condiment distributor in East China, mainly doing KA channels with annual sales exceeding 300 million yuan, uses sales guides to manage private domain traffic and empower the business.
How exactly do they do it?
In KA channels, a key point is the sales guide.
The people each sales guide reaches are basically consumers within a 3-kilometer radius of the store, mainly household consumers.
Household consumers have a high repurchase rate. For distributors, this is high-quality private domain traffic.
The distributor's approach is to first have sales guides create a benefits group, then during daily promotion, add consumers who purchase products to personal WeChat, and then pull them into the benefits group.
The core role of the WeChat group is not sales but traffic generation. Sales guides post promotional information and activities daily to attract consumers to the store.
For example, "promotional gifts" and "buy one get one free" are very attractive to household consumers. If consumers know the activity times promptly, they are highly likely to visit the store.
In this process, the distributor builds a private domain traffic pool, sales guides achieve sales growth, and consumers get price discounts—a win-win-win for all three parties.
**The essence of private domain is relationships.** In this case, **the sales guide builds relationships with consumers based on the physical radius covered by KA stores.** This approach may not suit everyone, but distributors can think about their own business and accumulate private domain traffic.
**Livestreaming**
When visiting a snack distributor in Wuhan, I toured their office building and was truly impressed. Besides a modern office floor, there was another floor built as a self-built livestreaming base.
In the era of nationwide livestreaming, brand owners selling through livestreams has become a trend, but distributor livestreaming is still relatively rare. How does distributor livestreaming help business?
After communication, I summarized the following points:
**First, it helps terminals understand products.**
In the traditional distributor model, salespeople visiting terminals to introduce a product has high time costs; each terminal requires time and effort for product introduction, and some condiments even require demonstrations of usage.
Livestreaming, with real-person explanations, can fully introduce products and greatly reduce time costs. Additionally, distributors can explain promotional policies and expense support in depth online, and even conduct terminal training on how to execute displays and promotions.
**Second, it enhances brand stickiness.**
During the exchange, this distributor told me that brand owners showed great support for their livestreaming, and many brand owners requested dedicated brand livestream sessions.
For brand owners, reaching terminals directly is difficult; distributor livestreaming can help them understand terminal needs for products and policies, and also expand the brand's regional influence.
**Third, it generates additional business growth.**
This growth is not from selling goods but from external cooperation. As livestreaming matures, some platforms, such as leading community group buying platforms and O2O platforms, proactively seek cooperation to help them run dedicated livestream sessions.
**Community Group Buying**
2021 was a year of ups and downs for community group buying.
In the first half, the industry was still discussing whose cheese community group buying moved.
Platform announcements all touted financing amounts, order volumes, and GMV. The situation seemed favorable.
In the second half, the speed of the myth's collapse was surprising.
Tongcheng Life went bankrupt, Shixianghui fell, Dailuobo ceased operations, Shihui Tuan, Orange You优选, and Xingsheng Youxuan strategically contracted, while Meituan Youxuan and Duoduo Maicai continued to lose money...
Layoffs, city closures, contraction, transformation, survival...
The final outcome of community group buying is unknown, but one thing is certain: **the subsidy model that violates the essence of retail will not go far.**
Although community group buying is on the decline, it does not prevent many distributors from being affected and left in a mess for a long time.
From B2B to community group buying, many distributors have been eliminated by new things.
So, from the distributor's perspective, what should we think about in this historical process?
**The future channels will definitely be diversified.**
With limited capacity and diversified channels, sales at traditional outlets will inevitably be diverted. Distributors should look at future changes from the perspective of community group buying, and when channel changes come, they should have the ability to resist risks and the strategic capability to stabilize their basic business.
**In conclusion:**
Behind market changes is a shift in business thinking.
For distributors, they do not need to pay attention to all changes, but they must be able to stabilize the basic business when facing changes.
**Therefore, distributors must develop four capabilities: coverage of local retail outlets, service to market terminals, consumer marketing, and supply chain management.**
Next, New Distribution will publish a series of articles with in-depth analysis on how distributors can develop these four capabilities.
**Are you "watching" me?**


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671