In early 2025, a silent war is spreading across a regional market—the wholesale price of a leading beverage has fallen below the factory price, snack discount stores are dumping premium brand drinks with 'buy one get one free' offers, and traditional retail customers are comparing prices on their phones, questioning distributors: 'Others sell cheaper than you, why should I buy from you?' Low-price shocks are no longer occasional incidents but a systemic challenge for many distributors. Under multiple pressures—unrelenting factory sales targets, disorderly expansion of new channels, and channel partners selling at a loss to recover payments—regional price systems are collapsing, profits are shrinking, and customer churn is becoming the norm. As the 'gatekeepers' of market order, if distributors cannot quickly stop the bleeding, they risk losing core retail outlets at best, or being eliminated by manufacturers at worst.

Four Root Causes of Low-Price Chaos

1. High Sales Targets, Cold Distribution Some distributors, in order to meet the high sales targets set by manufacturers, overstock secondary wholesalers, leading to inventory pile-up. Secondary wholesalers then sell at low prices to quickly recover cash, disrupting regional price order. Under the manufacturer's 'sales-only' assessment mechanism, distributors are forced to bear high inventory. When sales are sluggish and funds are tight, secondary wholesalers resort to 'low-price dumping' in gray areas to survive, forming a vicious cycle: 'manufacturer pressures sales—distributor stocks up—secondary wholesaler dumps.'

2. Channel Imbalance, Price Domino Effect In recent years, modern channels such as hypermarkets and supermarkets have seen declining popularity. Plunging sales force them to seek joint promotions with manufacturers, price cuts to survive, backdoor shipments, and fake distribution, which deal another fatal blow to traditional channels. At the same time, under the backdrop of cold distribution, manufacturers, seeking growth, can only bow to new channels (snack discount stores, wholesale discount stores, community group buying, etc.) by directly supplying low-priced products, squeezing the profit margins of traditional retail outlets. Cross-regional dumping and price chaos become increasingly inevitable.

3. Management Failure, 'Black Hole' in the Interest Chain Salespeople, to boost their performance, tacitly allow or collude with distributors to dump products across regions, then use the company's fine system to 'fish' for violations and split the compensation with distributors. Manufacturers 'emphasize sales, neglect management,' and sales teams tolerate violations to complete tasks. Worse, some distributors collude with unscrupulous salespeople to fabricate evidence of cross-regional dumping to extract subsidies from manufacturers, further disrupting the market.

4. New Channels, Disorderly Expansion Snack discount stores use premium brands as 'price anchors,' forcing consumers to form a low-price perception. Surrounding convenience stores are forced to match prices, leading to sluggish sales and widespread complaints. If manufacturers lack control and effective responses, these channels will become 'Trojan horses' that break through regional price systems.

Core Contradiction: The essence of low-price shocks is a game between 'short-term sales' and 'long-term ecosystem.' If distributors only act as 'firefighters,' they will eventually be exhausted; only by building a systematic defense can they fundamentally cure the chaos.

Path to Breakthrough: Dual-Line Warfare, Balancing Attack and Defense Under internal and external pressures, distributors must have a clear and effective approach to move forward lightly and regain confidence. It is recommended to consider from two angles.

I. Offensive Strategy: Leverage the Manufacturer's Power to Fight a 'Blitzkrieg'

1. Go to the 'Negotiation Table' with Evidence Distributors should comprehensively collect issues, bring evidence, invite key manufacturer personnel to see the battlefield, and verify on-site. Convert the sales decline, customer loss, and gross profit loss caused by price chaos into specific numbers, and compare with regional data from the same period to highlight the severity of the problem, using data and facts to force the manufacturer to take quick action. For example: take photos of low prices, including time, location, and price tag; compile batch numbers, logistics documents, receipt vouchers, and bank card information to form a complete evidence chain.

2. Force the Manufacturer to 'Take Real Action' As the rule-maker, the manufacturer has both the power and the responsibility, and the advantage, to address low-price issues. Distributors should, in the process of applying pressure, deeply bind the manufacturer's interests with market order and show a resolute attitude. For example: If the price system continues to spiral out of control, the XX brand will be labeled as 'low-price,' and no customers in the entire market will be willing to cooperate in the future. Strongly demand that the dumping party pay a high penalty based on the value of the goods, to be used for compensation. At the same time, express willingness to actively cooperate. For example, promise: 'If the manufacturer vigorously governs market price chaos, we guarantee to complete the sales task this quarter'; in handling low-price goods, we are willing to provide manpower, vehicles, and resources for full cooperation.

3. Turn Policies into 'Weapons' Apply for differentiated policies from the manufacturer to build competitive barriers within the region. Apply for exclusive packaging. If the market under your jurisdiction has sufficient sales volume, communicate with the manufacturer to supply exclusive packaging with 'XX Market Exclusive' printed on the carton. Or design small-format packaging for snack discount channels to differentiate from products in circulation channels. Apply for exclusive supply privileges. If low-price goods flow due to internal channel distribution arrangements, such as central warehouse unified distribution or channel-specific supply, sign an agreement with the manufacturer to exclusively serve closed channels like supermarkets, convenience stores, hospitals, and schools in the region, avoiding price shocks from inconsistent policies. Apply to establish a price management task force. Agree with the manufacturer on a regular meeting system to review the progress of price management in the region periodically.

II. Defensive Strategy: Build Firewalls to Create a 'Fortress Market'

First Wall: Physical Isolation—Keep Low-Price Goods 'Out' Improve the efficiency of identifying abnormal products. All offline wholesale customers must implement secondary coding on cartons to increase the cost and risk of cross-regional dumping. Set up a reward fund for dumping clues. Customers who report and are verified will receive cash rewards, building an effective defense line. Utilize social resources to establish relationships with highway patrols and wholesale market management offices to intercept suspicious goods flows at the first opportunity. Prioritize substance over face. Often, when low-price goods are found, someone will come to plead for leniency. If you always compromise for the sake of face, you will encourage the other party to keep crossing the line.

Second Wall: Digital Monitoring—Make Price Chaos 'Unhidden' With the rapid iteration of AI technology, digital and intelligent price monitoring has become a reality. Distributors can use technology to achieve full transparency. For example, AI price comparison tools, integrated with the 'Eagle Eye Price System,' automatically crawl e-commerce platforms and community group buying prices, with real-time alerts for abnormal price drops. Install smart POS machines at core retail outlets to transmit inventory and selling price data in real time, automatically generating a 'Price Health Weekly Report.'

Third Wall: Channel Grading—Make Customers 'Not Want to Cause Chaos' In customer management, distributors should gradually establish a model that replaces crude control with interest binding. For example, differentiate credit for lower-level customers in the region based on past sales and compliance, classifying them as A or B customers. A-class customers (high loyalty): additionally provide 'quarterly profit guarantee'; if gross profit declines due to price chaos, the distributor makes up the difference. B-class customers (swing type): sign a 'Price Protection Agreement' promising 'if a lower price appears within 15 days, the difference will be refunded double.' Of course, on the other hand, establish a blacklist mechanism to restrict supply and impose strict penalties on wholesale customers who frequently dump at low prices. In addition, adopt fuzzy incentives to avoid direct price cuts or freebies.

Fourth Wall: Service Value-Added—Make Retail Outlets 'Not Want to Leave' Replace price competition with service. Build differentiated, value-added services for retail outlets in terms of delivery timeliness, product variety, and after-sales satisfaction to strengthen outlet stickiness, ensuring stable demand for goods even when prices fluctuate. For example, provide category-specific shelf placement suggestions to increase outlet sales. Customize a 'Monthly Best-Seller List for XX Region' for outlets, offering sales talk training, tasting, and promotional materials. Launch a 'No-Worry Exchange for Slow-Moving Products' service, allowing outlets to return slow-moving products at any time for equivalent-value best-sellers.

Fifth Wall: Ecosystem Alliance—Make Violations 'Have No Way Out' Actively establish or join local distributor alliances or chamber of commerce organizations, which play a more positive role in solving market problems. Members mutually restrain and supervise each other to jointly maintain market order. Use collective strength to counter individual speculation. Chamber members jointly sign a 'Price Defense Agreement,' with violators bearing penalty responsibilities. Establish information-sharing groups where each regional market reports low-price goods clues daily, with rapid joint verification within the group.

Coordinate with manufacturers to implement a 'Three Cuts Policy' for violating customers—cut supply, cut credit terms, and cut promotional support.

Facing market low prices, distributors should learn to upgrade from 'fighting alone' to 'systematic confrontation.' Abandon the mindset of 'treating the symptoms' and 'complaining and throwing tantrums,' and build a four-dimensional defense system of 'manufacturer-distributor collaboration + channel binding + technical monitoring + ecosystem joint defense.' Only by breaking down each strategic point into quantifiable, replicable actions can we truly achieve a healthy operation of 'advance when possible, retreat when necessary.' The value of distributors today is not just in logistics and distribution, but in safeguarding the brand's lifeline. When low-price shocks come, instead of complaining about manufacturers, become a 'co-builder' of rules; instead of fearing competition, become a 'leader' of the ecosystem. Those distributors who can unite with manufacturers to crack down on chaos, bind retail outlets with services, and build barriers through innovation will stand out in the reshuffle.

The future market will ultimately belong to 'long-termists who understand both attack and defense.'

Xing Renbao, with 18 years of marketing management experience, has served at Coca-Cola, Yili, Red Bull, and other well-known FMCG companies. He is currently the assistant to the Executive President of Marketing at Huabin FMCG Group, focusing on corporate marketing diagnosis, manufacturer-distributor relations, channel operations, and digital transformation.

The FMCG industry has long relied on the pyramid-shaped distribution system of 'manufacturer-distributor-retail outlet,' whose core logic is 'exchanging space for time'—expanding coverage through layers of distribution and driving market penetration through channel profit allocation.

But price wars are raging across the market, and channel changes are gradually overturning these traditional rules. The emergence of various new channels has drained the 'channel profit pool.' Distributors have lost the survival basis of 'earning the difference as middlemen' and are forced to bear the risk of inventory pile-up.

Against this backdrop, how should distributors respond to changes? How to break through? At the 10th China FMCG Innovation Conference and the 4th China FMCG Hard Discount Conference & the 4th China FMCG Distributor Conference, held in Chengdu from March 17-19, over a hundred outstanding distributors, manufacturer executives, and retailers were invited to discuss channel changes and business opportunities for distributors in the new environment. If you're interested, don't miss it!

【New Order · Symbiosis】 The 10th China FMCG Innovation Conference Date: March 17-19, 2025 Location: Chengdu, China