--- title: "Obstacles for Distributors Creating Their Own Brands" description: "Brand distributors are a type of distributor but differ from traditional ones, as they seize brand management rights from manufacturers. While this path offers higher profits, most FMCG distributors fail in their attempts to build their own brands due to outdated mindsets rather than capital or product issues." author: "郝星光" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2014-08-15" language: "en" canonical: "https://xinjignxiao.com/en/articles/obstacles-for-distributors-creating-their-own-brands-c1067311/" markdown: "https://xinjignxiao.com/en/articles/obstacles-for-distributors-creating-their-own-brands-c1067311.md" original_source: "https://mp.weixin.qq.com/s/wVfM3Rs2vwhrOLbZOZX-ew" translation: "https://xinjignxiao.com/zh/articles/%E7%BB%8F%E9%94%80%E5%95%86%E8%87%AA%E5%81%9A%E5%93%81%E7%89%8C%E7%9A%84%E9%9A%9C%E7%A2%8D-c1067311.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/obstacles-for-distributors-creating-their-own-brands-c1067311/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Obstacles for Distributors Creating Their Own Brands > Brand distributors are a type of distributor but differ from traditional ones, as they seize brand management rights from manufacturers. While this path offers higher profits, most FMCG distributors fail in their attempts to build their own brands due to outdated mindsets rather than capital or product issues. **Tip: Click the blue text above to follow "FMCG Distributor Professional Consulting" for more marketing and distributor internal management insights.** Brand distributors are a type of distributor, yet they differ from traditional distributors. In essence, brand distributors have wrested control of brand management from manufacturers. In today's market, the core of operations is the brand, and brands generate the most substantial profits, which is why brand distributors grow most rapidly. Ultimately, manufacturers and distributors alike work for brand distributors, becoming part of the brand value chain. Who wouldn't want to earn more and have a say? Creating private labels should be a great opportunity for FMCG distributors to upgrade, but why do most fail in their journey toward owning brands? Distributors are finding it increasingly tough: markets are saturated, competition is fierce, and the appetite of retail terminals grows ever larger, eating into their margins. The business is becoming less profitable, and distributors are struggling. In contrast, brand owners enjoy larger profit margins; as long as they successfully maintain their brand and channel, they can reap substantial rewards at year-end. Distributors are destined for hardship, stuck at the bottom of the channel! After over two decades of accumulation, the time has come for distributors to elevate themselves. They can start their own brand companies, register trademarks, and make money for themselves. From any angle, the success rate should be high. First, they no longer lack capital, and they have a network foundation, so it shouldn't be difficult. Thus, registering trademarks and promoting their own brands has become a trend among distributors in the past two years. However, after all the commotion, these brand companies either went bankrupt or shrank, and few traditional distributors have grown stronger. Fortunately, most of these daring distributors didn't abandon their original business and returned to the grind of moving boxes and delivering goods. Ironically, outsiders often succeed where insiders fail; some novices entering this field quickly develop their private labels. It's easy for others but hard for themselves—a unique phenomenon in the FMCG sector. After analyzing the failures, I found that the issue isn't capital or product, but outdated mindsets. Six typical mindsets hinder brand building: **1. Lack of Brand-Building Awareness.** In the past, they could calculate profits immediately after delivering goods to terminals. Now, with branding, they must invest money upfront before collecting payments, and even after collecting, they need to reinvest. Distributors earn money penny by penny from terminals; it's hard-earned. They hesitate to invest before attracting distributors, and once they collect payments, it's even harder to part with the money. Case: Boss Zhang was a relatively strong local distributor. Seeing his network mature with little growth potential, he decided to launch his own brand. Preparation was easy: he spent over a thousand yuan to register a trademark and had a small distillery produce the liquor, so a new baijiu brand was born. He then planned the promotion, learning from friendly enterprise managers about hiring, market division, and recruitment plans. He even poached Manager Wang from an enterprise with a hefty salary to be his general manager. Manager Wang was experienced and planned the brand well. But as cooperation deepened, conflicts arose. Boss Zhang didn't understand branding. He supported tangible investments like packaging and quality, but balked at intangible brand-building costs, fearing money thrown into water without a splash. He refused to invest in recruitment ads, thinking staff could just visit clients. After developing distributors, the brand collected over 2 million yuan in payments—a good start for a new baijiu brand. Manager Wang created a market investment plan targeting key clients, requiring over 1 million yuan. Boss Zhang hesitated, thinking the profit from 2 million wasn't even 1 million, leading to a major disagreement. Manager Wang left in anger. Subsequent sales managers were judged only on results, with assessments based solely on sales and profit, with the mantra "don't lose money." But market development is like swimming against the current; one sales manager resorted to "draining the pond to catch fish," exploiting the market. As long as clients paid, promises weren't kept, ignoring the future. Naturally, clients started demanding returns. Boss Zhang realized the trouble when clients blocked his door. The sales manager fled, but Boss Zhang had to deal with it. His reputation was ruined, and no one wanted to cooperate. He lost all his investment, leaving a warehouse full of unsellable goods. **2. Lack of Delegation Awareness.** Traditional distributors are family-run, partly due to market conditions; there are many loopholes, and they can only trust relatives. Now, branding requires a true company with systematic management, but these distributors see management as surveillance and prevention. With salespeople out all day, they worry about monitoring, wishing they could be in multiple places. Lack of delegation breeds trust crises. Without delegation, they do everything themselves, hire only relatives, and suspect everyone, making team-building impossible and hindering brand development. Case: Boss Liu painstakingly grew a wholesale department and then attached his own label, aiming for provincial and even national expansion. Originally, he used relatives: he ran sales, his wife handled money, and his brother-in-law delivered goods. As the business expanded, supervision became an issue. Boss Liu knew the dangers of loopholes; some salespeople could run off with money. He hired a business manager at a high salary but gave him no power, especially regarding money. Even the manager's signature wasn't enough; Boss Liu personally verified expenses in the market, fearing fraud. He was even stricter with salespeople: no policies when they went out, and they had to report back for approval, which killed deals. Once, for out-of-province expansion, they needed to rent an office, but Boss Liu insisted on inspecting it himself. One person can't oversee everything, so many tasks were delayed. His wife was "all smiles when collecting money, but grim when reimbursing." His brother-in-law acted like a supervisor, throwing his weight around. Who could work in such an environment? One salesperson left, saying, "I didn't want to leave, but the boss treated me like a thief." Soon, Boss Liu was back to family-only operations, so his business stayed the same size, and his baijiu brand sales were negligible. **3. Lack of Trade-off Awareness.** Traditional distributors deal with terminals in a small area, which doesn't help grow a brand. If distributors focus only on their own turf, thinking they can advance or retreat, the brand will never grow and will remain a "family brand." Case: Boss Zhao's wholesale business was thriving. He was a former enterprise salesman who started his own wholesale operation. He was shrewd and capable. But as a traditional baijiu distributor, he couldn't be hands-off; he had to lead and supervise, constantly loading and unloading goods. He envied brand owners who worked in offices with air conditioning and heating, directing by phone. He decided to transition. He rented an office in a business district and started promoting his brand. Initially, things went smoothly: hiring, team building, market recruitment—he was familiar with it, so brand development proceeded step by step. But after he left the wholesale department, it fell into chaos. Some business was tied to him; others didn't know the details. New staff took over, but terminals missed the warm, attentive Boss Zhao. They asked if he had quit or sold the business. Boss Zhao felt a trust crisis. To reassure terminals, he had to split his time between the wholesale department and the company. But you can't have it both ways; both suffered. The new brand needed his decisions, while terminal issues were endless and required his presence. A year later, his private brand was only available in his own wholesale network, surviving on his own sales. It became a "family brand." **4. Lack of Service Awareness.** Managing terminals versus managing distributors, and serving terminals versus serving distributors, are different concepts. Applying terminal service experience to distributors is like going south by driving north. Boss Kang summarized his wholesale success in three points: First, be friendly, greet people warmly. Second, offer better prices than competitors. Third, exploit customers' desire for small gains by giving gifts or waiving small change. But his "three tricks" failed with branding. When recruiting distributors, clients saw him dressed like a landlord, bowing and scraping like a lapdog, introducing products like a peddler. Others were in suits, looking successful and powerful, so clients looked down on him. His products were cheap, but there was no market support. The problem: brand companies target distributors, while his wholesale clients were supermarkets and hotels. These two types have different goals. Supermarkets and hotels seek cheap wholesale goods, but brand distributors want to make money, not just buy cheap; if products don't sell, high margins are useless. So most clients rejected his brand. His habit of waiving small change also caused trouble. From a brand company's perspective, that's arbitrary price changes, a serious issue, making clients think they can negotiate lower prices. So few deals succeeded, and when they did, prices were low. In the end, his market didn't develop, prices were too low, and he made no money. **5. Lack of Decision-making Awareness.** If you look for a distributor with both intuition and decisiveness, you won't find one in traditional channels. Perhaps it's "the onlooker sees the game best." Maybe distributors' keen judgment and intuition are worn down by daily grind, leaving them timidly following others. Boss Zhu has been in branding for over a decade. Many brand companies that started with him now have revenues in the hundreds of millions, but his business is shrinking; now he has only two salespeople and one delivery truck. His fondest memories are from his wholesale days; he beams, "I used to earn over 10,000 a day. When I quit wholesale and started my own brand, my luck turned." Was his choice wrong? After learning his history, I found he always followed market trends. When something became hot, he'd jump in, but by then the product's life cycle was ending. He not only didn't make money but also lost some. He became overly cautious, seeing traps everywhere. Sometimes he'd consider a new product, sensing a trend, but after lengthy discussions, nothing materialized. When others launched it successfully, he'd say, "I saw it coming; that product would work." His team would suffer his nagging, blaming them for delaying his judgment and not insisting. Eventually, everyone stayed silent, and he remained indecisive. He proudly showed me a trademark license from 1988, which made me laugh and cry. If he had been forward-thinking like some brands and seized opportunities, his brand might have become a "China Famous Brand" long ago. **6. Lack of Cooperation Awareness.** Put crabs in a basin, and none can climb out because others pull them down. That's a true picture of the distributor community: they look down on themselves and don't believe distributors can create good products or brands. Within this group, they see peers as rivals; the more familiar, the stronger the jealousy. Even if they buy some goods out of obligation, they won't genuinely help. Boss Li was friends with dozens of nearby distributors. Some were from working with the same enterprise, which often organized meetings, fostering friendships. Li was sociable and deliberately befriended other traditional distributors, forming a loose channel network. When he felt the time was right, he launched his own baijiu brand. He had the taste and positioning professionally designed, and market research was positive. He believed his biggest asset was his network; with so many friends, it would take off. He hosted a banquet, where friends, flushed with wine, vowed full support. When the brand launched, over twenty distributors ordered goods, but each in tiny quantities, saying they'd "try it out" and promising full effort. After a month, there was no market movement. Was support insufficient? Even friends need to make money, so he increased market investment, even providing vehicles and staff, but the market remained flat. The outcome was predictable. One distributor, drunk, confessed, "Why should I push your product? If I wanted to do a brand, I'd do my own. You're not more capable than us." With that mindset, they stocked his goods and waited to see him fail. Boss Li finally understood. He hired salespeople to develop the market, but the brand was already "half-cooked." Word spread quickly; everyone knew it wasn't selling, so who would jump in? He had to give up. His lack of cooperation turned his biggest advantage into his biggest obstacle. So in business, don't rely on friends, especially when trying to stand out; "the wind destroys the tallest tree." These distributors may be friends on the surface, but inside, they may see you as a competitor. --- **Like this article? Share it on your Moments by clicking the top right corner.** About us: WeChat ID: FMCG Distributor Professional Consulting Management Account intro: 20 years of FMCG distributor operations experience, specializing in distributor internal management. Click "Read Original" below to interact and ask questions in our micro-community. Learning & Exchange QQ Group: 344257092 Reply "1" to enter the micro-website and view historical messages. --- --- ## 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. 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