---
title: "Only 'Category Management' Is the Real Moat for Distributors!"
description: "As the year-end approaches, distributor conferences are underway. After visiting many distributors, the consensus is that business is tough, but growth comes from expanding channels and store counts. The key insight is shifting from brand agency to category management, which is what downstream retailers truly need."
author: "袁来"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2026-01-11"
categories: "Dealer Operations, Management & Methods"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/only-category-management-is-the-real-moat-for-distributors-9d63e6d0/"
markdown: "https://xinjignxiao.com/en/articles/only-category-management-is-the-real-moat-for-distributors-9d63e6d0.md"
original_source: "https://mp.weixin.qq.com/s/twyZkFVR_uazu59KYYtr8w"
translation: "https://xinjignxiao.com/zh/articles/%E5%8F%AA%E6%9C%89-%E5%93%81%E7%B1%BB%E7%AE%A1%E7%90%86-%E6%89%8D%E6%98%AF%E7%BB%8F%E9%94%80%E5%95%86%E7%9C%9F%E6%AD%A3%E7%9A%84%E6%8A%A4%E5%9F%8E%E6%B2%B3-9d63e6d0.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/only-category-management-is-the-real-moat-for-distributors-9d63e6d0/"
citation: "袁来. “Only 'Category Management' Is the Real Moat for Distributors!.” New Distribution, 2026-01-11. https://xinjignxiao.com/en/articles/only-category-management-is-the-real-moat-for-distributors-9d63e6d0/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Only 'Category Management' Is the Real Moat for Distributors!

> As the year-end approaches, distributor conferences are underway. After visiting many distributors, the consensus is that business is tough, but growth comes from expanding channels and store counts. The key insight is shifting from brand agency to category management, which is what downstream retailers truly need.

As we meet in print, I am Yuan Lai from New Distribution.
As the year-end approaches, various manufacturers' distributor conferences are being held one after another. To prepare for sharing at these conferences, I recently made a round of intensive visits to distributors.
We discussed this year's business changes, where opportunities lie, and where challenges are. Of course, we also talked about the impact of current channel changes on distributors' businesses.
Let me start with the conclusion: It is a consensus that distributors' business is difficult.
The "difficulty" is compared to doing business five years ago, mainly comparing with one's own business. But if compared with distributors in other industries, it's actually the same.
With this comparison, it doesn't feel so hard. When the whole industry is struggling, everyone feels relieved.
Just saying business is hard is meaningless. As long as you still want to do this business, you have to look forward and think about how to achieve growth and profit.
I also asked distributors whose business and profits are growing, where does the growth come from? After talking around, I found there is no earth-shattering secret or clever trick.
It's nothing more than expanding channels and increasing store counts.
Regarding channel expansion, there are two situations:
First, channels that were previously "looked down upon," such as community small supermarkets and grocery stores. In the past, they were considered too small and left to wholesalers, but now they are picked up and done by themselves.
Second, new channels, such as instant retail lightning warehouses, which are growing rapidly. They follow up immediately to gain incremental volume.
Regarding increasing store counts, it's the same: continuously going down-market, not just covering big and good stores, but also small and poor stores.
You see, these are the two measures.
If you tell any distributor, I believe no distributor would find it unfamiliar or high-sounding. The various meetings organized by upstream manufacturers also talk about this year after year, month after month.
Everyone understands the principles and knows the measures, but why do many distributors still not grow?
I also posed this question to some excellent distributors. Although the answers varied, when summarized, I reached a core viewpoint: You cannot do business following the logic of brand agency as in the past, but rather the logic of category management.
What does that mean? Let me break it down for you.

It's Not Brand Agency, It's Category Management
Let's first talk about the hottest instant retail lightning warehouses.
If today you want to supply goods to local lightning warehouses, whether you are a Nongfu distributor, Unilever distributor, Nestlé distributor, or Haitian distributor, a single-brand or multi-brand distributor, lightning warehouse procurement won't even bother with you.
Online 1688 and Pinduoduo, offline wholesale markets—they can all source goods. Why must they choose you?
Lightning warehouses don't lack single-brand agents; they lack a whole-goods supplier that can fulfill quickly and provide an entire category.
Let's talk about the current adjustment of regional supermarkets.
Many distributors think the direction of regional supermarket adjustment is direct procurement and naked procurement, to remove distributors. I wonder if you have observed that apart from a few supermarkets that can cooperate directly with manufacturers, most regional local supermarkets do not have the strength to work directly with manufacturers.
The core path of direct and naked procurement is to purchase from wholesale markets.
In the northwest, some supermarkets even set up offices in Zhengzhou Bairong Wholesale Market for regular naked procurement.
Why go to wholesale markets when there are local distributors?
Low price is just a phenomenon; the real essence is that local distributors can only provide product supply based on their own brand agency (first-tier + second- and third-tier products), but cannot effectively supply categories (traffic products + trend products + specialty products) based on changes in consumption trends.
Regarding regional supermarket adjustment, I believe that in the future, most categories will return to local supply, but at this stage, mainstream distributors have not yet changed their agency thinking.
Once they change and start doing business with the logic of category collection and category management, the most suitable will definitely be local distributors.
And today's small and medium stores.
Stores' procurement direction is even more obvious: they pursue a one-stop supply chain platform with small batches and high frequency, which is the B2b supply chain platform familiar to distributors.
The essence of a B2b supply chain platform is category collection and one-stop supply.
Three types of channels—instant retail, regional supermarkets, and community small stores—all point to category management in terms of product supply.
Of course, I want to emphasize here that this is not telling distributors to completely abandon brand agency.
Brand agency is a way for distributors to obtain product operations, not a path to supply channels.
Today, the core way for distributors to grow their business is to serve downstream retail channels well. And what downstream retail channels currently need most are distributors with category management capabilities.

Category Management Belonging to Distributors
Category management, these four words, strictly speaking, are not part of the distributor's discourse system, but belong to retailers. Category management is also a professional retail discipline.
Talking about category management here is not to show profound professional theory, but to effectively distinguish it from brand agency.
So the category management I'm about to discuss is the operational capability that distributors should establish.
Let's take the daily chemical category in the supermarket retail format as an example.
The category management of daily chemicals in supermarket retail, on the product side (excluding shelf display, visual expression, and operational services), I break down into three aspects:
  * Product selection
  * Product structure
  * Product optimization
First is product selection. The daily chemical industry has an obvious consumption characteristic: it is somewhat trendy, and the iteration speed of products is also very fast. It's a bit similar to snack foods.
Therefore, apart from first-tier big brands, how to choose differentiated products that can sell well is the core of demonstrating capability.
For product selection, I suggest starting from three levels:
First, high-potential retail representatives, such as Sam's Club, Hema, Pangdonglai, and leading regional retail enterprises. Refer to the product SKUs of leading retailers;
Second, online sales rankings, such as Xiaohongshu, Douyin, Tmall, etc., to look at new brands, internet-famous, and trend SKUs;
Third, regional beauty collection stores, such as Aotle in Chengdu, Lesha'er in Shenzhen, KKV, etc. These are the core channels for young consumers to try new things, to find high-appearance, high-cost-performance products.
Next, look at product structure.
The product structure here is more about determining the distribution of products based on the specific store positioning. The core is four levels:
First, brand
Second, price
Third, packaging
Fourth, function
Brand structure distribution: A-class national first-tier brands + B-class regional strong brands + C internet-famous imported specialty brands + D-class local specialty cost-effective products. Set corresponding reasonable proportions.
Price band distribution within the same sub-category: high-end, mid-range, low-end, three price bands. For example, for shampoo: high-end 20%, mid-range 60%, low-end entry 20%.
Packaging specifications corresponding to scenario needs: family packs, large packs, personal packs, and travel packs, as well as festive packs and IP limited editions based on special occasions.
Function corresponds to the product solving a specific pain point for a certain type of customer. For example, taking toothpaste as an example: anti-cavity, whitening, sensitive care, etc., corresponding to adult and children groups.
Finally, product optimization.
Not all products can sell well after being put on the shelf. Product optimization has two levels: sales volume and profit.
After the selected products are put on the shelf, how do they perform in daily sales? Through sales growth ranking, determine whether a certain SKU is worth continuing to cultivate? Is it worth giving better display and presentation?
Through gross profit and sales volume, a four-quadrant analysis determines which products have neither sales nor profit (eliminate), have sales but little profit (reduce display), have sales and profit (expand display), and have small sales but profit (expand display).
After reading the above content, I think everyone can understand that for distributors, category management is a professional operational capability.
In the past, the core logic of a distributor's business was regional authorization + channel relationships.
But in the future, and also happening now, the so-called regional authorization protection is being broken up and scattered by fragmented channels and new channels. Goods are available everywhere, so retail customers don't necessarily have to get goods from you.
When the brand is no longer the distributor's moat, what downstream retail customers truly need most is "your ability to help retail do a specific category well."

Summary
Finally, I want to emphasize that not all distributors need to do "category management and category collection." Some categories are not suitable, such as beer, milk, and some beverages. They are still limited by category concentration and strong brand control.
I think the most suitable distributors for category management are those in the following four categories: snack foods, daily chemicals and household cleaning, grain, oil and condiments, and daily necessities and general merchandise.
In today's market environment, I think this is a question that all distributors must answer: "If not relying on brand authorization, what value can you still create for your downstream customers?" When brand regional authorization becomes increasingly scattered and weak, can you treat category management as a business to operate?
The above are some of my recent visits and thoughts. The confusion of transformation is complex and cannot be fully covered in one article.
If you also resonate with this, have confusion, or are trying to change, I sincerely invite you to attend the 6th China FMCG Distribution and Retail Conference in Chengdu in March 2026.
The category management logic and channel change responses discussed above will be transformed into deeper topics, more specific cases, and more direct resources at the conference.
We hope to genuinely help distributor bosses turn the idea of "value reshaping" into a viable path.
The road is long and arduous, but with action, we will reach the destination. We look forward to seeing you in Chengdu, together with thousands of peers, to clarify the direction and move forward together.


---

## Citation metadata

- Publisher: New Distribution
- Author: 袁来
- Published: 2026-01-11
- Canonical: https://xinjignxiao.com/en/articles/only-category-management-is-the-real-moat-for-distributors-9d63e6d0/
- Original source: https://mp.weixin.qq.com/s/twyZkFVR_uazu59KYYtr8w

## 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