---
title: "Profit Strategies for Distributors in the Next Five Years"
description: "This article discusses the two stages of a distributor's development: survival and long-term sustainability. In the survival stage, distributors focus on quick profits and opportunistic sales, while in the long-term stage, they must shift to strategic planning, cost control, and talent development. The article outlines key profit models and future trends, emphasizing the importance of brand resources, market positioning, and dynamic adjustment."
author: "New Distribution"
publisher: "New Distribution"
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published: "2015-04-02"
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# Profit Strategies for Distributors in the Next Five Years

> This article discusses the two stages of a distributor's development: survival and long-term sustainability. In the survival stage, distributors focus on quick profits and opportunistic sales, while in the long-term stage, they must shift to strategic planning, cost control, and talent development. The article outlines key profit models and future trends, emphasizing the importance of brand resources, market positioning, and dynamic adjustment.

This article is reprinted from Jiu Shuo.
Survival and long-term sustainability are two states of a company's existence, and also two realms. They represent different stages of a company, thus their focus and manifestations differ.

**In the survival stage,** distributors sell whatever sells well and go wherever opportunities exist. **They primarily aim to solve the problem of food and clothing, which is typical speculative management.** At this stage, distributors are adept at seizing opportunities, but due to different perspectives, they focus on different points, leading to differentiation among distributors:

The first type of distributor grabs a bunch of "popular" products, i.e., best-selling products at the time, strictly becoming "large secondary wholesalers." Due to the lack of a main product they represent, they cannot obtain core resources, nor have they trained a team around a main product. These distributors currently have no major cash flow issues, but their gross margins are low, and profitability is weak.

The second type of distributor drives company growth through famous brand products. While strengthening, they enrich their product structure and become strong regional distributors. A small number of them, leveraging operational models, grow into super distributors.

The third type is the agent for famous liquor. These distributor companies evolved from state-owned sugar and wine companies. Due to inherent advantages, they obtained famous liquor resources. Some of these distributors, with the revival of famous liquor, become regional giants, while others cling to famous liquor products without innovation or expansion, causing their market to shrink continuously. Although they hold "golden babies," they also face operational difficulties.

**In the survival stage, the personal ability of the distributor boss plays a driving role. During this period, the boss's business skills are key. A typical manifestation is that if salespeople cannot handle it, the boss personally steps in and immediately secures the deal.** Due to their strong control ability, the company and market can advance rapidly. These distributors later also differentiate: **some bosses still charge ahead, handling everything personally; others transfer their abilities to employees or recruit people with stronger business skills to charge ahead for them. The former are tired but the company is not doing well, while the latter are relaxed but the company is doing well.**

**In the long-term stage,** distributors do not sell whatever sells well, but rather consider whose business they should do and whose they absolutely should not. Therefore, when introducing products, price differences and policies are no longer decisive factors. Instead, **the manufacturer's market plan, future market potential, and their own resource matching** are what distributors consider more. So many manufacturers who still hold the old concept of "my product has large profit margins and strong support" can only attract distributors still in the survival stage, but cannot capture those excellent distributors, because the "selling points" promoted by manufacturers no longer match the internal needs of these distributors. During the long-term process, the organizational structure of distributor companies also changes. **Whether in the survival stage or passing through the long-term stage, the organizational structure of distributor companies is "2+1": "2" is sales and finance, "1" is personnel. Sales generate profit, finance controls costs, and personnel ensures profit.**

In the survival stage, distributors focus on sales. But for long-term sustainability, relying solely on sales volume is not enough, because the profit generated by sales volume is hard to offset rising costs. At this time, distributors must pay attention to cost control and employee training, so as to drive sales growth through overall growth while controlling cost increases. Therefore, at this stage, the distributor's individual heroism and ability to conquer the world become insignificant, while relying on the entire company's strength becomes powerful.

In the survival stage, distributors do not pay much attention to or research new concepts and models, always feeling that these cost money and cannot make money. For long-term sustainability, they must actively pay attention to and try new models, because new models represent future trends, i.e., future profitability. Seizing the profitability of each stage is the foundation for long-term survival.

**From survival to long-term sustainability is a problem that distributors must consider now, because without the awareness of long-term sustainability, even if they can survive now, they will definitely live painfully and tiredly in the future.**

> **Enlightenment from long-lasting companies**

The author has come into contact with many distributors who have a strong sense of urgency, knowing that not transforming means they cannot survive in the future. But the problem is they do not know where to turn. This is like a butterfly on a glass window: seeing a bright future but not knowing where to exit. The confusion about the future causes anxiety among distributors. **Looking at those distributor companies that have developed for more than 10 years and occupy the top few positions in the region, their business is growing bigger and their paths are widening. It can be said that their development direction is the direction that distributors moving from survival to long-term sustainability should focus on.** "What we are doing now, Lao Zhang did two years ago, and what he is doing now is what we will do in the next two years. This is the difference," said a strong regional distributor, believing that the difference between himself and Lao Zhang, the local number one, is that Lao Zhang always acts two years ahead. Analyzing these successful distributor companies that have always been ahead, their profit models can be summarized as follows:

**1. Rely on the drive of famous brand products to form a product group and aggregate upstream and downstream resources.** If the focus of integration in the last decade was on upstream enterprises, then in the next five years, the focus will be on integrating downstream consumers, because in the future, whoever owns consumers controls cash and consumption traffic! Consumer levels vary, and consumption demands vary. To become the "wine steward" in consumers' eyes, multi-category, multi-terminal, and multi-service types are the development direction for distributors.

**2. Occupation of advantageous channels in small regions.** This model is common among professional distributors, such as those specializing in hotels, supermarkets, or group buying. They profit by monopolizing a certain channel. It is also feasible to thoroughly penetrate one channel. Accumulating years of resources can achieve the effect of "small investment, large returns."

**3. Brand operators.** This type of brand operator is now divided into two categories: single-brand operation and multi-brand operation. The former is more common, with Qiaoxi Sugar and Wine being the most typical. Although their profit models differ, they share several common features in business philosophy. **In summary, they can be described with several keywords: focus, positioning, and adjustment.** A sign of a company's maturity is focus, just like a person's maturity. We find that many companies rise behind a well-known brand. It can even be said that if a well-known brand succeeds, it will definitely bring success to a batch of distributors. Take familiar examples: Anhui Baichuan Trading does Wuliangye, Zhejiang Shangyuan does Yilite, both for over 10 years. These two products are still their main profit products. **It is this focus that has allowed distributors to stabilize and expand their networks, enrich their connections, and after ten years of sharpening a sword, achieve their current success.** Those distributors who focus on a certain channel such as hotels, supermarkets, or circulation have also achieved significant development, forming their unique and irreplaceable advantages, accumulating energy for future development. If there are distributors who rose due to specific market factors, they need to re-examine their development direction. Because times create heroes, and the rise of heroes depends on the market environment at the time. When the market environment changes, heroes should rethink: what exactly made them successful, where their advantages lie, how to leverage their strengths, and whether their current market positioning is accurate.

**If the survival stage requires hard work with heads down, then for long-term sustainability, one must look up at the sky.** This "sky" is market changes. Adjusting business strategies according to changes allows continuous leaps. So in the next five years, what changes do distributors need to make, and what will they rely on to stay ahead?

**First, occupy positions for famous liquor resources.** Judging from the current development trend of Baijiu, brand concentration is a certain fact. The next five years will still be the world of famous liquor and regional strong brands.

**Second, occupy a position among distributors.** In a region, distributors also have rankings: who is first, second, third. Leading in ranking not only brings the satisfaction of being first but also the capital to aggregate excellent resources. **The future development of distributors must be dual-brand development, i.e., product brand and company brand.** In the early stage, the product brand drives the company brand, and in the later stage, the company brand must drive the product brand. Paying attention to the company brand is not only meaningful for obtaining an excellent agency brand but also for whether the company can horizontally expand into related industries.

**Third, pay attention to dynamic adjustment.** Dynamic adjustment includes the following aspects: First, internal structural adjustment, which is the key to the distributor's second takeoff. Victory in market competition now is not the victory of a single point but the victory of a system. The same applies to distributor company operations: obtaining sustained profit is not just the business department's affair but every employee's affair. How to motivate every employee to create profit under a common vision requires the distributor boss to consider from the company's philosophy and incentive methods. Second, control over the company's development speed. If last year's sales were 50 million and this year's are 40 million, then adjustments need to be made in product structure and personnel allocation; if last year was 40 million and this year is 60 million, adjustments are also needed because the development speed is too fast. **"When it's fast, you must learn to brake," is a piece of advice from Zhang Yubai, Chairman of Yanghe.**

**Fourth, maintain attention to new models and new thinking,** such as e-commerce, O2O, WeChat marketing, micro-shops, customization, and sealing jars. "What exists is reasonable." Their popularity represents a part of demand and may become future trends. If you do not pay attention or occupy a position now, when the trend erupts, it will not be a matter of "stagnation" but of being overturned and surpassed.

**Fifth, the issue of the boss's breadth of mind.** A big problem now is that distributors have plans and directions, but in the end, they cannot achieve them. Why? Because the boss lacks "mental strength," i.e., breadth of mind. Imagine a boss who, when someone touches his BMW, immediately gets out and curses or even fights. It is hard for such a boss to grow big. **Therefore, a boss with a tolerant mind, good reputation, and credibility will definitely become stronger and bigger in the future, because he can gather employees and downstream customers.**

**Sixth, start now, start from the basics,** and build the highway to the future.

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