The resurgence of COVID-19 outbreaks has put distributors, who were already struggling, under renewed pressure. But today, we are not discussing the business challenges under the pandemic. Outstanding and capable distributors have always emerged through rounds of market changes and harsh environments. Facing business fluctuations, as operators, we should always be rational optimists. Optimism is the business mindset; rationality is the business science. Understand industry trends, adhere to correct business practices, professional operations, and optimistic management. As long as you stay on the right path and persist, extending the time scale, for distributors, this is just a test on the road to distant success. What are correct and professional business practices? That is what we want to discuss today: the seven key trends for distributors in the FMCG industry. Among these seven trends, I have further divided them into three industry trends and four operational trends, as follows: 1. The trend towards large-scale distribution 2. Localized competition 3. Category-based operations 4. Digital business 5. Independent warehousing and distribution 6. Partnership-based organizations 7. Professional promotion Let's interpret these seven key trends one by one for your better understanding. At the same time, we hope every distributor friend can stay on the right track, continuously improve, optimize, and operate professionally. ****The trend towards large-scale distribution From an industry perspective, distributors are part of the supply chain, which inherently has economies of scale. The previous lack of scale effects was mainly because distributors did not control their business destiny; it was controlled by upstream suppliers. When sales volume increased, markets were subdivided; with urban grid management and township-level distribution agencies, it was almost impossible for distributors to grow large. Now, with the disappearance of demographic dividends and rising labor costs, upstream brands find it difficult to continue subdividing markets as before. They basically stop at prefecture-level cities and county-level cities. Distributors have accumulated business resources and improved capabilities, laying the foundation for large-scale distribution. In a third- or fourth-tier city, there are at least 2-3 distributors with annual sales exceeding 100 million yuan, and at most 5-6. ****Localized competition In the past, when discussing market competition, we often talked about brand-to-brand competition. However, as industry brand concentration increases, when looking at market competition from a prefecture or county level, the main competition is often between distributors. More specifically, it is the competition for shelf space in each store. The capability of a distributor often determines the brand's position and ranking in the local market. Conversely, the brand also provides the distributor with bargaining power and leverage when competing for shelf space. Shelf space is limited; the distributor who can secure more shelf space has stronger bargaining power. Brands seem to be the direct competitors, but when brand awareness is similar, it is essentially a contest of distributor strength. ****Category-based operations With the combination of the trend towards large-scale distribution and localized competition, the most effective model for distributors to continue growing and secure more shelf space is category-based operations. For strong brands with exclusive competition, distributors often choose to extend with related brands. For example, leading brands in laundry products often compete exclusively, so distributors may choose laundry plus personal care plus oral care, etc. For non-strong brands, distributors often choose to aggregate brands within the category, such as snacks or paper products, stacking brands within sub-categories. Whether the brand is strong or not, and whether there is exclusivity, from the distributor's perspective, category-based operations or related category-based operations are an inevitable path for sustained business development. ****Digital business Current technological tools are already widespread and mature. In the past, many distributors used tools mainly for financial accounting and inventory management. Explorations in business operations were more about attendance and daily check-ins. Digital business aims to put products, personnel, and outlets online, enabling every order to be completed online. This is the first step, for business visualization and traceability. The second step is to conduct business analysis based on data accumulation: sales volume, distribution volume, and per-store output. Understand your business share and level in each sub-channel and sub-region. The third step is to formulate business strategies based on business analysis. From data presentation to business value is the purpose of digital business. Based on business levels, implement store-level management and investment management; based on business differences, adjust stage-specific business strategies. ****Partnership-based organizations Partnership-based organizations are not about solving management problems but are an organizational strategy to cope with business expansion. If you think partnerships alone can retain and manage people, it will only work temporarily. The background here is that when distributors expand their business, either by adding product categories or channel types, a single business organization cannot meet the needs of different category or channel operations. When a distributor exceeds 50 million yuan in sales, except for certain categories and regions, it is difficult to achieve further expansion without adding categories or channel types. During expansion, the existing team's business inertia cannot handle new businesses. Partnership-based organizations are an inevitable direction for every distributor when expanding category or channel operations. Only through partnership-based organizations and forming an organizational system can it be possible to achieve business scales of 300 million, 500 million, or even over 1 billion yuan. ****Independent warehousing and distribution Independent warehousing and distribution has two meanings: first, for distributors with conditions, usually large distributors, they can truly separate warehousing and distribution, even making it an independent business entity; second, for regular distributors, it can be outsourced in the form of contracted independent accounting. From a business perspective, warehousing and distribution operations are measured by piece or box, and warehouse picking and delivery are given to relevant personnel as a business client. This is the logic of independent warehousing and distribution. Why propose independent warehousing and distribution? Because as business scale grows and SKUs increase, the complexity of warehouse picking and delivery also increases, bringing management and communication time costs. Focus time and expertise on categories and channels; everything else is a consumptive cost. Since it is a cost, it must be efficient, reduce management, ideally require no management, and operate automatically. Professional promotion Whether it is new product promotion or brand promotion, more and more distributors are realizing the importance of promotion. Why is it important? Because only through promotion can there be sales, and only through promotion can there be higher gross margins. Having promotion actions and awareness is not enough. It is necessary to form a standardized management system, from distribution to selling, from selling to promotion, from promotion to best-selling, with a category-based promotion methodology. This is the core competitiveness for distributors to truly profit and sustain profitability. Summary: The above is a brief interpretation of the seven key trends for distributors. In the future, New Distribution will continue to provide in-depth insights and output on these trends. We hope to provide scientific, professional, and correct business methodologies to distributors in their business operations, helping them become large and strong distributors! Focusing on FMCG distributor new distribution/innovative consumer brand cases For communication, you can add WeChat by long-pressing. When adding, please indicate your company, position, and name. More articles _-END-**_