---
title: "Small Distributors Can Grow Big, Big Distributors Must Become Strong, Strong Distributors Must Go Beyond! Here's How..."
description: "This article discusses strategies for FMCG distributors at different stages: small distributors can grow by choosing suitable products, expanding networks, and investing in delivery and sales; big distributors can become strong by optimizing product mix, improving channel and inventory management, and training staff; strong distributors can go beyond by moving into manufacturing, private labeling, or retail. It also promotes an upcoming industry summit on FMCG and internet transformation."
author: "陈彦华"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-09-28"
categories: "Dealer Operations, Management & Methods"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/02VSvx5i464HmaTaZF9VHA"
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citation: "陈彦华. “Small Distributors Can Grow Big, Big Distributors Must Become Strong, Strong Distributors Must Go Beyond! Here's How....” New Distribution, 2016-09-28. https://xinjignxiao.com/en/articles/small-distributors-can-grow-big-big-distributors-must-become-strong-stro-859cd2ac/"
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---

# Small Distributors Can Grow Big, Big Distributors Must Become Strong, Strong Distributors Must Go Beyond! Here's How...

> This article discusses strategies for FMCG distributors at different stages: small distributors can grow by choosing suitable products, expanding networks, and investing in delivery and sales; big distributors can become strong by optimizing product mix, improving channel and inventory management, and training staff; strong distributors can go beyond by moving into manufacturing, private labeling, or retail. It also promotes an upcoming industry summit on FMCG and internet transformation.

Long press the QR code or click "**Read Original**" to register.
30+ industry experts, 100+ B2B platform founders, 800+ manufacturer friends, gather in Fuzhou to jointly explore the path of internet transformation for the FMCG industry.
The food industry, being closely related to people's daily lives, has a very large overall market. After years of rapid growth, it now exhibits the following characteristics:
**First, competitive methods are increasingly complex, with product wars, channel wars, and promotion wars becoming more intense and heated.**
**Second, investment is increasing while returns are diminishing. Due to fierce competition, various expenses are rising linearly, but profits are getting lower, increasingly falling to the level of a mere handler.**
Distributors who have struggled in the food industry feel these two points deeply. Many food distributors fondly recall the good old days when they didn't have to work too hard and still enjoyed substantial profits. But reality is harsh, and the wheels of history do not roll backward. In an industry environment of intensifying competition and shrinking margins, how small distributors can grow big, how big distributors can become strong, and how strong distributors can go beyond are pressing concerns for distributors at different levels.
> **How Small Distributors Can Grow Big**
Being small is only a temporary and relative concept; in fact, many large distributors started small. So how can small distributors become large? Pay attention to the following points:
**1. Choose products that suit you**
Big brands are scarce resources, already largely divided among large distributors. Moreover, big brands have high requirements for distributors, especially financial strength, often occupying distributor funds. But channels also tie up funds, so distributors with average financial strength should think twice. It's like choosing a wife; matching status is important. In reality, besides mature brands, many new food brands and manufacturers enter the market each year, and they have a strong need to build networks. In such cases, choosing manufacturers and products with vision, ambition, and potential can put your growth on the fast track.
**2. Expand your sales network**
The sales volume of 100 outlets naturally cannot compare with that of 300 outlets. So-called large distributors simply control more outlets, thus moving more goods. The top sales of Shuanghui grilled sausages appeared in the obscure Xuzhou market, which moves over 200 tons per month, with sales exceeding 3 million yuan. The reason for such high sales is the grilled sausage machines scattered across every street and alley in Xuzhou. According to the Shuanghui distributor, he controls over 2,000 machines—this is the principle of accumulating grains to form a mound.
While expanding the number of sales outlets, also pay attention to outlet quality. That is, good outlets should be well managed; good outlets sell 6-10 times more than average outlets. With support from good outlets, your network can be more solid and effective. The grilled sausage sales at Xinxiang Pangdonglai Life Plaza once set a national record: one plaza sold over 50 boxes daily, more than 10,000 sticks. When I visited for research, I was shocked—buyers were queuing to buy. This single stall sold over 1,500 boxes per month, with sales of 200,000-300,000 yuan, equivalent to the volume of a medium-sized distributor. If you control such outlets well, how can you not grow big?
**3. Increase delivery vehicles and sales personnel**
Chinese people have a tradition of buying houses and land after making money, but for business distributors, it's crucial to use limited funds where they can appreciate fully. In 2006, I visited a Wahaha distributor in Xinyang. Seeing him riding a small Qingqi motorcycle, I joked, "With your strength, you should have bought a Santana 2000 by now." He replied, "No need. It's not that I lack money; I need to use money where it counts. Just recently, I bought a JAC light truck, so I can add more township outlets." Once products are selected and increased, and the network needs expansion, you naturally need to purchase delivery vehicles to sink and expand your network. With more outlets, personnel must keep up; otherwise, if sales and service become disconnected, it directly affects sales and indirectly affects customer relations. Therefore, appropriately increasing delivery vehicles and personnel is a necessary condition for small distributors to grow big.
> **How Big Distributors Can Become Strong**
So-called big distributors have advantageous brand resources, huge networks, and many vehicles and personnel. But many big distributors are big but not strong, with significant sales but little profit, almost earning only the money of a handler. So how can big distributors become strong? Note the following:
**1. Reasonably adjust product structure**
First-tier products do sell in large volumes, but manufacturers often invest heavily in communication. They focus on pulling consumers to buy, not pushing distributors to do market work. The strategy of first-tier brands is: so many people come to buy; if you don't handle it, many others will. Thus, first-tier manufacturers control distributors by stimulating consumer purchases. Therefore, profits from first-tier products are very thin—for example, the minimum profit per box of Baixiang instant noodles is less than 0.5 yuan. But besides a few well-known brands, most manufacturers and products are unknown or less known. These manufacturers, with limited resources, cannot invest heavily in communication, but they often give distributors larger profit margins and support. Thus, these products often yield profits more than three times that of well-known products. Therefore, using the sales network built by strong brands to distribute lesser-known products can fully release channel power and create more profit.
**2. Strengthen channel and inventory management**
Large distributors have many outlets and are busy with routine delivery, unable to implement scientific channel management. In fact, channel potential tapping is an important method for distributors to become strong. Channel potential tapping means classifying channels and allocating support resources based on sales volume, creating a 1+1>2 channel effect and further releasing channel potential and power. Large distributors often handle many categories; if inventory management lags, a large amount of near-expiry or even expired products can accumulate. Many first-tier manufacturers stipulate in contracts that non-quality issues are not returnable. Therefore, distributors should abandon traditional manual operations, introduce inventory management software and platforms, grasp purchase-sale-inventory data in real time, strictly follow the first-in-first-out principle, prevent near-expiry products, and eliminate expired products. This avoids unnecessary losses, and avoiding losses is creating profit.
**3. Strengthen sales personnel training and management**
Work depends on people; the quality and level of people determine the outcome. Many large distributors are busy with daily affairs, neither focusing on their own improvement nor on improving their sales staff's skills. So many distributors are puzzled: "I'm busy all day, but why hasn't performance improved?" The problem lies with people! Training is the necessary path to solve the quality and skills of business personnel. Through training, cultivate a common value system, and let frontline employees master methods and skills. As long as your employees' standards improve, performance will inevitably rise! I once met a distributor in Xuchang who had comprehensive business personnel management systems in his office. What caught my attention most was the morning meeting system, which required all employees to loudly shout the company's goals and philosophy at each morning meeting. This trading company, established only five years ago, has achieved sales of over 60 million yuan, with more than a dozen delivery vehicles and over 60 people. Therefore, strengthening the management of business personnel, maintaining their full work enthusiasm, and continuously improving work levels will make big distributors smoother and faster on the road to strength!
> **How Strong Distributors Can Go Beyond**
So-called strong distributors control numerous brand resources, have huge networks, strong channel control, and operate as companies. But strong distributors also face growth bottlenecks: limited regional market potential, hitting the ceiling, and almost no potential left to tap. So how can strong distributors achieve transcendence? The following points are worth learning:
**1. Move upward into manufacturing**
Henan Chaohui Industrial, whose boss was originally a food distributor, reached a certain scale, saw the potential in meat products, decisively entered manufacturing, built factories, and is now a major domestic producer of grilled sausages, with sales exceeding 200 million yuan. Strong distributors, with rich market operation resources, can implement flexible market tactics and have relatively complete sales networks locally, so entering manufacturing often comes naturally. Of course, not all strong distributors are suitable for manufacturing. First, manufacturing requires ambition; second, investment is large; third, the time cycle is relatively long. But once successful, it achieves the leap and transformation from distributor to entrepreneur.
**2. Move into private labeling**
Many distributors find manufacturing troublesome, with large investment and high risk, but their sales networks are very complete. So doing private labeling—creating their own brands and products—will greatly increase profit margins. This is the popular asset-light operation. Shijiazhuang Qiaoxi Sugar and Wine has done private labeling with many liquor manufacturers in the industry, thus further expanding its sales network and regions, and naturally increasing profits. Once strong distributors enter private labeling, they gain exclusive resources and complete the transformation from distributor to brand operator.
**3. Move downward into retail**
So-called retail means owning your own retail terminals, no longer just a distributor but transforming into a retailer. Although strong distributors are strong, channel fund occupation is still inevitable. If they develop their own retail terminals, they can not only increase profit margins but also solidify control over local retail resources, reduce bad debts, and even occupy other brands' distributor resources. Pingdingshan Xianglu Trading, established only ten years ago, has grown from a few people to over 200, with sales exceeding 100 million yuan. Xianglu Trading moved into retail at the right time, opening 6 chain supermarkets in Jiaxian, a subordinate county of Pingdingshan. In a county with a population of only 500,000-600,000, the influence of 6 supermarkets is evident. Strong distributors have good brand and manufacturer resources and complete delivery capabilities; once they enter retail, they will have unique market competitiveness.
The only constant in this world is change. The weak can ride the trend to become strong, and the strong will naturally fall behind and become weak. In today's increasingly competitive food industry, what you choose determines what you become.
**This article is by Chen Yanhua, an expert in FMCG marketing breakthroughs**
New Food Era · New Distribution
—— 2016 China "FMCG + Internet" Summit Forum ——
**This is a grand event focused on how FMCG industry channels will transform under the trend of Internet+ transformation**
**Conference Agenda**
08:00-09:00 Registration
09:00-09:05 Host opening
09:05-09:35 2016 China FMCG Industry Trend Analysis Report - Zhao Bo
09:35-10:05 FMCG Enterprise Transformation Strategy and Path - Liu Chunxiong
10:05-10:35 Opportunities and Challenges Brought by FMCG Channel Reform - Field 365 CEO Liu Zhao
10:35-11:05 Alibaba Retail Link All-round Empowerment - Alibaba Retail Link Guo Kunkun
11:05-11:25 Channel Efficiency in the Internet Era - Benlai Holding Vice President Fu Xiaoyun
11:25-12:00 Roundtable Forum - Brand Transformation: Improvement vs. Reconstruction?
Guests: Liu Zhao, Liu Chunxiong, Fang Gang, Chen Feng, Shi Zhengchuan, Deng Xia
12:00-13:30 Lunch
13:30-13:50 Distributor Transformation: City Distribution Trends - Weijie City Distribution CEO Wang Qi
13:50-14:20 Roundtable Forum - Why Distributors Should Do Logistics in Transformation
Guests: Zhao Bo, Wang Qi, Liu Zhongmin, Tang Guangliang, Wang Cheng, Sheng Yan
14:20-14:40 How FMCG Enterprises Can Take Off with the Internet - Xijiu E-commerce Operations Director Wang Hui
14:40-15:00 Detailed Explanation of Zhongshang Huimin's One Machine, Two Wings Strategy - Zhongshang Huimin Vice President Su Xiaoxin
15:00-15:20 Category Value and B2B E-commerce Development Strategy - Yijiupi CEO Wang Chaocheng
15:20-15:40 Supply Chain Finance as Lubricant for B2B Driving Traditional Business - 51 Order CEO Chen Xian
15:40-16:00 Zhanghe Cloud Factory Helps Upgrade FMCG Supply Chain - Zhanghe Tianxia CEO Yang Lixiang
16:00-16:30 Integrating Small and Micro Retail, Reconstructing Business Ecology - Quanshi Vice President Miao Dong
16:30-16:50 Next Decade: B2B as Main Investment Battlefield - Well-known Investor (TBD)
17:00-17:30 Roundtable Forum - Who is the King of FMCG B2B Models?
Guests: Fu Xiaoyun, Zhuang Jianzhong, Jiang Tao, Zeng Weiqin
17:30-19:30 Dinner
For manufacturer friends who want to transform, this grand event is not to be missed. Interested friends can long press the QR code below or click "Read Original" to register.
**Registration: Long press the QR code below or click "Read Original"**
↓↓↓ Click "Read Original" [Register]


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## Citation metadata

- Publisher: New Distribution
- Author: 陈彦华
- Published: 2016-09-28
- Canonical: https://xinjignxiao.com/en/articles/small-distributors-can-grow-big-big-distributors-must-become-strong-stro-859cd2ac/
- Original source: https://mp.weixin.qq.com/s/02VSvx5i464HmaTaZF9VHA

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