Introduction: Thinking is all problems, doing is the answer.

Author 丨Cheng Yingqi Reviewer 丨Wang Qiang Layout 丨He Wen

In the new consumption era compounded by the post-pandemic period, daily chemical distributors are under immense pressure and are transforming and upgrading. Some succeed, while others lament. In this uncertain era, to find a certain future, although there is no formula for success or a universal panacea, we can learn from the successes of others and combine them with our own reality to form a new development starting point. Following trends and adapting appropriately is the efficient and effective transformation, and only then can we achieve another successful starting point in transformation. Looking at others, thinking about our own, and seeking tomorrow's opportunities is real and meaningful. We can find our own shining points and new paths from the highlights of successfully transformed distributors.

Brand and Channel Optimization and Transformation Models

Currently, business models are being restructured, commercial structures are changing, traditional brands are aging, emerging brands are shining, hypermarket channels are shrinking, and CS channels are upgrading. The original sales systems of daily chemical distributors are gradually failing to adapt to changes. Most distributors are optimizing and transforming, seeking new growth paths. Some distributors are closing, stopping, merging, or transferring to establish new channel structures; some are even making major pivots to build capabilities in trendy channels. While transforming channel structures, they are also optimizing brand cooperation matrices and introducing more brands suitable for new channel models. These transformations are efforts for tomorrow and investments for future development. Although transformation requires time and investment, most distributors have found new development opportunities and have begun new successes. For example, Mr. Wu of Hefei Bangwei initially focused on hypermarkets, then adapted to trends and changes by engaging in package deals, CS channels, convenience store channels, Watsons channels, Tmall Retail Link, etc., continuously adjusting and expanding brands and strategies according to channel changes, finding stronger and better operational capabilities, and thereby doubling the company's scale.

Key Supply Chain Cooperation Models

This cooperation model abandons the concept of regional distributors and focuses on building a specific type of channel as the core of cooperation. By focusing on key channels, distributors create unique operational capabilities and achieve stronger competitiveness through scale, enabling better cooperation breadth and depth. Some of these distributors cooperate through brand customization or brand partnership models, while others use category and channel partnership models. This model innovation may be difficult initially, but once adapted, it can establish a brand-new commercial kingdom. For example, Hangzhou Chuanxi uses the national CS top 100 stores as its core cooperation channels, achieves category differentiation through imported, trendy, and internet-famous products, realizes sales scale through omni-channel cooperation, and expands management through business partners. Hangzhou Chuanxi has become the most marketing-driven CS top 100 distributor in the country. Another example is Hunan's Zhang Guozhen, who identified the community group buying track, focused on it, and cooperated with well-known national community group buying platforms such as Xingsheng Youxuan, Meituan, and Pinduoduo with advantageous brands, achieving the status of a top community group buying distributor and a brilliant second entrepreneurial transformation.

Distribution and Private Brand Co-creation Models

This model emphasizes grasping both ends, being strong in both, and is particularly evident among large-scale CS and supermarket distributors. In addition to stabilizing existing channels and personnel scale, they combine their channel characteristics, operational capabilities, and advantages to create or co-create brands, then use their own channels as carriers to cultivate and incubate private brands, and later promote the brands nationwide. Using channels to build products and products to build brands may seem simple but is actually difficult. Because distributor thinking and brand thinking often differ in tactics and strategy, if their control over channels is not strong or their ability to expand outside the system is insufficient, they may fall into the trap of self-indulgence in private brands. Therefore, many attempt this model, but few succeed. A typical success is Yunnan Jixinlong, which leveraged its channel advantages in multiple southwestern provinces and its strong presence in internet celebrity live-streaming channels to vigorously launch the Shuguoyuan brand. Through years of investment and accumulation, it has become a leading emerging brand in household cleaning products.

Channel Value-added Service Cooperation Models

Some imported product distributors have begun to break free from regional imported product supply and initiate their own omni-channel distribution. To enhance their distribution capabilities, they share their experience in imported product selection management, data management, and promotion management with retail channels, empowering retailers while forming deeper operational cooperation, thereby achieving exclusive advantages in certain category cooperation within channels. This model requires strong refined management capabilities and is representative among emerging category distributors. For example, Yongzhixin's deep distribution services are well executed.

Whole-store Product Output Models

This model is more evident among original wholesale market customers. More than a decade ago, many wholesalers discovered that the sit-in model could no longer adapt to the market, so they adopted the vehicle sales model. However, vehicle sales had the drawback of limited scale, so many large wholesale customers expanded their distribution categories and store operations, turning themselves into full-category suppliers for small supermarkets. That is, township supermarkets can select more than 80% of their products from them, solving the problem of managing multiple products for small supermarkets and becoming distributors that provide product selection, delivery, and even store upgrade services. This whole-store output model has basically taken shape among large wholesale customers, and they are currently further improving categories and supply chain models. These distributors rely on scale and strength, and are especially prevalent in provincial wholesale markets in inland provinces such as Hunan, Hubei, Henan, and Hebei.

Online and Offline Co-construction Models

Some daily chemical distributors, feeling the impact of e-commerce and recognizing its development trend, have begun to build their own online sales management. Some start with Pinduoduo, some with JD.com, and some even delve into live-streaming. They grasp both ends, aiming to be strong in both, optimizing and upgrading existing offline channels while expanding into new online channels, forming a relatively balanced online and offline distribution structure, thereby achieving stronger sales capabilities and stability. However, the success rate of this model is not high, perhaps due to a lack of talent, differences in adaptation between online and offline business models, or intense competition in both online and offline channels. In short, many attempt it, but many fail, and most are still in the process of further exploration and transformation. How to form a better brand structure, channel structure, personnel structure, and profit structure during transformation should be the core strategy of this model.

Final Thoughts

These six models can be said to encompass the transformation and upgrading of most current daily chemical distributors. This is the worst of times because the economy is sluggish and volatile; it is also the best of times because trends and changes bring many opportunities. Every distributor knows that not changing is waiting for death, and transformation is the future. However, how to change requires clear thinking and proactive action. Thinking is all problems, doing is the answer. As a member of the daily chemical distribution industry, with decades of accumulated business wisdom, I believe everyone can find a more certain self.

Cheng Yingqi, Doctor of Business Administration, founder and CEO of Guangzhou Bingquan Cosmetics Technology Co., Ltd. Director of China Oral Cleaning and Care Products Industry Association, representative of the 17th People's Congress of Liwan District, Guangzhou. He has served as Marketing Director of Blue Moon Group, Marketing General Manager of Sofu Group, Marketing General Manager of Lafang Group, and Vice President of Uniasia Group. In 2019, he founded Bingquan to create a refined oral care brand loved by young people, successfully making Bingquan a standout among emerging brands in the new consumption field.

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