---
title: "Ten Ways FMCG Distributors Die"
description: "This article outlines ten common pitfalls that lead to the failure of FMCG distributors, including excessive pressure from manufacturers, lack of profitability, being bypassed by direct distribution, price chaos from cross-regional selling, internal mismanagement, over-diversification, poor brand selection, complacency, dysfunctional manufacturer relationships, and neglecting terminal market maintenance."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2014-04-30"
language: "en"
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---

# Ten Ways FMCG Distributors Die

> This article outlines ten common pitfalls that lead to the failure of FMCG distributors, including excessive pressure from manufacturers, lack of profitability, being bypassed by direct distribution, price chaos from cross-regional selling, internal mismanagement, over-diversification, poor brand selection, complacency, dysfunctional manufacturer relationships, and neglecting terminal market maintenance.

快销品经销商专业咨询管理:kxpjxszyzxgl
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**Death #1: The Five-Finger Mountain of the Buddha—Crushed to Death**
The Five-Finger Mountain—adding staff, adding vehicles, renting larger warehouses, increasing capital, and stocking up. Manufacturers typically assess sales staff based on sales volume, profit, and process management, so salespeople only do what is assessed. To earn high salaries and avoid being scolded, they transfer this pressure onto distributors. Experienced salespeople appeal to distributors emotionally, wining and dining them, complaining, "Heavens! Brother, I'm forced too. Just keep paying, and I'll find a way to clear your inventory." Some salespeople directly "rape" distributors, threatening—if you don't pay, we'll terminate the contract or suspend promotional fees and rebates—or enticing—if you cooperate closely with the manufacturer, you'll reach "climax," and we'll give you special treatment, more promotions, and more expense reimbursements. But monthly targets rise like sesame flowers—higher and higher. Distributors' warehouses are full, market coverage is already high, and customers are "constipated." Manufacturers, eager to achieve annual marketing goals, become short-sighted and continue force-feeding stock. Eventually, distributors die from overstocking and indigestion.

**Death #2: Not Enough to Eat, Not Enough to Wear—Starved to Death**
Without profit, a distributor's survival is like a tree without roots or water. A merchant's purpose is to make a profit; a merchant who doesn't profit is foolish. However, the real profit period for a product at the customer stage is during the growth phase of the product life cycle. The introduction phase is often a cultivation period with more付出 than收获, yielding little profit or even negative. One fate is losing money for applause—the terminal looks good but doesn't move, no prospects, and the distributor dies from early blood loss. Another fate is the manufacturer giving up—the product is too ahead of its time, pioneers become martyrs, and when the big river dries up, the small streams follow. In the maturity stage, volume is high but profit is thin, and distributors often die from excessive costs or chaotic market management.

**Death #3: Manufacturer Directly Controls Terminals, Bypassing Distributors to Death**
With the rise of channel supremacy, terminal kingship, and deep distribution concepts, manufacturers push for channel flattening. To control terminals more directly and effectively, some manufacturers resort to unscrupulous means, "beating the landlords, dividing the land, and confiscating assets." They shrink distributors' territories, persuade and recruit the secondary distributors that distributors painstakingly cultivated, and register any local gentry with a bit of fame reported by the masses, then encircle and suppress them. After large-scale netting, only small fry remain. Many distributors are functionalized and marginalized during integration, reduced to delivery or service providers without control, and eventually killed by the manufacturer's severing of tendons and bones.

**Death #4: Cross-Regional Selling Poison Kills**
Cross-regional selling can be benign, malignant, or natural, but the fatal kind is malignant. It directly causes price chaos and channel blockage. After years of hard work, you're back to square one. Downstream distributors complain, the distributor loses prestige, prices spiral out of control, product profits become transparent, and eventually, the distributor dies from loss of hematopoietic function.

**Death #5: Internal Friction—Worn Down to Death**
Severe internal friction often occurs during the transition from small to large, from weak to strong. The pace of self-improvement lags behind market growth. Internal management is chaotic, personnel are used irrationally, efficiency is low, and laziness prevails, leading to terminal complaints, customer complaints, and severe loss of outlets. Low pay and unreasonable assessments mean you can't recruit or retain people. Systems are incomplete and change overnight, with loopholes everywhere—drivers steal fuel, salespeople intercept gifts, and moonlighting is rampant. Financial management often relies on relatives, with weak awareness, focusing only on sales volume while ignoring costs and profits, just staring at the books without analysis, overlooking operational issues and risks. Warehouse management chaos leads to untimely delivery and expired products.

**Death #6: If One Side Doesn't Shine, the Other Will, but You Still Die on Two Boats**
Benefits of diversification: "spreading risk; optimal resource allocation; pursuing profit advantages; increasing bargaining power with manufacturers." Drawbacks: "heavy capital burden, more complex management, loss of economies of scale, increased decision difficulty, affecting relationships with existing brands and manufacturers." Distributors must implement diversification based on their capabilities. First, have your own niche products and markets, and consider your development stage. Also, keep your eyes open—invest in areas that can share resources with existing distribution. After all, every trade has its own expertise. Don't be greedy, looking at the bowl while eyeing the pot, or one mountain higher than the next, until you're robbing Peter to pay Paul and run out of walls to dig.

**Death #7: Choosing the Wrong Industry, Marrying the Wrong Man—Depressed to Death**
Choice is greater than effort. Facing various industries, bustling national exhibitions, and salespeople flocking in, without Sun Wukong's fiery eyes to distinguish truth from falsehood, you'll be eaten by wolves in sheep's clothing. Early on, salespeople go to great lengths to get you on board, swearing by their company's strength, market support, staffing, and advertising advantages. But often after the first order, they disappear—"dead without a body, alive without a ghost," like "a cut of plum blossom." Another situation: when the city gate catches fire, the fish in the moat suffer—like the Sanlu melamine incident. Also, some companies are strong early on but lose momentum later and abandon the market. In short, a big tree gives good shade, but projects have risks; invest cautiously, for lips and teeth are interdependent.

**Death #8: Stuck in the Past, Taking Things as They Come—Looking for Death**
Robert Kuok, recipient of the 2012 China Economic Person of the Year Lifetime Achievement Award, said: "When you find a profitable project, act quickly, have drive, and sometimes patience. After making money, be especially careful. There's a saying that failure is the mother of success, but in my view, success is also the mother of failure." Many distributors, through opportunity and personal effort, achieve staged victories and accumulate capital, then become complacent, lose ambition, and think they're second only to the best. Everyone has their own way of living; not everyone needs grand ambitions. But the increasingly competitive market forces you to be vigilant in times of peace, not slack off, and change your mindset promptly. Those who change slowly are either eliminated by manufacturers or by the market.

**Death #9: Disharmonious Manufacturer-Distributor Relations—Killed to Death**
One type: the distributor is treacherous, saying one thing and doing another, liking to tattle. If the manufacturer and distributor disagree on a decision, the distributor directly reports the salesperson's daily behavior to their superiors or headquarters. Two outcomes: either the salesperson is fired, or the salesperson has protection and survives, but you get killed.

Another type: the distributor is either too upright, refusing to play along with sauna culture or mahjong culture, unable to properly serve the "imperial envoys" from headquarters, and thus is killed with trumped-up charges for not knowing the times; or the distributor is too shrewd, eating meat without spitting bones, forgetting the well digger when drinking water, ungrateful, and deserves to be killed.

The customer's own level is insufficient, and they can't keep up with the times, update marketing concepts, or align with the manufacturer's thinking. Their thinking lags, ages, and falls into empiricism. They always challenge the manufacturer—if the manufacturer goes east, the customer goes west.

**Death #10: Only Sitting at the Table, Not Going Out—Waiting to Die**
Sitting at the table is easy and saves effort, but going out early on is laborious and risky. Only by persistently visiting terminal routes, strengthening customer relationships, reducing complaints, increasing market coverage, and doing vivid merchandising to boost sales can you avoid losing terminals and bleeding out. Zhang Ruimin of Haier said: "Doing simple things well every day is not simple; doing very easy things very seriously is not easy." Only then won't you lose terminals or die from excessive blood loss.

Working as a porter to death; being beaten to a pulp by competitors with no escape, squeezed to death; manufacturers suppressing expenses and not paying, with payment methods that tie rebates to payments, trapping distributors to death; being forced to death by manufacturers' salespeople who demand kickbacks; being the vanguard for manufacturers, testing the waters—testing death; after the market matures, being flooded by big-brand products—flooded to death. Tolstoy said: "Happy families are all alike; every unhappy family is unhappy in its own way." Only by learning from failure can the road to success be not so distant and become wider.

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