In the past two months, while visiting the market and communicating with many distributors, the business situation shows a clear polarization. Some distributors are optimistic about their business, with clear development directions and plans for the future, and their overall business is improving. But the majority of distributors feel that business is becoming more difficult and have a strong sense of crisis. Why does this phenomenon occur? Is it because the former's business is smooth sailing, or is the latter's market too poor? There are differences in different regional markets, but overall, the trend of market changes is converging. Every distributor will face crises at different stages of business development; the key is whether they can find opportunities within the crisis. This is also the question all distributors need to consider: What crises does the current business face? Is the distributor business worth doing? If so, how should it be done? Where are the crises for distributors? Why is the distributor business difficult? Where do the problems lie? Internally, the business has hit a bottleneck, unable to achieve quality growth and profitability. From the perspective of business scale, the natural growth of many distributors' businesses has actually stagnated. The ceiling of the operating market, the ceiling of category business, and after the distributor business develops to a certain stage, the space for incremental growth becomes increasingly limited. In the past, distributors could easily achieve business growth by adding well-known brands, but when the regional trade pattern stabilizes, the agency rights for well-known brands also become relatively stable, and the incremental growth brought by small brands is very limited. At this point, the distributor's business can only be a stock business. In this context, many distributors shift their attention to profits. Since there is no incremental growth, they try to increase profits. But when focusing on profits, distributors find that profitability is very limited. On one hand, overall management efficiency is low. Many distributors still operate with outdated models, and their internal management of personnel, warehousing, finance, and operations has not been updated, remaining extensive management from the past. On the other hand, operating costs continue to rise. For example, personnel costs: ten years ago, a salesperson's salary of three to four thousand yuan was acceptable, but now the basic salary is six to seven thousand yuan, yet the profits from large circulation products have not increased much, squeezing profit margins. Another example is logistics costs. A major distributor in Henan told New Distribution that monthly vehicle fuel costs alone reach 500,000 yuan, plus driver and vehicle maintenance expenses, which are significant expenditures. During rapid business growth, these issues are masked by business expansion, but when growth stagnates, the negative effects of these problems become prominent, leading to low overall profitability. Externally, changes in the market environment and channel differentiation are gradually cutting into distributors' businesses. In a stock market, supply exceeds demand, and competition among manufacturers intensifies. There is only so much market share; those who grab more naturally leave less for others. In this process, some manufacturers, to further increase market share, begin to directly control terminal stores. From early direct control of NKA stores to now direct control of local chain supermarkets and branded convenience store chains. At the same time, the entire retail format is also changing. Retail scenarios have evolved from a single scenario to multiple scenarios. In the past, retail scenarios were mainly traditional retail, with two main formats: traditional offline circulation and KA stores. But with the continuous development of online channels, retail scenarios have become diversified. Traditional retail, e-commerce, and social retail are three retail scenarios, combined with traditional circulation, KA, B2B, B2C, community group buying, and other channels, giving rise to various new scenarios, models, and gameplay, reducing the volume of single channels. Today, the online and offline sales ratio for FMCG has reached 6:4. Distributors' market share is being continuously cut, and competition among peers intensifies, inevitably leading to some distributors being eliminated. Under the dual pressure of internal and external factors, it has become a common phenomenon that distributors find business difficult. So, is the distributor business worth doing? Is the distributor business worth doing? In February, the author visited a water beverage distributor in Beijing, Mr. Wang, who has invested in many industries, including pharmacies and supermarkets. He started as a distributor in 2021 and now has annual sales of over 60 million yuan. Mr. Wang told New Distribution that among all the industries he has been involved in, although the distributor business does not offer huge profit margins, it is the most stable industry. The link from manufacturer to consumer seems short, but the coverage cost in the offline channel is complex and huge. If manufacturers directly cover the market, it is difficult to manage and control costs. Therefore, this process requires distributors to do regional intensive cultivation. For distributors, as long as they serve terminal customers well and keep the channels in their hands, the business is sustainable. To be more specific, we can use a set of data to see whether the trade business is worth doing. During a survey in a prefecture-level city, a regional major distributor provided a formula to estimate the market capacity of the regional circulation channel: Regional trade circulation channel market capacity = number of stores * average daily sales * 365 Assume a prefecture-level city has 4,000 stores with an average daily sales of 3,000 yuan. Regional trade circulation channel market capacity = 4,000 * 3,000 * 365 = 4.38 billion yuan** Focusing on a specific category, such as leisure food, which accounts for 25% of the category. Regional trade circulation channel leisure food category capacity = 4,000 * 3,000 * 365 * 25% = 1.095 billion yuan** This calculation may not be standardized, but the data reflects that the distributor business is definitely worth doing. As long as the offline market base exists, the value of distributors will always remain. However, internal and external impacts persist, and the current distributor business is no longer a simple combination of a few people and a few vehicles. For distributors, intensifying competition requires stepping out of the past comfort zone. Future development directions for distributors In the past year, "New Distribution 100" has reported on many excellent distributors, including many successful transformation cases. Based on these cases, the author summarizes four directions that distributors can try to develop. 1) Digitalization Distributor digitalization is usually divided into two types: model digitalization and business digitalization. Model digitalization, typically like B2B. Through platform-based operations and large-scale distribution, achieve more efficient distribution coverage, combined with their own service advantages, to make the regional business bigger. But the B2B model has obvious limitations. First, B2B is essentially a large-scale wholesale business, just with larger scale and higher efficiency, but it does not solve personalized needs based on the logic of sell-through, such as terminal customer relationship maintenance, new product placement, and vivid display. Second, B2B requires distributors to have relatively high store coverage capabilities. For example, distributors in categories like leisure food, condiments, and water beverages, who have certain small store distribution coverage capabilities, can try it. Business digitalization is a stage that current distributors must go through. Through the use of digital tools, every link of the business can be made efficient, data-driven, and quantifiable. Network digitalization, product digitalization, and personnel digitalization, shifting from human-driven to data-driven. First, improve efficiency; second, enhance the ability to obtain and apply data, better supporting business development. 2) Scale After decades of development, the trade circulation industry has formed a relatively mature system. Generally speaking, it can be divided into five types. Brand operators: Agents for a major brand, operating in multiple cities and regions, or particularly large in the local market, providing localized operation services for the brand. Typical examples include distributors for P&G, Yili, and Mengniu, where a single brand can achieve large scale. Category operators: Focus on a specific category, agenting multiple brands within that category, and operating deeply. This is currently a mainstream development direction for distributors, using a combination of multiple brands to maximize shelf space in the category and gain bargaining power upstream and downstream. Channel supply chains: Large supply chain enterprises with the right to distribute channel profits and even set channel prices. For example, national B2B platforms, operating across all categories, with large-scale coverage and strong bargaining power. Distributors (delivery): Mainly for categories with deep distribution, where manufacturers control the terminals and require a large number of manufacturer personnel to operate. Distributors only act as delivery agents, and their autonomous operating rights are weakened. Typical examples include Coca-Cola's 101 distributors. Wholesalers: Agent for a few brands but with a rich variety of products, mostly sourced from distributors, able to provide one-stop supply to small stores. This was the main model in the early trade circulation field. Among the five types of distributors, the two largest in number, delivery agents and wholesalers, lack competitive barriers. They waste time on a large amount of low-level repetitive work, which is very tedious, but cannot generate creative premiums, leaving only thin profits. With thin profits, they cannot retain talent with sufficient funds, management cannot be upgraded, ultimately leading to diminishing marginal returns and eventual elimination from the market. As some distributors exit, others inevitably grow larger. These growing distributors serve terminals with faster speed, lower costs, higher efficiency, and better experience, expanding their scale and eventually becoming regional major distributors. 3) Omnichannel operations Today's retail scenarios have changed significantly compared to twenty years ago. In the past, the core retail scenario was traditional retail, mainly divided into KA and offline circulation. But now there are three retail scenarios: traditional retail, e-commerce, and social retail, combined with N types of channels, dispersing consumers across different channels, with single channels having less volume. Distributors must adapt to these changes in retail scenarios and channels, and omnichannel operations are an inevitable topic. This does not mean distributors must do all channels, but rather combine their own advantages to expand into channels with opportunities and growth. During a recent market visit, the author saw many excellent major distributors doing well in new retail. For example, O2O and community group buying, which require local suppliers, where distributors actually have relative advantages. 4) Private brands 1) Coverage capability of local retail outlets 2) Service capability for market terminals 3) Consumer marketing capability 4) Overall supply chain management capability When distributors become the local head, they usually possess these capabilities. In this context, trying to develop private brands is a good development path for distributors. On one hand, transitioning from a distributor role to a brand owner role opens up greater imagination space for the business and enhances the company's operational capabilities. On the other hand, by building private brands, distributors can strengthen their control over channels, reduce dependence on first-tier brand channel penetration, and also achieve better profits. Final thoughts: The distributor group will not disappear, but as the market and channels change, they will continuously evolve new capabilities. For distributors, how to seize the opportunities brought by market changes and find a development direction suitable for themselves is the guarantee of sustainable business in the future. From April 6 to 8, the 8th China FMCG Innovation Conference will grandly open in Chengdu. On April 8, at the [FMCG Distribution Channel Model Innovation] forum, New Distribution has invited more than ten excellent regional major distributors to share their experiences and discuss opportunities for business growth in the trade circulation field. Interested distributors should not miss it.