---
title: "The Dead End and Way Out for Distributors..."
description: "Distributors in the FMCG industry are often reduced to mere delivery roles, losing their true value. To survive, they must strengthen their 'distribution' function by focusing on management and marketing, not just sales, and become indispensable partners to brands."
author: "古歌读舒"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-08-11"
language: "en"
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---

# The Dead End and Way Out for Distributors...

> Distributors in the FMCG industry are often reduced to mere delivery roles, losing their true value. To survive, they must strengthen their 'distribution' function by focusing on management and marketing, not just sales, and become indispensable partners to brands.

Click 'Read the original' for details.
No middlemen, but definitely more profiteers!
Do you want a dead end or an innovative way out?
Of course, an innovative way out!
But before finding a way out, you must first think about why you've reached a dead end.
In the FMCG industry, food and beverage distributors typically act as delivery agents, lacking the essence of distribution; whereas in the cosmetics industry, distributors are called agents, but often perform the role of distribution.
This is the difference between having no team and having a team to do sales!
Although different, both complain about being exhausted. They almost all turned to WeChat business...
When the role of being in the middle becomes less and less valuable, they express confusion about their way out.
'No middlemen to earn the difference, pass the savings to consumers...' Such fairy tales are heard every day.
However, even if manufacturers sell directly to consumers, without distributors and retailers, prices are not necessarily cheaper.
Some smart consumers even joke: 'No middlemen, but definitely more profiteers!'
Look at those WeChat public accounts or online platforms that sell cosmetics and health products directly or through WeChat business; most prices are much higher than traditional channels.
Getting rid of distributors is actually unlikely, at least not fully achievable in the next few years. Because efficiency will be greatly reduced, whether in terms of capital or execution.
Distributors have value, but it doesn't mean sticking to old concepts and waiting for spring to return.
On the contrary, the concept of distribution among distributors should become stronger and stronger, even surpassing manufacturers, because this is their own territory.
For manufacturers, the country is so large, with diverse market environments and customs. Even with big data analysis, they still encounter the phenomenon of hard to please everyone. To overcome local challenges, they must rely on local distributors.
In addition, distributors are key partners in capital turnover, especially for small and medium-sized enterprises without capital support.
Let's take the cosmetics store (CS) channel as an example to analyze the dead end and way out for distributors.
I. Dead End: Just Delivery!
1. No team but with network
In May this year, at the Shanghai Beauty Expo, I met an agent from a northern city. He picked up a mask with a so-called imported barcode and all-English packaging and asked me, 'Can I take this brand?'
I asked him, 'Do you have a team?'
'I used to, but I disbanded them because of high costs.'
'So you don't have one.'
'But I thought, I sell laundry detergent and household items, supplying about 200 stores in various counties and towns under my area, so I thought I could also supply this mask to them.'
I asked, 'Does a mask need service? Besides, this is an unheard-of brand, even if it looks foreign, and its price is much higher than other masks in township stores. Without promotions, guidance, or experience, what is its value?'
'Well...'
'So I won't say whether it's worth taking this brand; you think about it slowly first!'
Does laundry detergent need service? It can be optional, but it's better to have it. However, I believe there are still many such 'speculative' agents.
Agents who treat themselves as delivery agents, without core value, only earn that pitiful and primitive middleman difference. Ask yourself, if the manufacturer doesn't press you for goods, who will they press? If they don't bully you, who will they bully? It's about leverage...
2. Have a team but no management
Next, agents with outdated thinking have teams, but they are all focused on sales. They ignore the meaning of management!
What is management? It will be explained in the 'Way Out' section.
They lament that the current times are bad, business is difficult, brand owners put great pressure on them, and slightly stronger stores find alternative paths, bypassing agents to directly contact stores, or even register their own brands, find an OEM factory in Guangzhou, and happily sell in their own stores... Under such confusion, agents and their teams focus their energy on shipping goods.
They use soft and hard tactics to persuade their downstream stores, and the rules of the game begin a vicious cycle, tired and complaining at the same time!
II. Way Out: Strengthen Distribution!
Many distributors worry that now slightly well-known brand manufacturers are cooperating with top 100 stores, giving the discounts originally given to distributors directly to the stores, signing direct supply agreements. As such, the scope for us to play and sell is greatly narrowed, but the tasks given by manufacturers increase year by year. How can we continue to cooperate?
But have you carefully observed whether, after a year, those brands directly supplied to top 100 or top 10 stores have performed better than when they went through you?
Or, nationwide, what is the share of the brand you represent that is directly supplied to top 100 stores out of total sales?
Going deeper, brand manufacturers directly supplying top 100 stores require service, not just supply. It is far from the 'exclusive' channel popular ten years ago—direct bottom-price operation. They give you goods at 20% or 18% of the price, and how you sell is your business, even the terminal price can fluctuate according to the manufacturer's price.
If you add in the costs of brand services, personnel wages, transportation subsidies, and other hidden costs, it is actually not much cheaper than going through an agent first, and then the agent sends personnel to the store to do activities.
It can only be said that if a brand owner doesn't trust that a region can operate the brand effectively locally, they can bypass and directly find large-scale, high-coverage stores, striving for better positions in the store and more convenient targeted promotions.
So, this is a management issue, and it is precisely what many agents currently lack.
Distribution, as the name implies, is management and sales.
Finally, I realize why distributors in the daily chemical industry are not called distributors but agents. Is it because they lack the role of management?
Currently, most agents in the CS channel have sales but no management. Even if they have teams, this meaning still doesn't bring greater effect to the brand, nor does it bring crises to their own enterprises.
So-called management refers to the management level. You give meaning to consumers for a brand's positioning, and through the efforts of your company's team, you transform it onto the BA in the store, letting it spread its charm to consumers.
Management is a process, a pleasant process, while sales is just the result, the natural result.
Sales itself has no value! You must have this awareness...
For example, companies with annual sales within 100 million always value the sales department. They hire a business expert who thinks they are great, eloquent, and resourceful, give them the title of director, thinking that this will smoothly sell the product.
In reality, it's just a warehouse transfer, moving the brand owner's warehouse to the agent's warehouse, far from reaching the store or the consumer; but for the marketing department that helps the brand develop and design products, they think it's just a matter of hiring a few employees for a few thousand yuan, and the boss himself is an excellent product manager...
Think about it, how many sales directors understand the product's sales performance on consumers, rather than last year's sales among peers? How many sales directors will discuss in the agent's dinner how to build the specific selling points of their products, which product's sales display and promotions can be deeply coordinated with store staff? For them, the biggest mission is to urge payment collection.
Products are the marketing department's business! But the marketing department is too small, far from senior management, and can't even reach the agent's dinner...
Actually, it's normal, because for small and medium-sized enterprises, in the survival stage, without sales to bring in money, how can the company survive?
But this phenomenon will gradually not continue, because the space is getting narrower.
And for manufacturers who have risen from barefoot to domestic first-line brands, it is completely different. They gradually understand that sales is just sales, far from marketing, and there is a difference... So, they begin to have brand general managers and brand directors, and the marketing department becomes strong. Sales directors also become marketing directors.
With the concept of marketing, there will be professionals who go to the market, go to stores to listen to the voice of the market, observe competitors' trends, and then timely launch or adjust product packaging strategies, marketing plans, etc., and simultaneously implement through the training department, from pre-launch training to in-activity promotions, post-activity analysis, summary, adjustment, etc...
All this, when condensed, is equivalent to the concept of management in the agent's own region!
So, a true distributor is like a branch office of the brand owner here, complete with all functions and good performance. Although you may represent more than one brand, always remember that you must have one brand that is the best.
The value that agents should pursue is simply:
> **1. Achieve the first in the province in scale;**
>
> **2. Achieve the first in the country for a certain brand;**
>
> **3. Achieve the first in a certain category for all brands;**
>
As long as you have one of these, it proves that your team behind you is a strong and reliable team, building your own walls that ordinary people can't enter, and brand owners can't easily replace you.
If you can't achieve it, then strive towards this small goal, even top three.
In this way, not only will agents with sales but no management face a dead end, but even brand owners will face a dead end!
We should think generously: the way out for distributors is actually the way out for brand owners...
The viewpoint is not absolute, for reference only, welcome peers to leave comments for exchange!
About the author: Gu Ge, brand thinker, 'Gu Ge Du Shu' public account brick mover! 4A creative person, once served as brand planning director for Danz, Tiandi No.1, etc. Good at 'reverse thinking' creation! For 'content interaction, copywriting planning', follow the 'Gu Ge Du Shu' public account.
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