---
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: "2019-08-14"
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.

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**No middlemen, but more profiteers!**
Are you heading for a dead end or seeking an innovative way out?
Of course, the innovative way out!
But before finding the 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 true meaning 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 middleman role becomes increasingly worthless, they express confusion about their way out.
"No middlemen to take a cut, benefits for consumers..." Such fairy tales are heard every day.
However, even if products go directly from manufacturers to consumers, without distributors or retailers, prices are not necessarily cheaper.
Some smart consumers even joke: "No middlemen, but more profiteers!"
Look at cosmetics and health products sold directly through WeChat official accounts or online platforms; most are priced much higher than traditional channels.
Getting rid of distributors is unlikely, at least not fully achievable in the next few years. Because efficiency would be greatly reduced, both in terms of capital and execution.
Distributors have value, but that doesn't mean clinging to old concepts and waiting for spring to return.
On the contrary, the concept of distribution among distributors should become stronger, even surpassing manufacturers, because it's their own territory.
For manufacturers, the country is vast, with different market environments and customs. Even with big data analysis, they still face the challenge of catering to diverse tastes. To overcome these local differences, they must rely on local distributors.
Moreover, distributors are key partners in capital turnover, especially for small and medium enterprises without capital backing.
Let's take the cosmetics store (CS) channel as an example to analyze the dead end and way out for distributors.
**Dead End: Just Delivery!**
**1. No Team, Only 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 on 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 county and township stores in my area, so I thought I could take on this mask and supply it 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 mask brands in township stores. Without promotions, guidance, or trials, what's the value?"
"Well..."
"So, whether it's worth taking on, I won't say; you think about it slowly!"
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 see themselves as mere delivery men, without core value, earning only the pitiful and primitive middleman margin. Ask yourself, if the manufacturer doesn't pressure you to stock up, who else? If they don't bully you, who else? It's about leverage...
**2. Have Team, No Management**
Next, agents with outdated thinking have teams, but they're all focused on sales. They neglect the meaning of management!
What is management? It will be explained in the 'Way Out' section.
They lament the current tough times, difficult business, immense pressure from brand owners, and some powerful stores take a different path, bypassing agents to directly contact stores, or even register their own brands, find an OEM factory in Guangzhou, and happily sell their own products in their stores... Under such confusion, agents and their teams focus all their energy on shipping goods.
They use soft and hard tactics to persuade their downstream stores, and the game rules start a vicious cycle, getting tired and complaining at the same time!
**Way Out: Strengthen Distribution!**
Many distributors worry that well-known brands are now partnering directly with top 100 stores, giving them the discounts originally meant for distributors, signing direct supply agreements. This narrows the scope for distributors to play a role and sell, but the tasks assigned by manufacturers increase year by year. How can we continue cooperating?
But have you observed whether, a year later, those brands directly supplied to top 100 or top 10 stores have performed better than when they were in your hands?
Or, nationwide, what proportion of the brand's total sales does direct supply to top 100 stores account for?
Going deeper, brand manufacturers directly supplying top 100 stores require service, not just supply. It's far from the 'exclusive venue' channel popular a decade ago, where they gave goods at rock-bottom prices (2% or 1.8% discount) and left you to sell as you wish, even allowing terminal prices to fluctuate within a range set by the manufacturer.
If you factor in the costs of brand-provided services, such as personnel salaries and travel allowances, these hidden costs are actually not much less than going through an agent who then sends staff to stores for activities.
It's just that if a brand doesn't trust a region's ability to operate the brand effectively, they can bypass the agent and directly approach large, high-coverage stores to secure better positions and more targeted promotions.
So, this is a management issue, and it's precisely what many agents currently lack.
Distribution, as the name implies, means management and sales.
I finally realize why distributors in the daily chemical industry are not called distributors but agents, perhaps because they lack the management role?
Currently, most agents in the CS channel have sales but no management. Even if they have teams, they don't maximize the brand's potential, and they bring crises to their own companies.
So-called management refers to the managerial level. You give meaning to a brand's positioning for consumers, and through your team's efforts, you translate it to the store's beauty advisors (BAs), who then use their charm to spread it to consumers.
Management is a process, a pleasant one, while sales is just the result, the natural outcome.
Sales itself has no value! You must have this awareness...
For example, companies with annual sales under 100 million always emphasize the sales department, hiring a so-called top salesperson with eloquence and resources, giving them the title of director, thinking they can smoothly sell products.
In reality, it's just moving inventory from the brand's warehouse to the agent's warehouse, far from reaching stores or consumers. But for the marketing department that helps 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 among consumers, rather than just last year's sales among peers? How many sales directors discuss in agent dinner parties how to build the product's specific selling points, or how to deeply coordinate product display and promotional activities with store staff? For them, the biggest mission is to chase payments.
Product is the marketing department's job! But the marketing department is too small, far from senior management, and can't even get a seat at the agent's dinner table...
Actually, it's normal, because for small and medium enterprises in the survival stage, without sales to bring in money, how can they survive?
But this phenomenon will gradually fade because the space is narrowing.
For manufacturers who have risen from humble beginnings to become domestic first-tier brands, it's completely different. They gradually understand that sales is just sales, not marketing; there's a difference... So, they start having brand general managers and brand directors, and the marketing department becomes powerful. Sales directors become marketing directors.
With the concept of marketing, professionals go to the market, visit stores to listen to market voices, observe competitor trends, and then adjust product packaging strategies and marketing plans in a timely manner, and implement them through training departments, from pre-launch training to in-activity promotions, post-activity analysis, summary, and adjustment...
All this, condensed, is equivalent to the concept of management for agents in their own regions!
So, a true distributor is like a brand's local branch, complete with all functions and good performance. Although you may represent multiple brands, always remember you must have one brand that excels.
The value agents should pursue is simply:
> **1. Achieve the largest scale in the province; 2. Achieve the number one for a certain brand nationwide; 3. Achieve the number one in a certain category across all brands.**
>
If you achieve any of these, it proves your team is strong and reliable, building your own fortress that others can't easily enter, and brands can't easily replace you.
If you can't achieve that, strive towards this small goal, even top three.
In that case, not only agents with sales but no management will face a dead end, but even brands will too!
We should think generously: the way out for distributors is actually the way out for brands...
Source: 古歌读舒 (ID: orangeguge)


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