---
title: "The Dealer's Business Must Change"
description: "Recent visits to wholesale markets across multiple regions have reinforced the perception that the distribution business is becoming structurally harder. Traditional channels are declining, while new retail formats are squeezing dealers' margins and bypassing them, forcing a transformation."
author: "张振宇"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2026-04-25"
categories: "Dealer Operations"
language: "en"
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markdown: "https://xinjignxiao.com/en/articles/the-dealer-s-business-must-change-9b1e753a.md"
original_source: "https://mp.weixin.qq.com/s/ccTX0NDTkdysdKPTspDW_g"
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attribution: "New Distribution — https://xinjignxiao.com/en/articles/the-dealer-s-business-must-change-9b1e753a/"
citation: "张振宇. “The Dealer's Business Must Change.” New Distribution, 2026-04-25. https://xinjignxiao.com/en/articles/the-dealer-s-business-must-change-9b1e753a/"
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---

# The Dealer's Business Must Change

> Recent visits to wholesale markets across multiple regions have reinforced the perception that the distribution business is becoming structurally harder. Traditional channels are declining, while new retail formats are squeezing dealers' margins and bypassing them, forcing a transformation.

**Phenomenon:** Recently, we have intensively visited wholesale markets in multiple regions, which has reinforced our previous perception: the distribution business is becoming increasingly difficult—structurally difficult.

In traditional channels, most KA (key accounts) are experiencing continuous customer attrition, with noticeably weaker product sell-through, and are all seeking adjustments to save themselves. Mom-and-pop stores generally report significantly reduced restocking frequency, and even many small shops that have been around for a decade are starting to put up "for lease" signs...

The channels that veteran dealers are familiar with are almost all declining—the only difference is between a cliff-like decline and a slow decline.

At the same time, new retail channels are expanding aggressively. Discount formats and instant retail have driven prices to rock bottom, leaving minimal intermediary profits. Membership warehouse clubs and direct manufacturer partnerships are developing a large number of customized products, effectively bypassing dealers...

**Old channels are hard to hold, new pathways are hard to enter—dealers' business space is being squeezed from both sides.**

The universality of this situation indicates that this is an industry trend rather than a short-term phenomenon—dealers who rely on inertia are being phased out by the times.

**Essence:** Distribution is the circulation pathway for the FMCG market. Since retail, as the outlet, has undergone dramatic changes, the pathway naturally needs to be rerouted.

Dealers themselves undertake the circulation function for FMCG across society—distributing products from factories to retail terminals so consumers can purchase them there.

In the past, retail terminals were relatively clearly segmented. For example, KA once dominated the FMCG market for a decade; as long as you served them well, you could make money. Dealer service methods were relatively simple and straightforward.

But now, with the development of the FMCG industry, retail terminals are becoming increasingly segmented and complex. New formats such as discount stores, membership warehouses, and instant retail not only have their own rules but also blur the boundaries between online and offline.

**Industry trends are not formed overnight but are the result of multiple resonances among industry factors.** They are also the result of transmission through the industry chain, link by link.

To understand why the distribution business is structurally difficult, one must see what changes have occurred in industry factors.

Of course, for distribution, the most impactful variable is retail.

**Retailers, as the downstream customers of dealers, have two very obvious characteristics:**

1. They are close to consumers—"the duck knows the spring water temperature first." When consumers undergo structural changes, retail is the first to know and adapt.
2. No consumer refuses "more, faster, better, cheaper." As the final delivery point of FMCG to consumers, retail's direction of change is inevitably toward higher efficiency.

This summarizes what has been happening in the market over the past few years:

**In the era of shrinking volume, consumers are extremely pursuing cost-performance, forcing retailers to launch an efficiency revolution**—whether emphasizing price (discount formats) or quality (membership, premium supermarkets), whether it's the rise of new retail or the transformation of traditional retail.

**It is precisely this change that directly impacts dealers' businesses!**

**The macro environment changes consumers, consumers influence retailers, and retailers force dealers to change.**

As the upstream link of retail, dealers are responsible for the socialized network distribution of FMCG from factories to retail terminals, constituting the entire circulation pathway of the FMCG industry.

Currently, retail, as the circulation outlet, is undergoing dramatic changes, so naturally, distribution, as the circulation pathway, also needs to be rerouted. **After all, following the market—providing what customers need—is the basic quality of doing business.**

But in the process of rerouting, dealers cannot avoid facing two severe challenges:

1. Retail efficiency is increasing, driving the entire industry chain to improve efficiency. Undoubtedly, some inefficient dealers will be eliminated.
2. New customers have new needs. How to satisfy these new needs and successfully transform, redefining the industrial value of dealers.

The impact of retail changes on distribution

**Solution: Follow the trend, transform with retail, and find a way out.**

For dealers, the current challenge is not only severe but a matter of life and death.

That is why it is even more crucial not to act blindly. Dealers must clearly see industry trends and transform to find a future path for their business.

It can be difficult—finding a new direction with no clue—or simple, as the answer lies hidden in the market.

**Dealers' customers are retailers. As retail rises and falls, demand will clearly change. Where the new demand is, there lies the new opportunity for the distribution business.**

But it is worth emphasizing that, looking at mature FMCG markets abroad, **the market is only clearing out inefficient dealers, not denying the value of dealers' existence.**

Even in mature FMCG markets in Europe and the US, dealers have evolved over time into super service provider giants.

The super dealer giants that emerged from a century of development in the US FMCG market

Therefore, regardless of whether the industry ultimately clears out 30% or 50% of dealers, **as long as dealers' industrial value is sufficient, the FMCG industry cannot do without their services.**

Based on my observations, dealers who are transforming well have found relatively common service values:

1. **Buyer capability:** Acting as an external sales force for major clients, solving product development needs.
2. **Assortment capability:** Solving the product mix configuration needs of mom-and-pop stores, instant retail, and local chains.

The most typical examples are the dealer groups serving Sam's Club and those serving flash warehouse (instant retail) platforms.

Sam's Club dealers act as external buyers, screening the entire market for suitable brand owners and manufacturers to co-create products based on the retailer's clear product requirements.

Flash warehouse dealers act as assortment providers, directly supplying full shelves based on the retailer's complex product mix (generally >2000 SKUs with clear sell-through requirements), greatly optimizing the tedious work of product mix configuration.

Of course, there are also many dealers in the market who have begun to switch roles—no longer just dealers, but venturing into manufacturing (controlling production factories) or retail (opening stores, integrating wholesale and retail), earning industrial value beyond distribution.

It can be seen that many excellent dealers have already blazed a trail in transformation.

Expansion of the capability model for the distribution business (role extension or capability extension)

But returning to the distribution business itself, **whether it was previously helping customers with capital advances and delivery, or now solving product issues through buying and assortment, it all comes down to solving customer (retailer) problems.**

It's just that buying and assortment are transformations that follow customer (retailer) changes, satisfying new market demands.

Borrowing from Toshifumi Suzuki, founder of 7-Eleven Japan, in his book *The Philosophy of Retail*, the only constant in the retail industry is that it is always changing.

For dealers, **as long as they can adapt to customer changes, find new industrial needs, and satisfy them, being a dealer in the new era still holds great potential!**

**First China Private Brand Industry Chain Conference**

Time: June 4-5, 2026
Location: Hangzhou, Zhejiang

This is an industry flagship conference spanning the entire private brand industry chain—regional supermarkets, community supermarkets, instant retail, discount supermarkets, leading brand owners, OEM manufacturing factories, supply chain service providers—with 1500+ industry elites gathering in one place. Let the upstream hear the real needs of the terminal, and let the downstream see the true capabilities of the supply chain.


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## Citation metadata

- Publisher: New Distribution
- Author: 张振宇
- Published: 2026-04-25
- Canonical: https://xinjignxiao.com/en/articles/the-dealer-s-business-must-change-9b1e753a/
- Original source: https://mp.weixin.qq.com/s/ccTX0NDTkdysdKPTspDW_g

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