"For a business with 60 million in sales, I'd hand it over for 2 million." This is the account of a second-generation distributor, which made me ponder deeply. Many distributors work hard all year, and although they appear to make money on paper, most of the money turns into goods piled up in warehouses. In the past two years, while visiting the market, I've found that many distributors have similar thoughts: they want to transfer their business but can't find someone to take over, and they can't comfortably retire, yet continuing to struggle lacks motivation and direction. Once, these distributors worked hard to accumulate wealth and establish a foothold in the market. But now, market changes have left them confused about the future. Why has the distributor business become so overwhelming?

Profit margins are shrinking, and the business isn't making money "I dare not calculate profits; if I do, I can't sleep," lamented Liu, a condiment distributor in a third-tier city. "Take a well-known brand of soy sauce, for example: the gross margin is only single digits, basically sold at factory price, relying solely on year-end rebates. Even the salespeople don't want to do it." Indeed, traditional trading is facing unprecedented challenges, and "not making money" has almost become an open secret in the industry. Previously, industry expert Liu Chunxiong published an article in New Distribution that sparked intense discussion. He mentioned that the current situation is an imbalance of power between giants and distributors. High-intensity deep distribution means goods are piled up at distributors, either leading to short-dated products (like dairy) or tying up too much capital (like liquor), further squeezing profit margins. Moreover, to compete for market share, brands have started market segmentation strategies, dividing by channel or even product line. The market is being cut into smaller pieces, leaving fewer resources for each distributor, making business increasingly difficult. Meanwhile, costs for vehicles, rent, and labor rise year by year. Driver salaries have increased from 5,000-6,000 to 7,000-8,000, warehouse rents keep rising, and vehicle wear and tear and maintenance add to the invisible but heavy cost burden. But profits haven't increased with costs; the money earned basically goes to support people, vehicles, and landlords...

Terminals aren't selling; poor sell-through "It's okay if profit margins are a bit lower, as long as we can maintain sales volume and win by volume. But now, even small shops have poor sell-through!" sighed Wang, a snack food distributor. In the last year or two, return rates at terminals have been rising, with even more than ten stores closing in a month, making business increasingly difficult. There are many reasons, but he believes the two main ones are: first, people are tightening their belts and are unwilling or afraid to spend; second, while the overall market is declining, other channels are grabbing existing market share. From a macro perspective, according to data released by the People's Bank of China for the end of October 2024, narrow money (M1) fell 6.1% year-on-year, while broad money (M2) rose 7.5%. This may mean that the actual funds available for consumption have decreased. Due to increased uncertainty about the future economic outlook, consumer confidence is insufficient, leading to more money being deposited in banks, further indicating weak consumption. Wang smiled and used himself as an example: In the past few years, he would dine out with friends five or six times a month, drinking Moutai. Now, such gatherings have decreased significantly, and the drinks have been replaced with more affordable options. Continuous price cuts in offline channels have also impacted stores significantly. For example, Jia, a condiment distributor, told New Distribution that the impact of online channels is becoming increasingly severe. In the last two years, more and more customers have complained that his supply prices are too high. Upon investigation, he found that "Pinduoduo's flash sale activities for clearance goods can even sell at our purchase price, and the dates are not much different. They ship in whole cases. After comparing prices, second-tier distributors directly order online. It's hard to check if they buy 10 or 8 cases at a time. Reporting to the manufacturer is also difficult to control because flash sales are not long-term. Even if you screenshot and report, the link is taken down when you click again. Besides, manufacturers also need to clear inventory."

Team not united; management difficulties External environmental changes are only one aspect; traditional distributors also need to solve internal management challenges. Many distributors started as a husband-and-wife team and gradually grew, cultivating a group of "veteran" employees who grew with the company. However, the market changes rapidly, and the mindset of the internal team is quietly shifting. On one hand, salespeople who have worked for many years have lost their drive and treat the company as a "retirement home." On the other hand, if they make drastic changes to the team, they worry about affecting team cohesion and morale, leaving them in a dilemma. A distributor friend said bluntly, "For small enterprises like ours, being too process-oriented doesn't work, but without standards is also not acceptable." However, the process of forming these standards is painful, not only for employees but also for the boss. The most core department in a company is the sales department, and its level of professionalism is the biggest bottleneck restricting development. Distributor Zhou said: "Unlike warehouse keepers, drivers, and accountants, which are quicker to learn, a new salesperson needs two to three months to become familiar with SKUs, and that's for the smarter ones. Many find it unsuitable after two or three months, and we need to recruit and start over. The trial-and-error cost is too high."

Children unwilling to take over Making a fortune is hard, but keeping it is even harder. The first or early batch of distributors, who came from supply and marketing systems or started from scratch, are now mostly at retirement age. After a busy half-life, they can finally enjoy some leisure. But in reality, many second-generation distributors are unwilling to take over the business. After talking with many distributors, I noticed an interesting phenomenon: distributors generally let their children receive a better education, and many even study abroad. After graduation, they mostly have glamorous jobs, making it difficult for them to return. For the second generation, they are generally well-off materially and educationally, well-traveled, and their friends and classmates are either entrepreneurs or working in finance, foreign trade, and emerging industries. In their eyes, the distributor business is labeled as a "sunset industry." Compared to being "trapped" in this traditional trading business day after day, they yearn for the outside world and aspire to carve out a new path.

Final Thoughts Times eliminate you without even saying hello. Even if you haven't regressed and still operate according to the old model, that's not wrong in itself, but the market has changed. If you can't keep up, you may find business increasingly difficult. And the current environment will be the norm going forward; we can no longer expect to return to the era of making money while lying down. How to face reality? In one sentence: "If you have the energy, keep going; if not, get out." I recently visited a distributor with annual sales of 40 million. In the frontline market, this scale is not large, but he is very happy. He said bluntly, "It's difficult for an elephant to turn around. Compared to those large distributors with billions in sales, who need to communicate decisions through layers, my transformation and change are much easier. I can respond quickly to market changes and implement new strategies with a single order." After all, it's not just the FMCG industry that's difficult. If you broaden your perspective and look at catering and clothing, you'll think FMCG is still doable! If you really can't hold on, then earn what you can, and keep going as long as you can. Even if you'll be eliminated or acquired in the future, that's a matter for later. What matters is what you can do now. For distributors who still have drive, it's key to stay clear-headed, accept reality, and quickly keep up with the pace of change. Go out and learn continuously, avoid detours as much as possible, and refine a model suitable for your own development.

From August 19-21, 2025, the "2025 7th China FMCG Conference" with the theme "New Demand, New Supply," along with the 5th China FMCG Retail Innovation Conference and the 5th China FMCG Distributor Conference, will be held grandly in Shanghai.

New Distribution has surveyed nearly 500 distributors and will release the "2025 China FMCG Distributor Business Status Survey Report" at the conference, to see which distributors are growing and which are being eliminated this year. Where is the focus of operations? Where are the business opportunities?

At the same time, at the conference, we have invited benchmark cases of distributors transforming in different directions: representative of regional B2b platforms—General Manager of Jiecang Wogou, Zhong Xiaoping; representative of retail channel operators—General Manager of Tianjin Shicheng Bofa, Zhang Shicheng; benchmark of transformation to platform trademarks—Chairman of Shenzhen Yataixuan Industrial, Li Yong; regional category operator—General Manager of Zhengzhou Dapeng Trading, Zhang Gaifeng, among others, to share their practical experiences and thoughts on transformation.

Together, we will discuss how distributors should go, transform, and win in the market environment of new demand and new supply.

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