---
title: "The Distributor's Business Has Fundamentally Changed"
description: "The distributor's business is shifting from being brand-centric to store- and customer-centric. This article explains this transformation through the evolution of distributors from the 1990s to the present, highlighting the shift from a seller's market to a buyer's market and the need for distributors to become category operators focused on retail and consumers."
author: "袁来"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-02-07"
language: "en"
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# The Distributor's Business Has Fundamentally Changed

> The distributor's business is shifting from being brand-centric to store- and customer-centric. This article explains this transformation through the evolution of distributors from the 1990s to the present, highlighting the shift from a seller's market to a buyer's market and the need for distributors to become category operators focused on retail and consumers.

Dear readers, I'm Yuan Lai from New Distribution. Recently, I met with many distributor friends, all benchmark distributors from various regions. After our conversations, I have a profound feeling: **the distributor's business has fundamentally changed.** The distributor's business is shifting from being brand-centric to being store- and customer-centric. How exactly should we understand this? I'll explain it clearly in this article.

**The Evolution of Distributors**

The role of distributors was born in the 1990s with the reform of the commercial circulation system. Many distributors started their businesses by leaving local supply and marketing cooperatives to engage in distribution and agency businesses. From 1990 to 2011, with rapid population and economic growth, the supermarket format expanded quickly. The period from 1995 to 2011 is also considered by the industry as the "golden era of Chinese supermarket retail." In an era of supply less than demand, brand owners were also expanding aggressively, building independent distributor systems at the county and city levels. Many distributors followed brand growth, enjoyed the dividends, and quickly expanded in their own cities. Their businesses grew from a few million to tens of millions, and their teams from one or two people to a dozen or more. From 1990 to 2011, these 21 years saw distributors evolve from sedentary merchants to warehousing and distribution providers, then to brand distributors and brand-exclusive distributors. They went from initially providing only warehousing, distribution, and capital advances to later offering frontline market execution services. The starting point and perspective of their business were 100% brand-centric. **This is Stage 1.0.**

**Stage 2.0, we believe, is from 2011 to 2024.** After 2011, online e-commerce began to rise gradually. Meanwhile, offline diversified retail formats began to emerge, including not only large supermarkets and hypermarkets but also premium supermarkets, convenience stores, community fresh food supermarkets, and vertical category specialty stores. Additionally, the growth driven by the demographic dividend disappeared, and some categories entered a stage of stock competition. At that time, some outstanding distributors, in order to continue growing their businesses, began to deepen their category focus and combine dozens of brands. For example, in the snack food category, besides puffed and biscuit foods, they also handled braised products and even bulk foods; in the daily chemical category, besides personal care and shampoo, they also handled oral care and household cleaning categories.

These distributors, guided by category orientation, independently cultivated local markets. From 2011 to 2024, these 13 years saw some distributors move from representing single or a few brands to forming category distributorships with decades of brand combinations. Their businesses grew larger, from a few million to tens of millions, and many even exceeded 100 million. With departments and organizations, teams of dozens of people, they began the rudiments of corporate operation. However, the starting point and perspective of their business remained brand-centric. They sold more of brands with better policies, promoted more of products with higher gross margins, and paid more attention to brands that accounted for larger sales volumes. Through multi-brand combinations and cross-category distribution, they competed for shelf space in retail stores, thereby growing their businesses.

By 2024, I believe many distributors feel that **even if they seize shelf resources and do partial category takeovers with a dozen or so shelves, the input-output ratio seems increasingly smaller, and store business continues to decline.**

Additionally, some supermarket chains are actively undergoing adjustments. Changes in procurement models (direct procurement, naked procurement) mean that distributors not only have to reduce product gross margins but also increase the frequency of category selection updates, such as introducing niche differentiated products and internet-famous cost-effective products. Chain supermarkets are putting forward demands for product selection to distributors, which marks that **distributors are about to enter Stage 3.0, that is, becoming category operators centered on retail and consumers.**

**From a Seller's Market to a Buyer's Market**

The above is a time-based explanation of the evolution of distributors. The essence behind this evolution is the **shift from a seller's market to a buyer's market.** I believe many distributors have heard similar themes at various brand owner meetings: **The market has changed; in an era of supply exceeding demand, the buyer dominates the market. We must be consumer-centric; wherever consumers are, we go!** For distributors, as a link in the industrial chain, amid the tremendous market changes, what should we center on? In the past, distributors were 100% brand-centric, with their business completely dependent on brands. But now, downstream supermarket chains are in a period of deep transformation: optimizing product structures, moving from selling shelf space to selling products, and truly starting from serving surrounding consumers. Product prices are being de-inflated, and shopping experience is emphasized. In the wave of retail transformation, we must actively embrace it. We believe that **in the buyer's market era, future distributors must be store- and consumer-centric, not 100% brand-centric.** This does not mean that brands are unimportant; rather, brands are the core carrier for distributors to achieve business, but in terms of operational expertise or building core competitive advantages, the focus should be on stores and consumers. To facilitate understanding, I have made a comparison specifically, hoping to inspire you.

**Seller's Era: Brand-Centric**

**Task Indicators:** Brand owners treat distributors as deeply bound partners, similar to local sales branch roles, setting sales targets monthly, quarterly, and annually, completing sales, and providing corresponding rebate policies.

**Market Construction:** Product distribution, promotional activity execution, display execution, etc. Distributors need to complete a series of actions required by upstream brand owners, such as item distribution rates and display execution, with the quality of market construction linked to the expense reimbursement ratio.

**Capital Advances:** Pre-expense advances (e.g., promotional expenses for supermarket periods, floor fees, display fees, etc.), followed by post-event checks by brand owners linked to final sales achievement rates, with corresponding reimbursements.

**Buyer's Era: Store- and Customer-Centric**

**Category Portfolio:** Based on the category, understand the latest trends of upstream brands (new products), regularly select products, and update regularly. Provide corresponding category portfolio solutions (brand x packaging x function x price) for different types of stores.

**Retail Operations:** Design corresponding market actions based on different store types (supermarkets/hypermarkets, community convenience stores, etc.), such as product pricing, product promotions, product display and presentation, working with retail stores to attract traffic, sell more, sell at higher prices, and increase category capacity.

**Supply Efficiency:** Optimize product supply chain management, regularly eliminate and introduce category products. Digital operations to reduce costs and increase efficiency. Achieve real-time data sharing and collaborative management across procurement, sales, inventory, finance, and other links.

**Summary**

I have recently been saying a viewpoint that aligns with the above content: **Distributors must shift from the manufacturer's business to the store's business.** In the past, when distributors' businesses declined, they thought about relying on manufacturers to give more policies and more investment, or representing a few more brands. But in the context of industry stock or contraction, there is no incremental growth. Even if they represent a few more brands, volume may increase, but gross profit may not increase or may even decrease.

**Today, distributors cannot rely on upstream manufacturers; they must rely on downstream stores.** Either do category portfolios within existing stores, become category operators, and deeply provide category solutions; or expand store types, do small stores, rely on scale resources, provide full-category portfolio supply, and improve supply chain efficiency. How do distributors do "category operations"? How should "expanding small stores" be implemented?

**From March 17 to 19, the 10th China FMCG Innovation Conference will be held in Chengdu**, and concurrently, the **4th China FMCG Distributor Conference** will be held.

**At that time, we will invite more than ten outstanding distributors from the industry, including cases of deep operations in different categories such as snacks, daily chemicals, and seasonings, as well as benchmarks for transforming to B2b and deeply cultivating small stores, to share how they shifted from the manufacturer's business to the store's business.**

**【New Order · Symbiosis】**

******The 10th China FMCG Innovation Conference**

**Time: March 17-19, 2025**

**Location: Chengdu, China**


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