The Era of Distributors Is Not Over, but the Distributor Mindset Must Change

When we walk into the market and chat with distributor friends, many of them will respond that business is getting harder and harder to do. Pressures from sales, capital, warehousing, personnel, terminals, channel costs, and even the internet are increasing and growing, and many distributors even feel a bit breathless.

A common question distributors ask is: "Is the era of distributors about to end?" In fact, although the entire Chinese economy is facing transformation and upgrading, it has not yet reached the point where the distributor era ends. The channel model operated by intermediaries may still have further room for development and will not easily come to an end. However, for traditional distributors, if they cannot change their mindset, it is highly likely that their own companies will reach the end. Therefore, distributor friends must have a sense of urgency and prepare for transformation and upgrading.

Distributors need to adjust their positioning

Distributors have always been a special type of business entity. They achieve profitability by selling products from different companies to sub-distributors or retail terminals. This has formed a fixed mindset in the minds of traditional distributors: they are the best maintainers of channel relationships, and through these relationships they control a portion of channel resources to achieve distribution and profit. Obviously, if distributors still hold such a concept, they may be in danger.

Therefore, distributors need to adjust their positioning, shifting from the traditional intermediary role to a channel value creator. Traditionally, we generally believed that distributors achieve profitability by selling or leasing channel resources. After marketing entered the era of Marketing 3.0, the transmission and realization of channel value have become higher requirements that enterprises place on distributors, and the value created by distributors through channel operations is precisely the source of their profitability. Although the channel resources controlled by distributors remain important, how to operate products and brands through these channel resources to create value is a question distributors must seriously consider.

Based on this positioning adjustment, the introduction of resources from the upstream and downstream industry chain, as well as the level of integrated channel resource operations, have become standards for measuring distributor capabilities and profitability. Whether a distributor can gain the favor of companies or products with good market prospects will largely depend on the series of adjustments starting from positioning and the effects brought by those adjustments.

Distributors should build their own commercial brands with brand power

Currently, very few distributors have their own brands. Many distributors, although they have transitioned from individual businesses to limited companies, still lack their own brands due to deep-rooted traditional business concepts. Even if some distributors claim to have their own brands, upon closer inquiry, it turns out they are OEM products created through commissioned processing, and the distributor as a limited liability company has no brand. Clearly, this situation needs to be changed. Many distributors have already realized this problem, or distributors in certain industries are beginning to realize it, and the construction and development of distributor-owned brands have been put on the agenda.

Since retail terminals like Carrefour, Walmart, RT-Mart, and Wumart were able to create commercial brands with strong brand power years ago, why can't distributors create their own commercial brands? At that time, everyone focused on the development and utilization of channel resources, neglecting the construction of distributor brands. Now, the professional capabilities required of distributors as professional marketing execution agencies are increasingly strong, and many distributors have formed their own unique distribution models and business approaches. Creating a brand to carry the professional skills of distributors seems imperative.

Distributors need to create marketing management models

Distributors are not commercial entities that buy low and sell high to earn price differences, but rather creators of channel value, thereby maximizing their own value. Therefore, distributors need to create their own marketing management models to provide good marketing guarantees for the connection of upstream and downstream enterprises in the channel.

Successful distributors with brands all have their own unique marketing management models. This marketing management model is the distributor's "secret recipe," their core competency, and their magic weapon for profit. As the saying goes, "Nothing can be accomplished without norms or standards." For distributors, the determination of a marketing management model means the establishment of channel construction, product mix, marketing system structure, organizational operation processes, etc. This is a process of trade-offs and also a reference standard for distributors when facing numerous products and deciding whether to choose them. Without such a marketing management model, distributors are easily confused when facing many temptations. They want to do whatever makes money, and in the end, they deviate from their main business and development direction, "picking up sesame seeds and losing the watermelon," making it difficult to build their own advantages on the path of specialization, failing to attract the attention of excellent companies, and thus losing the opportunity to become large and strong.

Distributors should shift from control to service

Traditionally, the reason an enterprise needs distributors is to leverage their network channels to achieve rapid distribution. A strong distributor can quickly place products in any channel within their territory, achieving the goal of meeting consumers and realizing sales potential. To become strong, a distributor must possess this core competitiveness, which is the ability to control channel members at the terminal. For the distributor group, compared with enterprises, they are at a disadvantage in terms of capital strength, personnel, and other aspects, but in terms of timing, location, and harmony, distributors undoubtedly have more advantages. This is also where distributors can easily build their core capabilities. To achieve this, distributors need to ensure that their channel members can make a profit, and through service to channel members, they can free them from worries, gaining their trust and support. Only then can distributors have the capital to cooperate long-term with excellent enterprises and strengthen themselves.

Modern enterprises require distributors to shift from a resource control concept to a service concept, because controlling resources cannot create value, while service can create added value. The resource control stage was the root cause of price wars and promotion wars in the past. The service concept can effectively avoid price wars and promotion wars, and can also prevent other channel interest temptations from seizing channel resources. The core competitiveness of modern distributors has quietly changed, with the most important being the change in the function of distributors as intermediaries in commodity circulation. The service function in the channel chain has replaced the traditional distribution function, and can help upstream and downstream enterprises create service value to best serve final consumers.

Compared with traditional distributors, modern distributors are clearly distinguished by positioning, brand, and service. Upstream enterprises have basically completed the transformation from extensive management to precise operation. At this time, when enterprises seek distributors, they have put forward stricter standards: having a clear positioning, being a strong professional marketing execution agency with a brand, and providing strong channel service capabilities have become three very important criteria for selecting distributors.

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