---
title: "The Historical Mission of Distributors Has Changed!"
description: "Serve your customers well and secure channel resources; if you have sales volume, brands will naturally cooperate with you. Over the past few years, New Distribution has repeatedly said that 90% of distributors will be eliminated in the future, and that distributors need to transform and change. But how exactly? Recently, we visited a group of distributors. Their market environments, product categories, and operational models differ, but after talking with them, I clearly felt they share a huge commonality. This commonality is unrelated to personal traits or management styles; it is only related to one question: the future of the distribution business."
author: "任文青Andy"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-12-24"
language: "en"
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---

# The Historical Mission of Distributors Has Changed!

> Serve your customers well and secure channel resources; if you have sales volume, brands will naturally cooperate with you. Over the past few years, New Distribution has repeatedly said that 90% of distributors will be eliminated in the future, and that distributors need to transform and change. But how exactly? Recently, we visited a group of distributors. Their market environments, product categories, and operational models differ, but after talking with them, I clearly felt they share a huge commonality. This commonality is unrelated to personal traits or management styles; it is only related to one question: the future of the distribution business.

**Introduction: Serve your customers well and secure channel resources; if you have sales volume, brands will naturally cooperate with you.**

Over the past few years, New Distribution has repeatedly said that 90% of distributors will be eliminated in the future, and that distributors need to transform and change. But how exactly? Recently, we visited a group of distributors. Their market environments, product categories, and operational models differ, but after talking with them, I clearly felt they share a huge commonality. This commonality is unrelated to personal traits or management styles; it is only related to one question: where is the future of the distribution business? They are answering this question with practice, and the answer is quite consistent—meet customer needs and serve your customers well! You might say, serve customers well? That's obvious and taken for granted; why do you need to say it? Yes, in other industries that's true, but for the distributor community, it's not so obvious. Today I plan to share my thoughts with you in one article. Read it patiently, and I believe you will have a new understanding of the distribution business and the industry! Where to start? Let's start with three simple questions.

#### **Who are you actually serving?**

#### **What value do you provide to customers?**

**Question 2: What value do you provide to customers?** The distribution industry is accelerating consolidation. Mr. Zhang told me that in a local chain store, about ten years ago, there were about a dozen distributors supplying the same category, but now only three or four remain. Mr. Zhang is not only still among them, but his customer base is also growing. Currently, he supplies daily chemical products to over 100 stores locally. How did he do it? Other distributors only distribute for brands, but you can select products based on customer needs, build a strong merchandising team for promotion, and give customers more profit margin. **Customers want products that sell well, sales volume, and profit. If others can't do it but you can, the business naturally comes to you.** I saw the same logic with Mr. Sun. His B2b platform currently covers over 1,300 stores, mostly supermarkets of 300-500 square meters, and the number is growing rapidly, many of which come to him proactively. Moreover, customers have no credit period with Mr. Sun; they pay before delivery, which is unimaginable in traditional distribution. Is it because of low prices? No, Mr. Sun said, prices definitely have advantages, but we don't win by low prices. The platform has 3,000 SKUs, with one-click ordering and 12-hour delivery; customers can buy new products they want on the platform; any issue can be quickly resolved. **We always think customers want the lowest price, but in fact they want the lowest cost—communication cost, selection cost, comparison cost, after-sales service cost—these are all costs. Serving customers well means giving them the lowest cost.** If you work hard on this and do better than other distributors, brands will naturally come to you. If you think distributors are just sellers, taking orders, delivering, and providing after-sales service, that's all you provide. This is still the brand distribution perspective. You should know that the era of getting brand agency rights and making money by placing products on shelves is over. Consumer choices are diversified, and consumption demands are personalized; no brand is irreplaceable! So, what value do you provide to customers? It must be from the customer's standpoint. **Serve your customers well and secure channel resources; if you have sales volume, brands will naturally cooperate with you. Conversely, even if you have agency rights, you will eventually lose them.**

#### **Why you?**

After discussing the first two questions, let's look at the last one: **Why you?** The above two questions **relate to both mindset change and action capability**. In fact, few distributors do well, but they do represent the evolutionary direction of the distributor community. So what makes them different? The last question actually asks which type of distributor can seize this opportunity. Here are three important factors. **First, deep thinking and rapid learning.** In interviews with excellent distributors, I often ask: What made you start such a change? The answers are basically the same—they love thinking and learning. Recently, distributors who built their own B2b platforms frequently mentioned that it was because they attended New Distribution's conferences and study tours that they started paying attention and finally took this path. We often say that the boss's cognition determines the company's ceiling. Where does cognition come from? **Go out, see how others do it, think deeply, and learn actively. The boss must have strong thinking and learning abilities; this is the first priority.** **Second, distribute profits well and calculate accounts well.** The boss has cognition, but the team must execute. How to unite the team and make everyone work together? Two points are important: **distribute profits well and calculate accounts well.** If you feed grass, you keep sheep; if you feed meat, you keep wolves. Set competitive compensation for the team, make incentives predictable and feedback-driven, and truly capable people will be selected. This is distributing profits well, but its premise is calculating accounts well. What does that mean? In the distribution industry, gross margins are limited, and profits are squeezed out, so controlling costs and expenses is crucial. What are your inventory turnover and cash conversion cycles? How to maximize capital efficiency? Where are the problems? Where can optimization be done? A boss who doesn't understand finance has no idea of the stakes! **Finance is the language of business. If you don't understand this language, how can you do business well?** So, specific tasks can be delegated, but the boss must understand financial statements and have financial thinking. **Third, apply digital tools to improve efficiency.** The ultimate competition in business is efficiency. Where does efficiency come from? Tools. In traditional distribution, handling a few or a dozen brands is already a lot. But distributors who build their own B2b platforms can directly connect to thousands or even tens of thousands of terminals, centralize demand through scale coverage, and then establish business relationships with more upstream manufacturers, helping hundreds of brands complete large-scale distribution of thousands of SKUs. **Efficiency advantage → profit → better service → scale advantage—further reducing costs**, this is a positive feedback system. Tools are leverage, and digital tools are the strongest leverage today. The efficiency advantage of digital distribution will be overwhelming to traditional distribution.

#### **In conclusion:**


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