During a recent visit to a trading company owner, he lamented: "The overall environment is so poor now that many distributors can be said to be operating in a 'suicidal' manner. They know a certain outlet has high fees and long settlement cycles, yet they still supply goods, clearly losing money. It's really about exhausting yourself to leave no room for competitors." Indeed, we have now entered the elimination round for distributors. It's like polar bears hibernating: those with thick fat layers can survive until spring, while those without will gradually be eliminated. This is a manifestation of the cruelty of market competition. I divide the competition among distributors into "internal competition" and "external competition". Let's first look at some common forms of "external competition".

  1. Inventory Pressure Competition: Manufacturers, to meet sales targets, continuously pressure distributors to stock up, requiring them to hoard large inventories. Distributors are forced to accept excessive orders, leading to severe inventory backlog and cash flow difficulties. For example, some liquor and dairy distributors, due to manufacturer pressure, have warehouses full of near-expiry products, significantly extending inventory turnover days.
  2. Credit Sales Competition: To compete for customers and market share, distributors commonly adopt a credit sales model, supplying goods first and collecting payment later. However, terminal customers frequently delay payments, causing slow capital recovery and increased bad debt risk. Many distributors fall into cash flow crises due to uncollectible accounts receivable.
  3. Price Competition: Online e-commerce platforms (such as Pinduoduo and Duoduo Maicai) seize market share through low-price strategies, causing offline distributors' purchase prices to be higher than terminal selling prices, resulting in "price inversion". To maintain sales volume, distributors are forced to lower prices, severely compressing profit margins, even leading to losses.
  4. Distribution Competition: Distributors invest heavily in distribution to expand market coverage, attempting to increase sales by adding more terminal outlets. However, over-distribution leads to market saturation, soaring operational costs, and limited actual sales growth, ultimately falling into the dilemma of "the more you distribute, the more you lose".
  5. Promotion Competition: To stimulate sales, distributors and manufacturers increase promotional efforts, such as discounts, buy-one-get-one, and gifts. However, as promotions become routine, consumer sensitivity decreases, promotional effectiveness wanes, while costs continue to rise, further squeezing profit margins.
  6. Channel Competition: Emerging channels (such as discount supermarkets, instant retail, and community group buying) continuously appear, weakening traditional distributors' channel advantages. To adapt to channel changes, distributors need to invest resources in developing new channels, but the operational models and profit structures of new channels differ significantly from traditional ones, increasing operational difficulty and costs.
  7. Product Selection Competition: In fierce market competition, distributors blindly follow trends by representing popular brands or new products, ignoring the match with their own channels and customer base. This leads to product stagnation and inventory backlog, making poor product selection a significant manifestation of internal competition. Summary: "External competition" is essentially a contest of "fat layers" among distributors. Whoever has a thicker foundation can last longer, outlasting competitors and achieving success. Of course, we also call on distributors to do business rationally, building their "muscle system" while burning fat layers. My view: To win external competition, you must compete internally with yourself. Only by becoming stronger can you survive in an era of shrinking volume. The first step of internal competition: compete in organizational efficiency. Next, let's discuss what different types of distributor organizations need to compete on. Startup Teams: Compete on Time A startup team is formed when a few people come together in the early stages of a distributor's business with a shared belief, which could be short-term profit or a long-term career.
  8. Organizational Model Matching: The belief must be highly recognized internally, serving as the driving force for the project. There are few rules and regulations, and little mature management experience. Driven by this belief, everyone strives with "united force and united interests", pushing the trading company forward. The management characteristics are cohesion and execution.
  9. Organizational Management Recommendations: First, flatten the marketing team to improve cohesion and stability, which is crucial for startups. Second, keep the hierarchy compact to reduce communication costs and enhance flexibility for efficient market operations. Finally, employees are more focused, and labor costs are relatively low, easing the distributor's financial pressure. 3. Organizational Efficiency Improvement Focuses on Competing on Time: The best competitiveness for a startup team is sweat. Only by working harder than others can you survive in today's market. This requires competing on time, completing the following 10 tasks within more time:

  1. What is the total number of terminal customers in circulation business? How many are in special channels and KA? Remove duplicate customers to improve horizontal growth space; this is also an important indicator for staffing.

  2. How many visits per day should sales reps make? How many for special channels?

  3. What is the minimum daily sales volume in pieces? How much has been achieved?

  4. How many orders (number of transactions)? What is the visit-to-sale success rate?

  5. How many SKUs per order (how many items per store)?

  6. Eliminate the phenomenon of 1 SKU per terminal store to improve vertical growth space.

  7. What is the monthly sales target? How much has been cumulatively achieved? What corrective actions will be taken next?

  8. How many exclusive stores have been created? How many key accounts does the salesperson have?

  9. What are the key work priorities for the month? Which have been completed?

  10. Without tracking the process, there will be no results. Achieve daily completion and daily improvement! I have previously proposed two formulas: A. Execution = Knowledge × Attitude × Skills × Tracking and Inspection; B. Performance Capability = Coverage × Familiarity × Customer Relations × Activity. Without sales, there is no profit; without profit, survival is impossible. Basic sales capability is the foundation of distributor development. Regardless of market changes, this must always be prioritized. This is the underlying logic for startup teams competing on time. Developing Teams: Compete on Efficiency A developing team is the standardized, upgraded version of a startup team.

  1. Organizational Model Matching: More suitable for distributors growing as a team. Management characteristics: process-oriented and institutionalized. First, the team size increases as more members join. Second, management levels increase; fully flat management becomes limited, requiring three-level management. Finally, management methods upgrade, requiring process and system support and constraints, elevating gang-style operations to standardized, process-driven, and institutionalized management.
  2. Organizational Management Recommendations: First, management consists of both full-time and part-time managers. Second, increasing management density enhances market control and operational flexibility. Finally, build an integrated system for recruiting, managing, training, and retaining new and old members. 3. Organizational Efficiency Improvement Focuses on Competing on Efficiency: How to improve team work efficiency? I believe the best way is to establish a "foolproof" process system. I often mention this in consulting and training. Why "foolproof"? Currently, frontline staff in FMCG (including salespeople and supervisors) prefer to do more physical "manual labor" rather than sit down and think deeply. This is to adapt to human nature. So, minimizing thinking and following standards is the process system that distributor bosses need to design for frontline workers. Establishing a "foolproof" process system brings multiple benefits: First, ease of operation. It simplifies complex processes into easy-to-follow steps, reducing learning and execution difficulty. This allows new employees to adapt faster and reduces errors. Second, improved efficiency. By simplifying and optimizing process steps, unnecessary links and repetitive work are reduced, enhancing work efficiency. Finally, traceability and data analysis. A "foolproof" process system enables better tracking and recording of process execution and results. Making simple things complex is not a skill; making complex things simple is! This is the underlying logic for developing teams competing on efficiency. Organizational Development: Compete on Benefits An organization, in essence, is a team with corporate culture. When there are many team members, culture is needed for self-regulation. You'll find that the more members, the higher the demand for personalized management; you can't keep increasing reward and punishment systems. Secondly, teams need different types of members, such as the hardworking "old ox" type who are persistent strivers, and the "unkillable cockroach" type who are self-reliant pioneers. These members have different underlying management logics. At this point, the value of corporate culture under a shared understanding plays its greatest role: self-regulation first, then institutional rewards and punishments.
  3. Organizational Model Matching: More suitable for distributors developing organizationally. Management characteristics: endowing corporate culture. First, the team is endowed with corporate culture for self-regulation. Second, it resolves the management challenge of many members with high personalization. Finally, different types of members have different underlying management logics; the value of corporate culture under a shared understanding can maximize its effect, with self-regulation first, then institutional rewards and punishments.
  4. Organizational Management Recommendations: Large and medium-sized trading companies should build matching front-end and middle-office systems, operate systematically, and spread corporate culture through the system. Additionally, strengthen C-end (promotion) organizations to increase consumer brand influence. Possess basic digital management capabilities, especially in first- and second-tier cities, by segmenting regions, establishing offices with independent profit and loss accounting, enhancing organizational efficiency, and expanding economies of scale. 3. Organizational Efficiency Improvement Focuses on Competing on Benefits. I believe the following three things are urgent for distributors: The first is optimizing internal management. For example, reduce communication costs by establishing information-sharing mechanisms to minimize information asymmetry; clarify division of labor to ensure each task has a single responsible person; streamline processes to avoid inefficiency from excessive steps. Also, strengthen financial management by formulating revenue and expenditure budgets broken down quarterly and monthly, controlling credit sales ratios to avoid excessive bad debts. Additionally, standardize warehouse management by reasonably controlling inventory levels to avoid overstocking or stockouts; conduct regular inventory checks to ensure accounts match actuals. These are core elements of internal management optimization. The second is enhancing team effectiveness. Clarify performance indicators, keeping them to 2-3 items focused on key tasks; assess processes in the off-season and results in the peak season, flexibly adjusting assessment priorities. Design incentive mechanisms linking commissions to performance, encouraging employees to promote new product sales. Combine team and individual incentives to enhance team cohesion. Strengthen training and development through morning meetings and daily training to improve employees' professional skills and business capabilities. Encourage employees to share experiences to promote knowledge transfer. The third is deepening channel operations. This mainly includes optimizing channel structure by classifying and grading channel customers, focusing on maintaining core channels. Explore closed channels and cross-industry alliance channels to expand market coverage. Improve channel output by analyzing output ratios and optimizing outlet layout. Establish win-win mechanisms with channel partners, jointly investing resources to enhance channel vitality. Strengthen terminal management by ensuring proper distribution, display, and price maintenance; regularly visit terminals to understand needs, replenish promptly, and improve terminal sell-through capability. Final Thoughts For distributors, competition is inevitable. Everyone needs to survive, but survival resources are limited, making elimination a certainty. For external competition, the core principle is simple: avoid losing money for applause. For internal competition, the core principle is also simple: no matter when or where, cultivate yourself and enhance comprehensive competitiveness. Eventually, you will see the clouds part and the moon shine. Of course, whether it's the pressure of external competition or the cultivation of internal competition, they essentially point to the same issue: the distributor business is being redefined. And this "redefinition" is not an isolated case for one or two companies but a common challenge facing the entire industry. That's why we have decided to hold the "6th China FMCG Distribution and Retail Conference" in March 2026. We hope to bring together distributors, brand owners, and retail peers who are experiencing transitional pains and seeking growth paths for the next stage, to collectively find answers. Here, you will gain:
  • In-depth insights from 200+ industry leaders, interpreting the latest trends in the FMCG industry
  • 200+ brand executives, 300+ retail pioneers, and 800+ top distributors and platform representatives sharing the most authentic market information and cases
  • Comprehensive coverage of new and old channels, including regional B2b platforms, instant retail flash warehouses, discount retail, convenience stores, and overseas markets, to uncover future business opportunities Welcome to join us, along with 3000+ industry partners, to move forward towards the C-end! Scan the QR code to learn more about the conference and seize the opportunity to follow us! Ticket inquiries: Zhuang Jiting