--- title: "The Past and Future of Secondary Distributors: The 'Doomed' Narrative Was a Joke, but Dealers and New Technology Will Defeat Them" description: "This article is excerpted from Mr. Li Zhengquan's new book 'From Trends to Action: The New Business Ecosystem of the Next Decade + Enterprise Transformation and Change', published by CITIC Press, November 2015. The editor made changes during publication. Over a decade ago, we discussed whether secondary distributors would die out amid channel flattening, direct supply to terminals, and direct control. Many believed they were doomed. In the past, the 'secondary distributors are doomed' theory was a joke. Now, it's clear it was a joke! Today, from township markets to county-level and prefecture-level markets, we see secondary distributors thriving like greenhouse chives that never stop growing." author: "李政权" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2015-12-12" language: "en" canonical: "https://xinjignxiao.com/en/articles/the-past-and-future-of-secondary-distributors-the-doomed-narrative-was-a-b2e97d48/" markdown: "https://xinjignxiao.com/en/articles/the-past-and-future-of-secondary-distributors-the-doomed-narrative-was-a-b2e97d48.md" original_source: "https://mp.weixin.qq.com/s/U2KB3BwyhOyD09QqppC2Tw" translation: "https://xinjignxiao.com/zh/articles/%E4%BA%8C%E6%89%B9%E5%95%86%E7%9A%84%E4%BB%8A%E7%94%9F%E6%9D%A5%E4%B8%96-%E5%B0%86%E6%AD%BB-%E8%BF%87%E5%8E%BB%E5%B0%B1%E6%98%AF%E4%B8%AA%E7%AC%91%E8%AF%9D-%E6%9C%AA%E6%9D%A5%E5%8D%B4%E4%BC%9A%E8%A2%AB%E7%BB%8F%E9%94%80%E5%95%86%E5%92%8C%E6%96%B0%E6%8A%80%E6%9C%AF%E6%89%93%E8%B6%B4-b2e97d48.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/the-past-and-future-of-secondary-distributors-the-doomed-narrative-was-a-b2e97d48/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # The Past and Future of Secondary Distributors: The 'Doomed' Narrative Was a Joke, but Dealers and New Technology Will Defeat Them > This article is excerpted from Mr. Li Zhengquan's new book 'From Trends to Action: The New Business Ecosystem of the Next Decade + Enterprise Transformation and Change', published by CITIC Press, November 2015. The editor made changes during publication. Over a decade ago, we discussed whether secondary distributors would die out amid channel flattening, direct supply to terminals, and direct control. Many believed they were doomed. In the past, the 'secondary distributors are doomed' theory was a joke. Now, it's clear it was a joke! Today, from township markets to county-level and prefecture-level markets, we see secondary distributors thriving like greenhouse chives that never stop growing. **This article is excerpted from Mr. Li Zhengquan's new book 'From Trends to Action: The New Business Ecosystem of the Next Decade + Enterprise Transformation and Change', published by CITIC Press, November 2015. The editor made changes during publication.** Over a decade ago, we discussed whether secondary distributors would die out amid the waves of channel flattening, direct supply to terminals, and direct control. A considerable number of people believed that secondary distributors were doomed. **Past: The 'Secondary Distributors Are Doomed' Theory Was a Joke** Now, it's clear that was a joke! Today, from township markets to county-level markets, prefecture-level markets, and central city markets, we have witnessed secondary distributors thriving like greenhouse chives that never stop growing—even for exemplary companies that pioneered channel refinement, such as Master Kong, where secondary distributor sales account for over 30% in many markets. Of course, over these years, some changes have occurred in the secondary distributor segment, such as many secondary distributors moving from one location to another due to urban relocation of wholesale markets; and secondary distributors 'disappearing' from the channel design and value distribution chains of companies pursuing channel flattening. But the existing facts clearly tell us that secondary distributors will not disappear just because companies want to flatten channels, because we don't consider them when designing channel chains, because we don't set corresponding secondary distributor prices for this segment, or because we prefer terminal-type dealers with sales teams and networks. **Future: What Can Defeat Secondary Distributors Are Dealers and New Technology** Whether or not you consider the secondary distributor segment when designing price difference profit systems for each channel link, secondary distributors will not be blocked or defeated by manufacturers. In my view, the ones truly capable of defeating secondary distributors are dealers and new technology! Li Zhengquan recently met a dealer from Sichuan who believed that 'truly excellent dealers will not allow secondary distributors to exist.' Based on this philosophy, his company, before each vehicle sales trip to rural areas, calls his former secondary distributors: 'Boss XX, I have a vehicle going to the countryside today, the route is... There are still some spots on the vehicle. Do you have any customers that need deliveries? We'll help you deliver for free.' Through this free delivery service penetration method, they grasp the outlets that secondary distributors serve, and through continuous follow-up services, they gradually dismantle the secondary distributors' channel system. I have every reason to believe that as more companies require their dealers to have sales teams, vehicles and warehousing that match order fulfillment, and the ability to achieve small-area channel refinement, and as dealers themselves desire control over terminal resources and look forward to low thresholds, short or no credit periods, and fast cash flow for C and D class stores, they will increasingly become the kind of dealer described above. It's just that due to unstable regional price systems, or because they haven't found the right ways and means, they are willing but unable, and haven't acted yet. Another factor that will make secondary distributors who simply buy, sell, and speculate on goods have no place to exist is the application of new technology. Most secondary distributors exist on the information asymmetry of price differences. In some companies' sales activities, a large amount of channel promotions and terminal expenses are intended for terminal distribution and sell-through, but these policies and expenses are not truly implemented during execution. Instead, they are embedded into prices by dealers and simply passed on to secondary distributors. But now, this space is facing extinction. Because information about our channel promotions, promotional items, etc., can be sent via a text message, a WeChat message, or even a voice message, allowing all registered terminals with phone numbers to know within minutes. The gradual demolition of the mountain of information asymmetry will inevitably compress the space for secondary distributors. Of course, the breadth, depth, and differentiation of the Chinese market, as well as the different situations of various companies and their dealer groups, also affect the status of secondary distributor systems in each company and its channel system. A complete collapse is nothing but a pipe dream! However, a terrible future is indeed waiting for secondary distributors. As Li Zhengquan described in the previous chapter of 'From Trends to Action: The New Business Ecosystem of the Next Decade + Enterprise Transformation and Change', 'It is not difficult or distant for terminals to place orders directly with companies via the internet.' In such a world, there is no need for so many dealers, nor so many secondary distributors, and even offline physical terminal stores will not be needed in such numbers. **_Reprint note:_** Source: WeChat public account Business Trends (ID: lizhengquan02). This article is excerpted from Mr. Li Zhengquan's new book 'From Trends to Action: The New Business Ecosystem of the Next Decade + Enterprise Transformation and Change', published by CITIC Press. The editor made changes during publication; this is not the complete chapter. Click **↓↓↓** '**Read Original**' to learn more about the future of business and order 'From Trends to Action'. Statement: This article has been authorized for publication by the author. For reprints, please contact the author. **-END-** The best learning platform for FMCG dealers in China Dedicated to providing professional, practical, and actionable tutorials for companies and dealers Committed to helping Chinese FMCG dealers grow rapidly Reply with number **'1'** to view 1067 articles essential for dealers Including 14 categories and 57 knowledge points From manufacturers to customers / practical and management All are dry goods If you haven't followed yet, please long-press the QR code below Project consultation | Promotion cooperation Please call Click: **Read Original to join the group** --- ## Copyright and AI use This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL. Contact: zhaobo258@gmail.com · +86 158 5481 7671