Click to read the original text for details Recently, I visited a number of large distributors in China and had in-depth exchanges with them. Although their businesses are large and they can promptly perceive market changes and make adaptive adjustments, there are still many limitations. Based on this, I will discuss the development of large distributors, hoping to provide some inspiration and thoughts for distributor bosses and brand owners. What is a large distributor? First, let's define what a large distributor is. Simply put, it means a large sales scale. For example, in a prefecture-level city, a distributor's sales scale can exceed 100 million yuan. Of course, in other categories, such as grain and oil, daily chemicals, annual sales of 200-300 million yuan are very common. Additionally, there are many who achieve over 1 billion yuan through cross-regional operations and agency. These distributors with sales over 100 million yuan share four common characteristics: 1. Large sales volume, often with multi-brand and multi-category operations 2. Strong financial strength, with top-notch human, material, and financial resources 3. Modern governance, with relatively standardized corporate management and organizational structure 4. Business diversification, not satisfied with distribution, attempting to penetrate retail business Frankly speaking, these distributors, after decades of hard work in their respective regions, have achieved an absolute leading position in the regional market, and their professionalism and operational management capabilities are undoubtedly second to none compared to more traditional distributors. But this is not enough! As we all know, the market has changed too fast in the past two years. Community e-commerce, short-video e-commerce, O2O new retail, and new retail formats have emerged one after another, which has had a significant impact on the original retail formats. In the face of these changes, New Distribution predicts the future development of channels: In the future, the distribution agency business will definitely be cross-regional, and distributors that can operate online and offline in an integrated manner will have a competitive advantage in the future era. Perhaps the term "distributor" may also be called operator, marketer, service provider, etc. For the changes in the new environment and market, although large distributors have gained certain competitive advantages and resource advantages through decades of painstaking management, to truly strategize, they must break through their own limitations. The Limitations of Large Distributors What limitations? Generally speaking, they are reflected in two levels: First, the boss personally; second, the organizational team. First, the boss's personal dimension. The first is insufficient ability to accept new things. Whether they started their businesses in the 1990s or the 2000s, large distributors are now gradually entering their sixties. Due to age, their acceptance of new things is very limited. For example, new retail O2O, short-video e-commerce, etc., they may know or understand, but they no longer have the energy to study in depth. At the same time, they do not pay enough attention to and understand technology and models. In the past, the distributor business was a telephone business and a relationship business. However, with the popularization of mobile internet and the application of digital tools, which have gradually become the infrastructure of business, they have not paid attention to it. The maturity of infrastructure such as mobile internet has brought about the replacement of new business models. The drastic changes in the retail format in the past two years are essentially brought about by mobile internet, but now we see that the business model of distributors has basically not changed compared to the past ten years. At most, they have added a DingTalk attendance check and an ERP financial system. Many distributors, after 20-30 years of entrepreneurship, have accumulated initial capital and achieved personal financial freedom, with no worries about food and clothing. Although they still fight on the front line of business, they are still in the conventional work scope, staying in their comfort zone, relatively comfortable, lacking a sense of crisis, and lacking innovation ability. Furthermore, behind the initial capital accumulation of distributors, they actually seized the demographic consumption dividend, and most importantly, the brand dividend. For example, if you were an agent for Arowana around 2000, basically if you had money in your pocket and could get goods from the manufacturer, sales were not a worry. Brand growth naturally means your own business will not be bad. This has led many distributors to rely heavily on upstream brands. If Arowana no longer allows you to be an agent today, your business would drop by more than half, which is highly likely. Therefore, many distributors do not focus their business on category insight or business services, but constantly emphasize the importance of resources: maintaining relationships with upstream brands and key downstream customers. Having resources is a bonus, but it cannot be the foundation for long-term business development. The above are the limitations of the distributor boss personally. Of course, the boss's personal limitations inevitably bring about overall organizational problems. As the saying goes, "What the boss focuses on, employees naturally do." Second, the organizational team dimension. If we look at the organizational structure and division of labor of these large distributors, we will intuitively find that everything is sales-centric, and the importance of sales far exceeds other departments by "three streets." The sales department is divided by category or brand, or by channel type, with multiple branch departments, matching corresponding managers and management positions. Other departments are usually just administration, finance, and logistics. And these two departments often do the most basic work: order entry, invoicing, inbound and outbound inventory, and inventory counting. There are few important positions other than sales, such as operations, procurement, and planning. These positions are often concentrated in the boss. In my opinion, these positions are the most important supporting departments in the new environment. Without a procurement position, it is impossible to promptly find suitable good products based on changes in consumer demand; without a planning position, it is impossible to know how to use what themed activities to attract consumers and promote sales conversion; without an operations position, it is impossible to know what policies to set to counter competitors and seize the boss's wallet. Without these positions, let alone connecting with new retail O2O, community group buying, or short-video e-commerce. The lack of professional and technical talents and the relatively rigid organizational mechanism make it impossible to effectively face the challenges of new retail. Of course, the original organizational team is also older in age structure. It is very difficult for these managers who have followed the distributor for more than ten years and climbed up from frontline sales personnel to continue learning and improving. Because distributor bosses default to the business as a resource business and have achieved absolute local leadership, the overall organizational team lacks innovation and entrepreneurship. Whether it is the boss personally or the organizational team, these problems have not arisen overnight but have gradually accumulated under specific historical and environmental backgrounds. In the past, a channel evolution might take ten years, but now it is one year; in the past, a product might sell for ten years, but now it is half a year. The speed of business change far exceeds the past, so the problems of distributors are gradually exposed. How to Break the Limitations of Large Distributors Facing the above problems, how should large distributors adjust? I think there are three aspects: First, epistemology: increase the source and density of information; Second, methodology: need external professional specific guidance and advice; Third, practice theory: from the business aspect, delegate authority, give support and opportunities for trial and error. Regarding increasing information sources and density, distributors generally have the characteristics of an "information cocoon," with less communication with the outside world. Although they have a very wide social circle, it is limited to upstream and downstream, with limited understanding of diverse information and insufficient perception of new things. Need external professional specific guidance and advice. Some distributors have seen changes in industry trends and have some perception. It is not that they do not want to change, but the core is a lack of methods, and they lack relevant talents and methods for seeking transformation. Seeing more, listening more, and learning more are the most appropriate ways. From August 24 to 26, "New Distribution" will hold the 2021 (4th) China FMCG Conference in Shanghai. During the conference, we have set up 10 themed forums. Topics involve new retail O2O, community group buying, short-video live e-commerce, distributor transformation, the rise of new consumer brands, interpretation of new alcoholic drinks, distribution B2B supply chain, omni-channel marketing, B2B2C new technology applications, etc. For distributor topics, we have invited Mr. Xu Zhaohui, General Manager of Zhongshan Wanrong, P&G's largest distributor in China; Mr. Ma Xuzhong, the largest condiment distributor in southern Zhejiang and northern Fujian; Ms. Yan Lu, General Manager of Tao Daqing, the first distributor to expand warehouse membership supermarkets; Ms. Liu Fen, the post-90s General Manager of Quanjielai Trading, who won the 2020 Mengniu Outstanding Contribution Award for a single brand; and more than 10 outstanding large distributors from across the country to attend the conference together to discuss and share their business transformation paths. See what the industry is changing, see what other excellent distributors are doing and transforming. Although it cannot solve a specific small problem in actual business, it can bring different inspiration and reference for industry trends, retail format changes, consumption changes, and the thinking of excellent distributors. Finally, specifically in business, delegate authority, give support and opportunities for trial and error to young teams. Whether it is second-generation succession or empowerment of young entrepreneurial teams, control at the financial level and empower individuals. Where do young entrepreneurial individuals come from? In the past, the partners of Alibaba Retail Link, the customer managers of JD's Zhanggui Bao, and the current local supervisors or managers of community group buying are all very potential talents, bringing fresh blood to traditional trading businesses. In summary, the core essential problem facing large distributors currently is: insufficient understanding of new technologies, insufficient understanding of social changes, and consequently a lack of methodology. PS: From August 24 to 26, 2021, the 2021 (4th) China FMCG Conference hosted by "New Distribution" will be held in Shanghai. Focusing on industry trends + practical cases + docking growth as the core, 3,000 FMCG practitioners will gather at the event. 10 themed forums involve new retail O2O, community group buying, short-video live e-commerce, distributor transformation, the rise of new consumer brands, interpretation of new alcoholic drinks, distribution B2B supply chain, omni-channel marketing, B2B2C new technology applications, etc. Operators in various sub-fields will bring the latest case interpretations. Some of the heavy guests confirmed so far include: 1. Tao Shiquan, founder of Jiang Xiaobai; 2. Yao Xuhong, General Manager of Meiyijia Holdings Co., Ltd.; 3. Lu Xiuqiong, Global Expert Partner at Bain & Company, former Vice President of Marketing for Coca-Cola China; 4. Chen Xiaodong, Senior Vice President of Nestlé Greater China; 5. Zhang Fujun, President of Lee Kum Kee Sauce Group China; 5. Bi Chaojiao, General Manager of China Resources Snow Breweries (China) Marketing Center; 6. Yang Hongbin, Vice President of Junlebao Dairy Group; 7. Guo Xulin, Assistant to the President of Hema Fresh; 8. Yang Shun, COO of Lipton Greater China; 9. Zhang Yipeng, General Manager of Kuaishou E-commerce SKA Brand Operations Center; 10. Li De, E-commerce General Manager of Gold Hong Ye Paper Group ..... At the conference, you can gain excellent practical cases, make new friends in the industry through exchanges, and expand new industry horizons. 3000+ industry audience, 1500+ brand executives, 1000+ new e-commerce platforms & regional distributor leaders. The latest trends, latest models, and latest business are all here! A grand event for FMCG people, you must be there! Are you "watching" me?