---
title: "The Return of Secondary Distributors and the Failure of Deep Distribution"
description: "A case study reveals that long-term promotional policies have led to the resurgence of secondary distributors, undermining deep distribution. The article argues that while this shift has some rationale, it signals the need for a new round of deep distribution, possibly through low-cost visit-sales systems."
author: "刘春雄"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-07-01"
language: "en"
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# The Return of Secondary Distributors and the Failure of Deep Distribution

> A case study reveals that long-term promotional policies have led to the resurgence of secondary distributors, undermining deep distribution. The article argues that while this shift has some rationale, it signals the need for a new round of deep distribution, possibly through low-cost visit-sales systems.

**Case Study**
Let me start with a case.
Not long ago, I visited a relative who is an agent for a well-known brand in a county town. On that day, there were 11 delivery trucks, and only 40 orders were completed, but they were all large orders. The salespeople worked very hard; I saw with my own eyes that some didn't return until 10 p.m. After returning, an important task was to sort out the "promotion cards"—there were piles of them, because promotions had become routine. When loading the trucks each day, sometimes there were more promotional items than products.
I was surprised that 11 trucks only resulted in 40 orders a day. Upon further investigation, I found that if the distributor used mobile sales, the average was only 5-6 orders per day.
The main work of distributors now, as one of my group friends, "Pei Ni Kua Jie," put it, is "exhausting all possible channel methods." What do they rack their brains about? In fact, almost all work can be summed up in two words: promotion.
The long-term, high-intensity promotion has led to the return of secondary distributors and the failure of deep distribution.
**Why Have Secondary Distributors Returned?**
In the past, we often said that secondary distributors are "brand killers." They focus on categories rather than brands, using well-known brands to attract customers and generic brands to make profits. Therefore, one important role of deep distribution was to break through the barriers of secondary distributors and reach the end terminals directly.
In the eyes of deep distribution advocates, secondary distributors were opponents, but now they have changed.
I believe there are two factors for the return of secondary distributors:
01
First, it is the result of tiered promotional policies. With tiered policies, the more you purchase, the greater the discount. Those terminals that focus on retail cannot enjoy large tiered discounts, especially small terminals, which may not even reach the lowest tier and are unwilling to purchase without discounts. Secondary distributors share their tiered discounts with small terminals, thus becoming distributors again.
02
Second, the current "secondary distributors" are not the same as before. Originally, they were mostly full-time secondary distributors, mainly earning from wholesale-retail price differences. There were many generic brands in the market, forming a price combination of well-known and generic brands, which overdrew the well-known brands. Therefore, manufacturers hated them.
Now, secondary distributors operate both wholesale and retail, with retail as their main business and wholesale as a sideline. Also, due to the reduction of generic brands, they no longer overdraw well-known brands, no longer disrupt prices, and are no longer hated by manufacturers. Moreover, their distribution function is welcomed by distributors.
From these two perspectives, the return of secondary distributors is not necessarily a bad thing. Some distributors even reasonably utilize them to reduce the number of salespeople.
It may be time to change our prejudice against secondary distributors.
Although we no longer have prejudice, because it is the result of long-term non-tiered promotions, there are still channel problems, especially the decline in terminal distribution coverage.
Manufacturers spend promotional expenses, but terminal distribution declines. Although the return of secondary distributors has some rationality, it may not be sustainable.
**The Failure of Deep Distribution**
In the field of channel sales, before 2003, the basic principle was "sinking the center of gravity," until a distribution system centered on "county agents" was formed. Then deep distribution began, whose essence was to break through the barriers of secondary distributors and reach the end terminals (including small terminals). After 2008, although there was a period of "small terminal promotion," it was not the mainstream.
In terms of time series, deep distribution has been implemented for the longest time and has had the greatest impact.
If the initial deep distribution was to open up channels and achieve terminal distribution, later it became unclear what the purpose was. In fact, deep distribution later became the norm. As a result, costs increased, but sales contribution was not significant.
Because deep distribution later became a chicken rib, when sales peaked and promotional tiered policies brought back secondary distributors, the failure of deep distribution did not attract attention from the marketing community; it happened quietly.
**A New Round of Deep Distribution is Needed**
Let me talk about my relative's case again.
Last year, he was also frustrated by normalized promotions. He maintained sales, but it seemed he suffered losses.
This year, he is doing well, just because he did one thing: launched new products and stopped promoting old ones. Without promotions, profits are guaranteed, as consumers still buy them. New products have high gross margins, so of course they need promotional support, which also brings sales growth. This year, his sales are expected to double, and profits will be good.
2013 is definitely a watershed for Chinese marketing. It was the year when almost all industries reached their sales peak, hitting historical highs.
In 2014, sales began to decline, and companies thought it was abnormal. To maintain sales, almost all companies took promotional measures, resulting in a "double decline" in sales and profits.
In 2015, some companies persisted with the same views and practices as 2014, still experiencing the "double decline." Some companies believed the decline was normal and began to take new measures, namely promoting new products with "mainstream gear shifting."
To launch new products, deep distribution becomes valuable again.
It is difficult to distribute new products through secondary distributors, so deep distribution is needed. In addition, new products should also use internet tools to do KOL, which also requires deep distribution as a prerequisite.
**Low-Cost Deep Distribution**
In the past, deep distribution worked because there was an incremental premise; now it fails because that premise is gone.
Some people see deep distribution as "wasteful and exhausting," relying on a human wave tactic with high costs; in the eyes of the post-90s generation, it is too hard and they are unwilling to do it.
Now, the new type of deep distribution, I believe, is a visit-sales system, which can achieve deep distribution without being too hard or costly. The primary value of a B-end platform is that it is itself a visit-sales system.
The emergence of visit-sales systems may once again threaten the position of secondary distributors.
Traditional deep distribution may have failed, but a new type of deep distribution has begun. The means are different, but the goal is the same.
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**Organization**
1. Company visits
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Participating distributor friends only need to pay a registration fee of 200 yuan. Time: July 9-12, 2016. Location: Changsha, Xiamen.
Interested distributor friends can register by long-pressing the QR code below.
When adding friends, please reply "Third Registration."
**Past Inspection Enterprise Cases:**
**Yishang Logistics Model Inspection**
(Second B-end E-commerce Inspection Group Yishang Logistics)
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**Jinhuobao Model Inspection**
**Beiquan Model On-site Inspection**
**Piduoduo Model On-site Inspection**
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