---
title: "The Way Out for Traditional Distributors: Among Three, I Excel!"
description: "The market has changed significantly in recent years, bringing challenges to traditional distributors. Some overreact to new models like B2B platforms and community e-commerce, while others are slow to respond. The author argues that in China's vast market, distributors remain irreplaceable, and the key to growth lies in company-based operations, building strong teams, and expanding from brand-specific to comprehensive distribution."
author: "王军"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-11-15"
language: "en"
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# The Way Out for Traditional Distributors: Among Three, I Excel!

> The market has changed significantly in recent years, bringing challenges to traditional distributors. Some overreact to new models like B2B platforms and community e-commerce, while others are slow to respond. The author argues that in China's vast market, distributors remain irreplaceable, and the key to growth lies in company-based operations, building strong teams, and expanding from brand-specific to comprehensive distribution.

The market has changed significantly in recent years, bringing many challenges and tests to traditional distributors. In the face of change, **some distributors either overreact or are slow to respond.**
Overreacting distributors are pessimistic about new B2B platforms and community e-commerce, feeling as if their future is doomed. Others, without understanding the operational logic of these new models, jump in and suffer losses, becoming even more pessimistic.
The author believes that in such a vast market as China, nothing can replace the role of distributors. First, don't be pessimistic. It's not that you can't embrace new things, but you must first understand their operational logic and build a service system. Avoid constantly chasing "dividends" while neglecting the market foundation you've built, which leads to unsatisfactory results.
There are also slow-reacting distributors who know the market is changing but do nothing. They agonize daily over rising operating costs, intensifying competition, and more complex business formats. **Their instinctive first reaction is: Can we control costs? Cut a salesperson or driver, reduce salary expenses.**
Of course, such distributors also habitually rely on upstream manufacturers, waiting for them to provide policies and support. But in reality, behind these changes, brand owners are often lagging because within large organizational systems, there are vested interests and structural collisions, so even if they see changes, they dare not make major adjustments.
**Whether overreacting or slow to react, both are inadvisable in today's rapidly changing market. What should most distributors do in the face of market changes? Today, let's discuss this topic in depth.**
**Don't Cut Costs, Don't Rely on Manufacturers**
Before proposing specific measures, let's establish three overall directions:
**First, don't think about cutting costs.** Although sales personnel salaries are the largest expense in the business, strictly speaking, there is little room to compress them further.
Salespeople are the core link between distributors and store business. Never skimp on them; in fact, you should strengthen them. A capable team is one of the core competencies of a distributor.
**Second, stop relying on brand awareness improvements and increased manufacturer investment to drive your own business growth as in the past.**
Today's market has entered a state of saturated competition, with strategies tailored to each region and each store. A brand's industry leadership now has minimal impact on continuously increasing regional market share.
Regional market leadership requires localized, meticulous cultivation from a category perspective, with targeted strategies.
**Third, embracing new retail and business formats is fine, but don't neglect your core business.** Your local market is the foundation of a distributor's business. Only when the foundation is solid, with ample energy, talent, and matching resources, can you embrace new opportunities.
Returning to the distributor's own business, long-term development hinges on three factors: **continuously securing quality brand resources upstream, continuously seizing and consolidating customers (stores and consumers) downstream, and continuously improving team building and operational capabilities in the middle.**
Some distributors only focus on terminal customers and their own agency brands. When sales decline, they either blame manufacturers for not being supportive or blame consumers for shopping online, reducing offline capacity. Few distributors think about how to rebuild their advantages from a structural perspective when business in the original track shrinks, essentially "re-doing" their original business.
If you look at it from another dimension, **assume in a regional market or specific channel, among three distributors of the same category, if I do better and stronger than the other two, wouldn't that greatly reduce survival risk?**
Everyone's business is difficult, but when a distributor proactively seeks change and continuously grows, leading other peer distributors, you can "eat" more store business downstream and "eat" brand resources upstream, including market resources from your own agency brands and obtaining agency rights for other quality brands.
**When both business and resources gravitate toward you, the Matthew effect kicks in: other distributors get smaller, while you get bigger.**
**The core of growing your business is: Company-based operations,**
**Building an excellent team, and forming strong combat effectiveness!**
How to grow your business? It's not through passion or momentary enthusiasm. For distributors, the core of growth is company-based operations. What does company-based operations mean? It's definitely not just registering a company.
**Key points: First, a complete organizational structure; second, professionals doing professional work.**
Frankly, looking at FMCG distributors, many haven't done well in keeping up with the times in building "organizational structures."
What is a complete organizational structure? I believe the most basic should include three departments: Channel Department, Marketing Department, and Logistics Department. Next is excellent professional managers.
The Channel Department is divided by channel type: KA Department, Township Terminal Department, and Circulation Channels (small stores, community supermarkets divided by area).
The Marketing Department should include market planning, promotional merchandisers, and a supervision team and a task force. Promotional merchandisers serve the sell-through of core large stores, while the task force serves store-specific promotions and holiday store attacks. Distributors with strong promotional capabilities and the ability to seize downstream resources will naturally be favored by more quality brand owners.
The Logistics Department includes finance, clerks, warehousing, and distribution. It's recommended to introduce professional marketing software, such as Zhoupu, e-Kuaixiao, Guanjiapo, HaiRuan, etc. Once a complete organizational structure is in place, the next step is professionals doing professional work. Those serving large stores and those serving small stores should be separate groups because different channel types require different capabilities.
For example, some salespeople may not be eloquent but are very down-to-earth and reliable. Such salespeople are suitable for small stores; the "old ox" type often does well with small stores.
Some salespeople are articulate, quick-witted, and good at dealing with people, making them suitable for large stores, building good relationships with store managers and supervisors to maximize market resources.
**When different people do different things, after configuration, design corresponding business processes. Large stores have their own processes, visit frequencies, account management, and expense investments; small stores have their own processes, visit frequencies, and expense investments. After designing standard processes and management systems, implement corresponding performance assessments and daily management methods.**
After completing the above professional division of labor and management system setup, you also need to find excellent professional managers. If you can promote from within, great; if not, consider sales managers from manufacturers—those who live locally, work pragmatically, and have drive. At a certain age, they are willing to transition to distributor roles. This way, the overall organizational efficiency of the distributor improves.
**With a complete structure and personnel division, intensify efforts to seize store resources downstream, while distributor owners seize quality brand resources upstream.**
**From Brand Distributor to Comprehensive Distributor**
Operating expenses are the "numerator," and gross profit is the "denominator." You can't just reduce the numerator when the denominator shrinks. Instead, break free from fixed thinking and dare to increase both the numerator and denominator simultaneously to become the strongest local distributor!
If a distributor's business scale is below 50 million yuan and still tied to one brand's chariot, it's very dangerous. The brand's ups and downs affect the distributor's profit and loss, and you can't change that. A more proactive approach is to develop into a comprehensive distributor, especially after making the above arrangements and preparations; good brands may even come to you proactively.
So how to select products?
The author suggests **prioritizing horizontal category extension. Being a category distributor helps comprehensively utilize operating costs and market expenses and better serve stores. Secondly, under the premise of relatively consistent channels and service frequency to stores, appropriately cross categories.**
After all, FMCG is interconnected. Some new consumer brands that better solve consumer pain points and achieve consumption upgrades have great potential. If there's no pressure or risk (avoid brand owners' inventory pushing), and they have good brand building and communication online, you can also boldly try them.
**Summary:**
In the past, many distributors thought their business was too small to support a complete organizational structure and professional division of labor, planning to improve when they got bigger. But they didn't realize that the prerequisite for growing the business is having the organizational structure and professional division of labor first, then the business grows.
**Business growth is the "effect," and organizational building is the "cause." Some distributors always fall into a vicious cycle, reversing cause and effect.**
Finally, two words for distributor friends: The shift of consumption online is a reality, but offline business is still larger. To run your business well, you must seize competitors' share. Since high operating costs are unavoidable, you must improve operational efficiency and win by scaling up, not by blindly cutting costs.
**About the Author:** Wang Jun, formerly held positions as regional, provincial, and large-area manager and headquarters marketing executive at Liby Group and Yihai Kerry Group, with deep understanding of the operational logic of different channels in the Chinese market. Now co-founder of Bingguo Brothers, willing to exchange ideas with industry practitioners for mutual progress. The above article represents only personal views.
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