---
title: "Three Years of Pandemic: Distributors in Deep Water"
description: "The article reviews the challenges FMCG distributors faced during three years of the pandemic, including two waves of bankruptcies in 2020, the impact of community group buying in 2021, and the deepening consumption downturn in 2022. It highlights successful cases and emphasizes the importance of continuous learning and exchange for business growth."
author: "高级研究员 海游"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-06-29"
language: "en"
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# Three Years of Pandemic: Distributors in Deep Water

> The article reviews the challenges FMCG distributors faced during three years of the pandemic, including two waves of bankruptcies in 2020, the impact of community group buying in 2021, and the deepening consumption downturn in 2022. It highlights successful cases and emphasizes the importance of continuous learning and exchange for business growth.

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The world changes too fast, with increasing uncertainties. Many people have shifted from 'predicting the future' to 'seizing certainty'; from 'innovation' to 'conservatism', wave after wave of change. In my view, **no matter the industry, continuous exchange and learning are the unchanging truths that drive business growth. All losses are payment for cognition, and all fears stem from insufficient cognition.**
Today, let's review the dire straits of FMCG distributors over the past three years and the breakthrough paths of outstanding distributors.
**1**
**In the first year of the pandemic, there were two waves of distributor bankruptcies**
The pandemic broke out in 2020. Essentially, before the outbreak, the demographic dividend in the FMCG industry had basically ended, and the market shifted from incremental competition to stock competition. Jinmailang's 'Four-in-One' strategy, with its 'squeeze-style' strong competitiveness, showed FMCG players the essence and hope of competition, attracting many manufacturers to pursue offline layout.
However, the pandemic disrupted this offline layout. Under the nationwide united fight against the pandemic, cities were sealed off and roads closed for 3-6 months, bringing offline operations to a standstill. At that time, the most common phrase among distributors was 'how to ensure cash flow to survive the pandemic.' But there were still two waves of distributor bankruptcies.
The first wave of distributors who fell were mostly those heavily invested in the Spring Festival season: dairy distributors, gift box distributors, and other New Year goods distributors. Those who acted quickly had stocked shelves before the Spring Festival, but short-shelf-life products expired at retail points; those who acted slowly hadn't distributed goods before the festival, waiting for the first month of the lunar year to visit relatives and stock up, but short-shelf-life products expired in warehouses.
Due to nationwide lockdowns, except for a few top industry brands that spoke up to share some distributor losses, most brands chose to remain silent, and many distributors went bankrupt as a result.
The second wave of distributors who fell were mostly at times when consumption inertia stalled. The pandemic came suddenly; at that time, no one thought COVID-19 would coexist with us long-term, nor that it would so comprehensively affect our market ecosystem.
People didn't take the pandemic seriously enough. Due to consumption inertia, people continued eating and drinking as usual. But by the end of the year, they gradually realized the pandemic was far more serious than imagined, impacting their income. 'Mortgage slaves' felt immense pressure, consumption began to contract, distributors' high-volume products stopped making money, and high-margin products suddenly became unsellable. Some distributors with thin financial reserves faced cash flow breaks and began to go bankrupt or exit the FMCG industry.
**【Outstanding Distributor Case 1】A third-tier dairy distributor self-rescued by clearing inventory during the 2020 Spring Festival**
Background: This distributor relied mainly on the Mid-Autumn Festival and Spring Festival for profits, with Spring Festival accounting for 70%. Before the 2020 Spring Festival, they had stocked about 800,000 yuan worth of goods; after the festival, warehouse inventory was about 400,000 yuan. The manufacturer-distributor model was basically distributor-led operations with bare-price transactions; the brand would not and could not bear losses. With pandemic lockdowns, if they didn't clear inventory promptly, they would inevitably go bankrupt.
I remember on the third day of the Lunar New Year, this distributor called me. He sensed that after the lockdown, the return wave could be terrifyingly large. What to do? We communicated for a long time; I won't detail the process, but the action plan was as follows:
1. Team principle: Don't harbor侥幸心理 (wishful thinking), don't entertain illusions, face the problem head-on: products have shelf lives; those who act first can escape, those who lag will be trapped. This principle must be clear.
2. Try to rely on the brand, but don't just depend on it: The brand surely had reserved market promotion funds for the Spring Festival sales period. Though not much, if focused, it could solve some customers' urgent needs. After all, the early bird catches the worm; it depends on how you communicate.
3. Self-reliance is always the key work:
a. Visit key terminal customers to see if there's a chance to use relationships and property management connections to push New Year goods to community entrances for special sales (at that time, prevention measures allowed one person per household to go out for one hour to shop);
b. Many customers in the market couldn't move their products, so recall them as soon as possible. At this point, sooner is better than later (during the pandemic, there was a window period: after a lockdown, there was a sudden relaxation for about a week);
c. Street-side clearance to attract group buying: extraordinary times call for extraordinary measures. Set up a ground stack at the storefront (though few people, not none), to build brand and sales;
d. Break into smaller units, bundle sales: open boxes and sell individual bottles, put on shelves, make displays, bundle two or more for special prices, or 'bundle' with popular products in the market;
e. Online sales, embrace community group buying;
f. Leverage organizational relationships to implement group buying;
g. Cross-industry combinations, joint promotions;
h. Annual planning, product exchanges.
4. Prepare for the best, plan for the worst: If inventory cannot be cleared and piles up in the warehouse, how to ensure normal cash flow and post-festival operations? Plan early to avoid being caught off guard.
Result: We planned many options; some were used, some not. To put it bluntly, we did our best and left the rest to fate, but the final result was relatively satisfactory. Although there were losses, they were bearable, and we survived.
Summary: If this distributor had sat idle, what would have happened? Natural disasters are accompanied by man-made disasters. **When times are tough, distributors should get out, communicate more, and learn from each other.** Often, an offhand remark from someone else can be your lifeline.
**2**
**In the second year of the pandemic, distributors were tormented by community group buying and economic downturn, and another batch fell**
In 2021, driven by the pandemic, home delivery services and community group buying developed rapidly. On one hand, due to economic downturn, consumers wanted to buy more affordable products. At this time, capital teams began burning large amounts of money in the community group buying track, engaging in vicious competition. Many consumers could buy products at prices even lower than distributors' purchase prices.
On the other hand, lockdowns restricted people's freedom. Many received community notices like 'The community is sealed; each household can have one person go out for one hour during a specified time to buy daily necessities.' What can you do in such a short time? It forced people to buy on community group buying platforms, with pickup the next day.
It takes 21 days to form a habit. With lockdowns lasting one to two months and 'affordable' prices, even after lockdowns ended, the habit of group buying remained strong.
In 2021, the darkest moments were April and May. Distributors clearly felt that sending out so many vehicles to sell goods daily didn't even cover fuel costs. After several months without breakthroughs, some distributors began laying off staff, moving to smaller warehouses, cutting unprofitable brands, and even selling delivery vans.
I remember writing an article trying to guide distributors to正视 (face squarely) the value of community group buying. The feedback was extremely polarized. Those with a positive attitude believed: 'What exists is reasonable.' Community group buying was the trend at the time; distributors couldn't block it like a mantis trying to stop a chariot. Even if they didn't embrace it, they shouldn't reject it. They should understand it deeply, and even if not participating in cooperation, they should 'fleece some wool' (take advantage).
Those with a negative attitude believed: Community group buying was killing the livelihoods of hardworking distributor teams, which was intolerable. They hoped relevant government departments would intervene, complained about social injustice, blamed brand mismanagement, and accused competitors of being unscrupulous, but never blamed their own lack of strength or learning ability.
Then these negative people had no 'then.' At this time, a saying emerged: 'In 2021, if distributors can survive, that's the greatest victory.'
**【Outstanding Distributor Case 2】A distributor's love-hate relationship with community group buying**
Background: In July 2021, this distributor's products were severely impacted by community group buying. Team morale was low, and they were losing nearly 3,000 yuan per day. Under multiple pressures—full warehouses, brand pressure, and payroll—they were on the brink of bankruptcy.
At that time, 'New Distribution' had many reports on community group buying. After reading them, this distributor was deeply moved and sent me a WeChat message to chat (I had also published many articles on community group buying at New Distribution).
My suggestions were:
1. Don't stay away because you hate it; first understand its principles. Tell your team: if you can't change it, accept it.
2. Only by benefiting first can you have motivation. Learn to 'fleece wool' first (I taught him several specific methods).
3. When the wool is good, stop and seek cooperation. Visit and consult community group buying professionals.
4. Choose a local platform you think is the best and a product you think is reliable to establish cooperation.
5. Press the advantage, continue to expand scale, and strive to become a regional top TP (Trading Partner) operator.
6. Remember, **if you can't stop change, adapt to it.** Don't always put yourself in the victim's shoes.
Result: Six months later, community group buying accounted for about 40% of his business. Even for some long-shelf-life products, he turned community group buying into a 'drainage channel' (a way to clear inventory). He even shared his experience on stage for other distributors.
Summary: Last year, many distributors hated community group buying to the bone. But hate is hate, complaints are complaints; they still confined themselves, and besides their own pain and venting, it did no good.
**For new things, even if we can't embrace them immediately, we shouldn't reject them. We should communicate and learn more.** Opportunities are equal for everyone, but results can be vastly different.
**3**
**In the third year of the pandemic, the impact on consumption worsened; distributors who don't change their thinking will continue to be eliminated**
2022 is another extremely special year.
Since mid-March, the pandemic has again ravaged various places, affecting nearly 30 provinces. From Shenzhen and Guangzhou to Jilin and Shanghai, and now to Beijing and Zhengzhou, sporadic outbreaks have disrupted normal operations in many regions.
The macroeconomic data since April has been nothing to cheer about. Total retail sales of consumer goods fell 11.1%, and the industrial and commercial activity index hit a new low; foreign trade is sluggish, domestic sales are also hindered, a large number of self-employed individuals and small businesses are struggling, and the employment rate for college graduates is currently less than 20%.
In such an environment of pandemic normalization, distributors' businesses are facing severe tests. Market obstruction, declining sales, inventory backlog—a series of problems need urgent solutions. After communicating with many distributors, I've summarized a few points:
1. Overall demand hasn't changed much, but consumption downgrading has occurred, and growth logic has changed:
a. Re-examine 'selling more' vs. 'selling at higher prices'?
b. Young people's consumption concepts are changing; distributors must keep up with the situation.
c. At the brand level, it's necessary to connect and establish a drainage channel system for bulk products.
2. Multi-scenario and multi-channel efforts are better than standing still:
a. Multi-scenario customer acquisition and multi-channel selling should be immediately elevated to corporate strategy.
b. Exploration is better than standing still; executives should activate exploratory thinking.
Summary: When distributors hit bottlenecks in growth and profits, opportunities are not to the left, right, front, or back, but above. How to reach above? **The simplest and most direct way is to exchange and learn—communicate with peers, experts, and those you think are better than you.** Perhaps the tomorrow you plan is the today or yesterday of outstanding distributors.
**From July 20 to July 22, the 2022 (7th) China FMCG Channel Innovation Conference will officially launch in Chengdu**, themed 'Seize Opportunities, Stabilize the Market.' It invites the most influential frontline entrepreneurs and executives in China's FMCG industry to discuss new concepts, models, tactics, and opportunities under industry challenges. For distributors, this is an excellent opportunity for learning and exchange—don't miss it!


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