Over the past three months, I visited markets in Sichuan, Hainan, and Shaanxi, and what I saw was not a 'decline' but a cliff-like 'plunge.' Since August, the sales scale of numerous distributors has suddenly dropped by 30% or even more than 50%. Many who were barely holding on with thin margins and high pressure have now stepped into losses. You ask why? The consumption environment and weather certainly have an impact, but they cannot explain the speed and magnitude of this collective collapse. The real turning point is that the retail channel suddenly underwent drastic transformation after August, and this transformation directly targets distributors' livelihoods. In a word: it's not that distributor bosses aren't working hard, but that the traditional retail soil they rely on for survival is rapidly collapsing.
Three Major Impacts Are Crushing Distributors' Existing Business
First Impact: Snack discount stores open on a street, and that street collapses. Many people haven't realized that the impact of snack discount stores on traditional stores is not just stealing some business, but structural substitution. When you see a Zhaoyiming or Snack Preferred on a street, don't think it's just a new store. You'll soon see five or six more popping up together. And then? The sales of traditional small stores on that street will plummet like an avalanche. Market data from a first-tier brand in Xi'an is striking: in just one or two years, the sales share of snack discount channels surged from 0 to 30%. But this 30% volume basically doesn't go through distributors—supply has largely shifted to direct factory operations. For distributors, this is not being diverted; it's being bypassed and completely replaced. Your coverage, display, promotions, and customer relationships become ineffective overnight. Because the consumer's purchase entry point is no longer in the network you've laid out.
Second Impact: The instant retail war is directly siphoning a large number of orders away from you. Starting in August, Meituan Flash Purchase, Taobao Flash Purchase, and JD Seconds Delivery launched an all-out war. The model is simple: online ordering + offline fast delivery, using warehouse stores/flash warehouses to directly absorb retail orders. What's more deadly is subsidies: 0-yuan purchases and 1-cent purchases are bombarding consumers like bombs, causing order volumes to multiply and warehouse store numbers to surge. The essence of this battle is moving the 'shelf' into the phone, changing in-store purchases to home delivery. As a result, the distributor's system centered on distribution efficiency, terminal coverage, and personnel visits is instantly rendered obsolete. No matter how diligently you visit stores, stock shelves, or push inventory, you can't keep up with the demand curve that is shifting online and to warehouse stores.
Third Impact: The price system is broken through by new business formats, and traditional terminals can't hold on. The biggest weapon of discount stores and instant retail is not having many stores, but the continuous low-price impact. What's the result? The two foundations of traditional retail are loosening simultaneously:
- Traditional KA traffic and sales have declined by nearly 50%;
- Traditional small stores are caught between discount stores and flash warehouses, with even more exaggerated declines—many stores have dropped 70%: originally selling over 2,000 yuan a day, now only 500 yuan. When terminals themselves can't survive, what business structure optimization can distributors talk about? If terminals are unstable, the distribution system is a castle in the air.
What is the core function of traditional distributors? Distribution + coverage. But today, small stores are ebbing, KA is shrinking, and new retail is bypassing you. This means: the traditional business of distributors will become increasingly unsustainable, and irreversibly so. An increasingly clear trend is that the distributor group will inevitably shrink significantly. After the Spring Festival (2026 Spring Festival) will be a cruel juncture: many distributors will go from thin profits to losses, cash flow will break, and they will exit the market. What you should ask now is not how to survive, but: what kind of distributor can still survive in the future?
Distributors Being Validated
Three Survival Paths
I won't talk about vague transformation or directions; I'll talk about actions. I'll only talk about the real paths we've seen and are happening.
Path 1: 'Radical surgery' optimization of existing business—first save yourself. A certain super-large liquor distributor, with annual scale of 700 million yuan and over 600 people, mainly dealing in famous liquor + mass liquor + beverages, also suffered losses this year. Its approach is 'ruthless' but effective: Bring in external shareholders: exchange first-tier brand resources for equity, changing the boss from 'carrying the burden alone' to 'fighting as a group.' Internal entrepreneurship for loss-making teams: for brand businesses with scale, let core backbone start businesses, with the company bearing part of the inventory pressure, transforming the 'payroll team' into 'distribution partners.' Cut brands that have neither today nor tomorrow: keep those that are 'difficult today but promising tomorrow,' and clear out the rest. Resolutely reduce inventory and throw off burdens: reject the 'emotional ties, policy temptations, and distribution authority pressure' tricks, and return to real business needs. Outsource non-core functions to professionals: the 30,000-square-meter logistics park is preparing to introduce third-party cooperation (such as Annto) to turn a cost center into a profit center. The essence of this path is: stop the bleeding first, then grow. If you don't survive first, all transformation is an illusion.
Path 2: Shift from category distributor to brand operator—use professional capabilities to exchange for higher gross margins. A certain liquor distributor in Chengdu, with 2 billion yuan scale and over 100 people, mainly does catering beer and beverages. This year, catering declined 15%, but it didn't purely defend; instead, it sought a position upstream. Deeply bind with upstream, becoming the strategic operator in Sichuan for a well-known soda water brand, and the operator in Sichuan for a core single product of a first-tier beer brand; establish a professional team to lay out instant retail; enter the catering back-end supply chain to build a second growth curve for the future. It pushed its team, capital, and market professional capabilities to the extreme, becoming the brand's 'right-hand man' in Sichuan, in exchange for higher gross margin space and larger market capacity. The essence of this path is: shift from earning through coverage to earning through operational capability.
Path 3: From B2b to integrated zero-supply—use one pallet of goods + retail capability to exchange for the future. A certain leisure food distributor in a municipality, with decent B2b transformation, but still thin profits and unstable upstream support, this year began to connect downstream retail: Capital controls regional snack chain, forming new product launch capability and 'one pallet of goods.' With new product launch capability, upstream strategic support becomes stronger. Output one pallet of goods and retail operational capability to help small stores impacted by discounts/warehouse stores improve survival. The essence of this path is: distributors must bind goods with retail capability to gain new bargaining power.
Must Warn:
Transformation is not a life-saving medicine; if you turn wrong, it's a death warrant. In the past six months, we've seen many failure cases: Those who failed in B2B transformation, those who lost money in retail, those who burned cash in new channels, those who left unfinished private brands... Why?
- Not repairing the roof on sunny days, forced to revolution on rainy days: those forced to transform will have distorted actions. Transformation is not a sprint; it's a long-term coupling of resources, capabilities, models, and opportunities. The goal of transformation on rainy days is not development but survival.
- Blind transformation without going out: only reading news, only listening to a few exchanges with peers, and then deciding direction on a whim is like driving with eyes closed. The result will inevitably be a crash. So my suggestion is only one sentence: before transformation, give yourself at least 6 months to go out. What to do in these 6 months? Walk more, see more, communicate more. Look at models in different regions, see how peers have stepped on pitfalls, and see how real financial models run. Domestic cases let you see 5 years ahead; international cases let you see 10 years ahead.
Distributors:
Don't wait until this snow buries you to think about finding a way. As snack discounts, instant retail, and warehouse store systems continue to expand, a major event is happening in China's FMCG circulation: consumer entry points change → terminal structure changes → distributor roles change → interests between brands and channels are redistributed. Whoever doesn't change is out. This applies to distributors and brands alike. If you don't embrace new retail, the old world won't come back; you're just waiting to die in the old world.
Finally, a realistic call to action. If you are a distributor boss, do three things today:
- Stop the bleeding: immediately do radical surgery optimization on your business to protect cash flow.
- Choose a path: among brand operator / integrated zero-supply / new retail capabilities, try to find the path that truly suits you.
- Go out: use 6 months to travel domestically and internationally, see ten real cases, and don't transform based on imagination.
Image source: Xiaohongshu
'New Distribution' has always been committed to promoting the upgrade of China's FMCG circulation, and we have built a large number of domestic study tour cases for the industry. More importantly, in January 2026, we will organize a 'Europe Trip' inspection. Europe, as one of the world's most mature consumer goods markets, experienced overcapacity and channel revolution decades ago, giving rise to supply chain and trading giants like Edeka and SPAR. Going there, you will see more clearly: what Chinese distributors will look like in ten years.
Don't wait until this snow buries you to think about finding a way. Now is the time for distributors to make a 'life-and-death turn.'