Recently, while teaching a course to distributors of a French company in Ningbo, Zhejiang, a student asked after class: under economic downturn pressure, especially with channel flattening and the increasing prevalence of new retail, which distributors are not easily replaced?
This is indeed a good question worth pondering, and it is likely a source of confusion or uncertainty for many distributors. So, under the dual pressure from manufacturers and retailers, including the impact of internet marketing, which distributors can develop better without shrinking performance, being replaced, or even going bankrupt?
1. Technical Distributors
So-called technical distributors not only provide customers with inventory, warehousing, logistics, and even sales assistance services but also offer technical support. This technology has a certain professional barrier, and switching would require greater cost or sacrifice. With technical expertise and a greater role in after-sales functions, such distributors will have greater irreplaceability.
Therefore, to avoid being replaced, distributors can start by enhancing their own functions, taking on more pre-sales, in-sales, and after-sales work such as market development, management, customer relationship maintenance, and technical services. Through professionalism and focus, they can become industry experts, thereby winning market recognition and approval, and enhancing their attractiveness and cohesion in manufacturer operations and customer management.
2. Brand Distributors
Brand distributors refer to those who, in addition to fulfilling the manufacturer's distribution functions, also own their own brands.
Distributors that are hard to replace have the following characteristics:
Distributing branded products. If it is a well-known brand, under exclusive conditions, their own brand is often a non-competitive product with similar channels.
If the agency brand manufacturer does not have exclusivity requirements, they can produce similar products under their own brand, but they can form a complement in grade or category. This often occurs at the level of small and medium brands and larger distributors.
Having a sound distribution network and good customer relationships. Such distributors, holding two cards, are flexible in advancing or retreating and have ample room to maneuver, making this a good choice.
The author once taught a course to a distributor company in Maoming, Guangdong. This distributor originally started with big brands like Shuanghui, and later became an agent for a well-known pickled vegetable brand. Now, in addition to being an agent, they have registered their own brand, producing and selling noodles and related products. They have grown quite large and are very autonomous.
3. System Distributors
From the perspective of the value chain, market competition is actually competition among supply chains. This includes suppliers, manufacturers, various channel distributors, and consumers. System distributors either possess the entire system, acting as both manufacturer and distributor, or occupy key links in the supply chain, making themselves indispensable and, of course, irreplaceable.
Jinliufu Liquor Company initially cooperated with Wuliangye, which can be considered a co-branded brand. As the business scale expanded, Jinliufu (now Huaze Group) began to extend its supply chain by acquiring, holding stakes in, participating in, or self-building to integrate the supply chain or industrial chain. It became both a supplier and a manufacturer, as well as a channel distributor, and even established Huazhi Liquor Store chain terminals, becoming a system integration group.
However, transforming from an agent that was only a marketing company into a manufacturer also carries risks. Years ago, a famous beer brand integrated and set up provincial agents, inviting the author to train their general agents and distributors. Through communication, it was learned that this agent had just built a modern factory producing pomegranate juice, thus being both an agent and a manufacturer. But recently, when the author was teaching at a hotel near the factory area and passed by in a car, the area was desolate, which was quite lamentable. The transition from a "light asset" approach of holding a brand and finding OEMs to a "heavy asset" transformation involving land acquisition, factory construction, and equipment purchase for integrated production, supply, and sales requires full consideration of risks.
4. OEM Distributors
System distributors require large investments and complex operations, but there are also those who only do what they are good at, thereby gaining core competitive advantages and carving out their own space. OEM distributors belong to this category. Such distributors, through their own vast and active networks, leverage their brand or design advantages, front-load value, seize the market high ground, and maximize profits.
The author was invited to teach at a wallpaper factory in Foshan, Guangdong. This enterprise has years of production experience and good product quality. During the lecture, their Shanghai partner happened to be at the company. The chairman introduced that they had a strategic cooperation, i.e., an OEM model. After the lecture, the distributor company boss who attended invited the author to give another lecture at their Shanghai headquarters. Through in-depth communication with the distributor company boss, it was learned that this company is not simply having the Foshan factory produce for them; they own their brand and have design, marketing, and service teams. The enterprise produces according to their designs. Like Apple and Nike, they own their brand, design, R&D, marketing, and services, while leaving production to qualified third parties, doing only what they are best at. Such distributors also have strong market voice and initiative.
5. New-Type Distributors
This refers to three types of distributors that are different from traditional ones, with passion, vision, strategy, and drive.
Distributors transformed from manufacturer salespeople. Such distributors often have higher education, are familiar with manufacturers, have insight into the market, understand customers, follow rules, keep up with the times, are flexible, accept new things quickly, and are easy to seize market opportunities.
College student entrepreneur distributors. Some college graduates, for various reasons, start their own businesses after graduation, opening stores and doing distribution. After a period of trial and error, with their aptitude, they cooperate with potential manufacturers to jointly develop markets, and they easily become the "hotcakes" of the market.
E-commerce. The cost of circulation in China is high, while the internet's channel flattening compresses cost links, offers one-stop shopping, and allows marketing to be carried out anytime, anywhere, making e-commerce indispensable. A nut brand in Qingdao, Shandong, which the author recently trained, sold over 80 million yuan online during last year's Singles' Day, which is astonishing and makes people re-recognize the huge potential of e-commerce. Of course, the above may also be trinity, not mutually exclusive, but possibly intermingled.
6. Category Buyout Distributors
In addition, category buyout distributors are also not easily replaced. Because such distributors have a wide network capability, and because category buyout profits are higher, even the packaging for that category is designed and provided by the distributor, or they control a large area, they are also relatively strong in market operations. There are also distributors integrated with manufacturers. A trading company in Hainan, which the author has trained multiple times, not only exclusively operates a new brand from a Guangdong manufacturer (the old brand is operated by two other distributors), but also holds shares in the enterprise. Being both a distributor and a shareholder, this deep strategic cooperation binds them together, benefiting both the factory and the distributor.
Of course, there are also those who gain irreplaceable status due to special geographical locations such as vast but sparsely populated or remote areas, but these are a minority and will not be discussed further here.
But in any case, the overall characteristics of distributors that are hard to replace in the future must be: they are relatively young, they have ideas, they are dynamic, they adjust quickly, they do not stick to conventions, they are proactive, they continuously improve, they are the new force in the distributor field, and they represent the future of China's distributor industry.
Source: Cui Zisan Marketing Vision (ID: gh_8ab2847e7727)
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