Currently, facing volatile markets and shifting demand, distributors who originally did not want to change, or even hoped to return to the past, are now entering a period of transformation and seeking change this year. As one of the protagonists in the FMCG industry, what are distributors most worried about during their transformation, and what help do they most hope to receive? Let's listen to some voices from the FMCG distribution circle. It's not about right or wrong, just a candid sharing of true feelings. Distributor A says: Know when to advance and retreat, and maintain balance. It seems that e-commerce is on the offensive, while many distributors are on the defensive. Perhaps after several years, a relatively balanced state will be achieved. In fact, manufacturers also do not want any single channel to become too large, otherwise they would be reduced to mere OEM factories. The e-commerce that is currently thriving may seem glamorous, but who can guarantee it will remain as fierce as tigers and wolves? Market changes are never subject to our will. If local market operating costs rise, e-commerce demands higher profits, but if they cannot extract more from consumers, they can only compress their own profit margins. If e-commerce cannot find a way to break through and still relies on price wars to win, most will be dragged down by capital and eliminated by the market. Distributors need not worry excessively about being replaced by e-commerce. In the end, to avoid being "left behind and beaten," the only choice is to proactively adapt and seize opportunities to strengthen oneself. In this era of survival of the fittest, only by eliminating others can you survive as yourself. Distributor B says: Manufacturers also need to change. Nowadays, many manufacturers' salespeople are no longer building the market but squeezing every penny, every inch of display space, and every square meter of warehouse from their customers. They only care about shipping goods, not selling them. Parallel imports run rampant, leaving merchants in misery: if they follow along, there are product structure issues and price gaps cannot be widened. If they don't follow, they lose excellent brands. Currently, many manufacturers are heavily loading inventory, leaving merchants breathless and in considerable danger. Raw material prices are fluctuating greatly, and the current market economy outlook is not optimistic. Holding high-priced inventory creates cash flow difficulties. These issues are indeed pain points. Manufacturers should reflect: without traditional channels, unable to control the market, is it really better to keep squeezing the market with massive inventory loading? These are my confusions, and they should also be the confusions of some distributors. Distributor C says: Shift from defense to offense. For distributors to survive, the first rule is to recognize who the biggest enemy is; the second rule is to realize that former adversaries can also be partners, as when the lips are gone, the teeth feel cold. Sometimes, offline distributors can sit down and discuss cooperation; the third rule is that you don't have to be purely defensive; you cannot just passively take hits from e-commerce's attacks. In fact, if distributors unite, establish professional distribution centers and service centers, and truly leverage their own promotion and service capabilities, they can form a counterattack against e-commerce. What to do in 2018? For a long time, many distributors have relied solely on low prices and local connections to sell products. They have not focused on improving their own quality, adjusting product structures, or keeping up with market trends. Many merchants will inevitably be eliminated. Some merchant friends I know started focusing on after-sales service, product knowledge training, and adjusting sales structures as early as four or five years ago. Combined with local connections, they have now become "hot commodities" that many manufacturers compete for in the market. For intermediaries between enterprises and consumers, do not be dizzy and confused by the fleeting internet bubble, to the point of not knowing what to do! Remember one thing: no matter how developed the internet is, the last mile will never be solved, and the existence of distributors still has irreplaceable value. However, due to changes in market conditions and the social environment, our distributors cannot continue to operate with the same old face and methods. We need to innovate and break through, amplifying our value so that no enterprise dares to bypass you, let alone casually say "eliminate traditional distributors." This is the shaping of distributor brand power. Remove the word "traditional" from "traditional distributors," create new-era distributors through self-reform and innovation, and with your unique strength, dominate your region, forcing companies that want to enter your area to not underestimate you. Just remember the following key points for specific actions.

  1. Brand your company name. Stop using tacky names like "Xingwang," "Longfa," or "Xinsheng." Also, do not use your own name as the company brand, such as "Yinkun," "Zhangji," or "Aqiang." These brand names are too rustic and lack any distinctiveness; consumers have no feeling for them and will not form unique memories. Brand names should be sought from the interests of the core consumer group of the products you deal with. If you are in fast-moving consumer goods centered on food and beverages, you should focus on names with personality, charisma, and emotional appeal, such as "Energy Hero," "Double Swordsman," "Cool Sell," "Brother Cares About You," "Tender Double Charm," and "Waiting for You Every Day."
  2. Brand positioning and value proposition. Once you have a brand name, give yourself a clear positioning: what are you best at and what do you want customers to remember you for? Then, through an objective value proposition, highlight it. For example, if your product wins on low price, you should write under the brand name: "Inflated prices are cheating." If your product wins on quality, then change it to "Good goods are not cheap; cheap goods are not good."
  3. Change from a trading company to a marketing company. Currently, most distributors' business licenses are registered as XX Trading Company, which looks like a middleman moving goods. Registering as a marketing company is completely different. For example, "Zibo Food and Beverage Marketing Company," "Shenzhen Building Materials and Home Furnishings Marketing Company," etc. The name of a marketing company adds a "marketing function," which is particularly valued by upstream manufacturers when selecting distributors.
  4. Create a regional distribution alliance. Most distributors' distribution cooperation is loose and emotional. That is, downstream distributors and terminal merchants do not necessarily have to buy from you; sometimes they buy from you because of long-term cooperation and mutual trust, nothing more. Creating a regional distribution alliance is about turning your loose and emotional downstream partners into allies in the same camp. The relationship is not traditional emotional ties, nor a dispensable upstream-downstream relationship, but a compact alliance where you cannot do without me and I cannot do without you, sharing benefits and bearing difficulties together. For example, have downstream partners provide a deposit or form a mutual interest binding, and distributors must provide various value-added services to downstream partners under strict contracts, including loans, promotions, and product returns, subsidies, and compensation. Now with the internet, setting up a WeChat group is not difficult, allowing all downstream partners to be transparently together.
  5. Regularly organize activities or provide market intelligence platforms. Current self-media like WeChat official accounts can help distributors achieve this. For example, praise every new move and good deed of downstream partners through your platform, even highlighting specific downstream stores. If you have the resources, you can even create a free print media, such as a simple magazine. Publish the alliance's activities, propositions, practices, online store layouts, individual characteristics, store locations, and contact information for delivery services, and also include original articles reflecting local consumption characteristics. What is this magazine for? Distribute it free to all alliance members, residential communities, restaurants and cafes, community and street reading rooms, public bus stops, government offices, and office buildings to expand the distributor's brand influence locally. Over time, you will become a local leader in your industry—brand power will naturally emerge. More importantly, due to your focused online and offline communication, your downstream partners' businesses will improve, and you may even form horizontal alliances—cross-industry alliances. This cross-industry alliance connects with the target consumers of your products—individuals and organizations—through your promotional platform, forming a symbiotic ecological cooperation, thus infinitely amplifying your brand value.
  6. Create a regional online mall. This does not require a large investment; it is just to serve consumers in the region who are lazy or keen on online shopping. The mall does not need promotional investment; just place a poster or QR code advertisement at each downstream partner or terminal sales point. The products in the online mall are all the series you represent, with clear prices, possibly slightly cheaper than offline. But because this online mall is jointly created by your distributor alliance system, the benefits of e-commerce belong to everyone, so there is no issue of infringing on the interests of regional alliance members. In fact, there are many other methods to help distributors create influential regional brands, but too much detail may make it seem too complex and difficult. In reality, as long as you seriously do the above points, the regional brand power of distributors will begin to show, and any manufacturer wanting to enter your region will definitely not underestimate you, even treating you as a key customer. In summary, as the social environment and consumer demand change, distributors must change accordingly, but many may not know exactly where to change. If you change according to the above, you will become a pivotal force in the region. What power can eliminate you in the future? Only you have the strength to eliminate other unambitious competitors in the region, and even decide whether to accept brand products into your region based on price. The viewpoints in this article are taken from some anonymous distributors and Shen Kun, Chairman of Shenzhen Shuangjian Poju Marketing Planning Co., Ltd. and an expert in lateral thinking innovation. New Distribution compiled and edited this article and expresses its gratitude. -END-