The call for distributors to embrace internet transformation has been ongoing for years without much attention. Most distributors merely laughed at the slogan 'eliminate intermediaries,' as e-commerce mainly impacted the C-end, and although the B-end was also affected, the overall economic environment was good and the market was still growing, so their lives were relatively comfortable. But since last year, the plot has reversed dramatically. With the O2O war, physical stores have become hot targets, while distributors caught between manufacturers and retailers are having an increasingly tough time. Recently, I have communicated with several distributor friends, and they all generally say that business is getting harder and life is getting tougher. Besieged on all sides, crises lurking everywhere Summarizing their feedback, the main points are as follows:

  1. Macro environment impact. As China's economy enters the new normal, all industries show weak growth, consumption growth slows, and some industries even experience severe decline.
  2. Too many competing products, severe homogenization. On one hand, this intensifies competition for terminal resources, driving up maintenance costs; on the other hand, product sell-through becomes increasingly difficult.
  3. Extended payment cycles. In recent years, terminal merchants expanded blindly, leading to tight cash flows, shifting pressure onto distributors. Payment collection becomes harder, and payment cycles lengthen.
  4. Rising labor costs. In the past, 3000 yuan a month was acceptable, but now even 5000 yuan may not attract workers. Moreover, due to the overall environment, the salary trend for salespeople has been declining, leading to high turnover and unstable teams.
  5. Impact of direct sales. With the rise of micro-commerce, many third- and fourth-tier brands or new brands use WeChat for human-wave tactics, greatly seizing traditional distributors' customer traffic.
  6. Impact of online competitors or same products. Especially e-commerce channels like Tmall and Taobao stores, in certain categories (e.g., snack foods), are aggressively taking market share from traditional distributors. Moreover, online cross-regional selling has intensified, directly threatening distributors' profits.
  7. Impact of O2O. Since last year, under the national 'mass entrepreneurship and innovation' call, a large number of entrepreneurs have flooded into O2O. After several rounds of cash-burning wars, they have caused considerable damage to distributors' businesses.
  8. Increasing difficulty in KA volume. Many distributor friends report that large supermarkets are developing private-label products, while positioning their agency brands as profit products with high prices, making it increasingly difficult to move volume.
  9. Pressure from manufacturers. Facing declining sales, manufacturers continuously pressure distributors. Beyond normal promotions, many manufacturers require distributors to provide dedicated personnel and vehicles, significantly increasing terminal maintenance costs. In summary, distributors' pressure mainly comes from four aspects: First, industry ceiling—almost all industries have seen sales decline, and the era of simultaneous growth in sales and profits has ended. Second, e-commerce disruption—the information revolution is rapidly spreading from C-end to B-end, and traditional channel structures are being reconstructed. If C-end traffic hijacking was not fatal, the arrival of B-end e-commerce is a thorough revolution. Third, rising operating costs—rents increase yearly, and Chinese commerce has been kidnapped by real estate, leaving distributors in a dilemma. Labor and management costs also rise with business scale. Fourth, manufacturer pressure—as mentioned, the harder manufacturers are, the more demanding they become on distributors. Distributors are in a 'besieged on all sides' situation; transformation is the only way out! 'Eliminate intermediaries,' this time it's for real! The slogans 'de-intermediation' and 'eliminate intermediaries' have been shouted for years without substantive action, but this time it's different—it's for real. On January 12, 2016, Alibaba held the 'Global B2B Ecosystem Summit' in Yunqi Town, Hangzhou, high-profile launching the 'Hundred Cities, Ten Thousand Stores' plan and the 1688 service provider project, re-entering the B2B market. Then on January 16, JD.com held its annual meeting, where Liu Qiangdong announced that JD.com would launch the 'New Channel Business Unit' in 2016, personally overseen by him, laying out three major networks to focus on fresh food and international business. In short, JD.com is also entering the B2B market. B-end e-commerce represented by Alibaba and JD.com is devastating for traditional distributors. Their model bypasses all intermediate links from manufacturers to terminals, directly controlling terminals and replacing distributors. The industry calls this model centralized B-end e-commerce. Its purpose is clear: to eliminate traditional distributors, suppliers, secondary wholesalers, and all intermediate links, using internet means to reconstruct traditional channel structures. Regardless of the feasibility of this model, being targeted by both Alibaba and JD.com means at least a painful experience. According to my understanding, JD.com is currently recruiting heavily, deploying many ground promotion personnel, and has already launched subsidy wars against terminal stores, with many stores starting to defect. Although Alibaba has not yet made a move, once it does, it will be a major action. At the same time, another model of B-end e-commerce is flourishing, such as PiDuoDuo and ZhangHeTianXia, which the industry calls distributed B-end e-commerce. Unlike the centralized model, distributed B-end e-commerce focuses on existing distributors, using internet means to optimize traditional channel structures (e.g., through collective procurement, unified storage, unified distribution, unified sales) to improve efficiency and reduce consumption, playing an integrator role. Although from a model perspective, distributed B-end e-commerce is not as radical as Alibaba and JD.com, advocating symbiosis with distributors, it implies a premise: only distributors who accept the internet and undergo transformation according to internet requirements can board this train. Therefore, regardless of the model, B-end e-commerce aims to reconstruct traditional channel structures, cutting unnecessary distribution and management links. Distributors who cling to old ways will only face death. - END- The best FMCG distributor learning platform in China Focusing on providing professional, practical, and actionable tutorials for companies and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Distributor market operations | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operations management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation strategies | 014 First lesson for new salespeople | 015 Internet, brands | 016 Distributor B2B transformation | [Long press QR code to follow]