--- title: "What Has Turned Distributors from Channel Protagonists to Supporting Roles?" description: "Once hailed as the backbone of the distribution sector and protagonists in commodity economic activities, FMCG distributors have now been relegated to supporting roles due to external changes (manufacturers taking control of the market and the rise of KA terminals) and internal inertia (distributors clinging to outdated business philosophies and management methods). This article explores the challenges facing individual distributors and proposes the formation of distributor associations as a solution." author: "潘文富" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2017-10-24" language: "en" canonical: "https://xinjignxiao.com/en/articles/what-has-turned-distributors-from-channel-protagonists-to-supporting-rol-5e562786/" markdown: "https://xinjignxiao.com/en/articles/what-has-turned-distributors-from-channel-protagonists-to-supporting-rol-5e562786.md" original_source: "https://mp.weixin.qq.com/s/cn4sWYR-qFsEE5aMtNClWw" translation: "https://xinjignxiao.com/zh/articles/%E6%98%AF%E4%BB%80%E4%B9%88%E5%8E%9F%E5%9B%A0%E8%AE%A9%E7%BB%8F%E9%94%80%E5%95%86%E4%BB%8E%E6%B8%A0%E9%81%93%E4%B8%BB%E8%A7%92%E5%8F%98%E6%88%90%E4%BA%86%E9%85%8D%E8%A7%92-5e562786.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/what-has-turned-distributors-from-channel-protagonists-to-supporting-rol-5e562786/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # What Has Turned Distributors from Channel Protagonists to Supporting Roles? > Once hailed as the backbone of the distribution sector and protagonists in commodity economic activities, FMCG distributors have now been relegated to supporting roles due to external changes (manufacturers taking control of the market and the rise of KA terminals) and internal inertia (distributors clinging to outdated business philosophies and management methods). This article explores the challenges facing individual distributors and proposes the formation of distributor associations as a solution. Once upon a time, in the fast-moving consumer goods (FMCG) sector, distributors, predominantly individual operators, were hailed as the backbone of the distribution sector and protagonists in commodity economic activities. But now, the protagonists have become supporting roles, and the reasons are not complicated: one is external changes, and the other is internal inertia. **Let's first look at external changes:** Upstream manufacturers have begun to control the market, and downstream terminals are increasingly being replaced by KA (Key Account) terminals. As for internal factors, many distributors still adhere to early business philosophies, market concepts, and management methods, failing to make timely adjustments and progress in response to changes in the external environment. This has led to distributors transitioning from being the central operating entities in the distribution sector to mere delivery and market service providers. The days of wielding influence and dominating local markets have become a memory, and the sharp decline in profitability is troubling every distributor. Where the road ahead lies has become a question on every distributor's mind. Crisis is opportunity. Some distributors have calmly analyzed the current situation and sought solutions from a new perspective: organizing distributor groups into collective forces, which has indeed resolved many issues in practice. The author has visited several initiators of such distributor organizations and compiled some materials on distributor organization, which are presented here for the reference of interested distributor friends. First, let's look at the various problems faced by individual distributors: 1. **Information blockage** Many distributors have limited information sources, with no relevant channels to provide them with sufficient information, especially industry data closely related to their current business. Moreover, since they often have to personally oversee daily operations, they have little time for reading books or newspapers, and even fewer use the internet for information. They lack timely and effective industry intelligence on new trends in market changes, often relying on personal experience for judgment, which frequently leads to directional errors. 2. **Unequal dialogue with KA stores** The vast majority of distributors negotiate with KA stores as individual suppliers, holding limited product leverage and negotiation experience, making them easy targets for stores to pick off one by one, becoming objects of exploitation. 3. **Unequal status in dialogue with the government** In recent years, whenever a product quality incident occurs, distributors are often the biggest losers. Local governments, in a panic, may seal and impound all related products, causing heavy losses to distributors. For example, in the milk powder incident in Fuyang, Anhui, many local governments directly targeted all milk powder distributors, sealing and impounding all milk powder without distinction before investigating, causing great harm to legitimate distributors. Moreover, in cases of government misjudgment or wrongful penalties, distributors face cumbersome appeals, or are directly deprived of the right to appeal, or must pay high appeal costs. Even then, it is difficult to guarantee a fair ruling and compensation. 4. **Handling manufacturer relations** Currently, in most regions, manufacturers and distributors have single-line contact. If a negative incident occurs during cooperation, since manufacturers have greater strength and intellectual resources, distributors often suffer more. Furthermore, manufacturers can easily find another distributor locally to continue their business, leaving the aggrieved distributor to sigh in helplessness. 5. **Fighting separately** Regional distributor groups generally have little communication, mostly fighting separately, with information and resources not shared, and many operating costs duplicated. Naturally, it is difficult to achieve mutual cooperation and improvement, and they are easily looked down upon by external forces (manufacturers, KA stores, government departments, etc.). Moreover, due to poor communication among distributors, misunderstandings easily arise, leading to intensified vicious competition and damage to each other's profits. 6. **Lack of strategic development training and expert guidance** Many distributors now understand the importance of consulting and training, and urgently need experts to guide them in strategic development planning. However, consulting firms are expensive, and individual distributors can hardly afford them. Manufacturer-provided distributor training often has a bias, with limited practical value. 7. **Interference from local criminal forces** In many places, individual distributors are seen as wealthy individuals, naturally attracting local criminal forces. Many distributors go to great lengths to secure positions as local CPPCC members or People's Congress representatives, more for personal safety, as being single organizations, they have to find ways to protect themselves. 8. **Talent attraction issues** Distributor development cannot be separated from talent introduction, but the stage and salary an individual distributor can offer are limited, and there are management difficulties. Additionally, individual distributors find it hard to attract talent, leading to problems of "can't invite, can't manage, can't retain" in terms of talent. 9. **Access to financial support** Funding and support from financial institutions are the basic guarantee for distributor business development. Currently, commercial bank loans are mostly concentrated on business-to-business transactions. Distributors are mostly small and medium-sized companies, making it difficult for individual distributors to obtain loans, and the required guarantees are also a problem. In desperation, many distributors have to pay several times the bank interest rate to obtain loans from underground banks, which naturally increases operating costs. Facing the various problems of individual distributors, in some regions, capable and strategically minded distributors have taken the initiative to establish distributor associations. Through the integration of distributor group resources, they have better solved some of the above problems. The author has summarized the management experience of some excellent distributor organizations for reference. **1. Entry point** Choosing an appropriate entry point is crucial. The relationships among distributor groups are complex, involving both cooperation and competition. In the early stages, it is not suitable to choose business integration as the entry point. Currently, a more successful form is the incident entry point: using conflicts or disputes between some distributors and manufacturers, KA stores, or government departments as the entry point, solving problems through collective strength, gaining recognition and trust from distributors, and on this basis establishing a basic distributor association. **2. Sharing consulting costs** Consulting and training are needed by many distributors, but individual distributors can hardly afford the expensive fees of consulting firms. By using the group cost-sharing method of the distributor association, this problem can be more easily solved, achieving what individual distributors find difficult. Moreover, it can even invite some well-known experts, allowing everyone to benefit from consulting and training at a limited cost. This is the second way to stabilize the distributor association and attract more distributors to participate. **3. Proactive contact** According to government regulations, social organizations need to register with government departments. After gaining a certain number of distributor members, organizers can formally apply to government departments for registration, using this opportunity to communicate and contact relevant government departments, informing them of the establishment of the distributor association. In this way, in future inspections and problem handling involving distributors, these government departments generally notify and communicate with the distributor association in advance, greatly reducing losses suffered by distributors in completely passive situations. Government departments also welcome distributors to conduct self-inspections first, resolving many issues through consultation. Since we all live in the same city, government departments are reluctant to seal goods at the drop of a hat. Now, through the distributor association as a liaison, they can notify and arrange in advance, reducing disputes and troubles in later work. This also works similarly in handling relationships with local media. **4. Information and resource sharing** After forming a distributor group, members have a platform for information exchange. Organizers can also use the group's strength to contact industry associations and obtain relevant information. In a distributor association in a city in Central China, the organizer commissioned a local small consulting firm to obtain industry information by category from the internet and market research companies, compile it into documents, and regularly distribute it to relevant distributor members. Additionally, all distributors' transport vehicles are registered, allowing for internal borrowing and adjustment of vehicles within the distributor group, improving vehicle utilization and reducing duplicate investments in vehicles. **5. Human resources** The high-end talent needed for distributor development is not actually for specific tasks but to help teach distributor employees how to work more efficiently and scientifically. The distributor association can hire professionals with specific skills as consultants to provide internal rectification and training services to each distributor. The cost paid by individual distributors is limited, and there is no long-term management issue. **6. Financial industry** In terms of loans and acceptance from banks and other financial institutions, the group's strength is naturally much greater than that of individual distributors. The distributor association arranges for some distributor members to provide guarantees, breaking down large risks, and the bank's approval rate is much higher. **7. Security issues** A single chopstick is easy to break, but a bundle of chopsticks is hard to break. In ensuring the safety of the distributor group, the role of a group can fully manifest, effectively deterring local criminal forces. Even if an individual distributor faces security issues, the distributor association, as a social organization, can communicate with public security departments, with significantly different effects. **8. After achieving the above non-operational functions, the distributor association can gradually shift to specific operational aspects, playing an incomparable role in joint negotiations with KA stores and manufacturer inspections and communications.** Organizing distributor groups is more about distributors saving themselves than integrating group resources. In today's ever-changing external environment, if distributors do not make corresponding adjustments and progress internally, they will inevitably be eliminated, experiencing functional and profitability atrophy. This is a real problem many distributors currently face. From a commercial perspective, all problems have solutions; the difference lies in the cost of the solution. Individual distributors can hardly afford this cost, so relying on group strength to solve problems is a more suitable approach for distributors. Organize and strive for the future development of distributors! The author, a private business owner, has managed a family distributor company for many years, during which he also served as business manager and trainer in several production enterprises. His research focuses on internal management of small and medium-sized private enterprises, with main topics including personnel management, cost control, management backend construction, and the integration of demobilized military personnel into private enterprises. He has continuously broken down over 400 topics related to internal management of private enterprises, maintaining material collection and solution updates. **The 2017 (3rd) FMCG + Internet Conference** will be held in Chongqing in November 2017. The conference will closely focus on the theme "New Forces, New Ecology," inviting **1000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions** to jointly explore new chapters of cross-border integration! Click the link below to review the highlights of the first and second FMCG + Internet Conferences: [2016 "FMCG + Internet" Summit Forum]() -END- --- ## Copyright and AI use This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL. Contact: zhaobo258@gmail.com · +86 158 5481 7671