---
title: "What Is the Core Function of a Distributor, Really?"
description: "Distributors will not disappear as a group, but those with redundant functions will be optimized. The core function of distributors is promotion, not warehousing or distribution, which can be integrated by B2B platforms. Future distributors should focus on their core function and leverage both offline and online relationships."
author: "刘春雄"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-07-01"
language: "en"
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---

# What Is the Core Function of a Distributor, Really?

> Distributors will not disappear as a group, but those with redundant functions will be optimized. The core function of distributors is promotion, not warehousing or distribution, which can be integrated by B2B platforms. Future distributors should focus on their core function and leverage both offline and online relationships.

Click 'Read the original' for details.
In recent years, people have repeatedly asked me similar questions: Will distributors disappear? Where is the way out for distributors?
Some B2B platforms and experts have also voiced that distributors are the target of revolution and should be replaced.
My conclusion is simple: Distributors will not disappear, but distributors with redundant functions will be optimized. The form of distributors will change in the future.
In other words: As a group, distributors will not disappear, but as individuals, if they do not transform or fail to transform successfully, they will likely disappear.
I find it strange. Twenty years ago, we called on distributors to transform from 'sitting merchants' to 'traveling merchants,' but we encountered great resistance at the time. Later, a group of new distributors known as 'traveling merchants' rose, and 'sitting merchants' were eliminated.
Traveling merchants mean going out—not only people but also goods. 'Vehicle sales' became the standard for traveling sales.
Later, we proposed 'visit sales,' separating people from vehicles, and again encountered great resistance. Fortunately, many large distributors have now made the transition.
Now, we propose third-party 'unified warehousing and distribution' in the B2B environment, which is an improvement over 'visit sales.' In essence, it strips the [warehousing and distribution] function from distributors, and it still encounters resistance.
Over the years, distributors have been constantly negating themselves. Every negation encounters resistance. So, the elimination of the traditional and the rise of new forces are perfectly normal.
**0 1**
**The Core Function of Distributors**
What is a core function? It is that without it, distributors as a group would not exist.
As long as the core function is irreplaceable, distributors as a group will not disappear. The elimination of individuals and the emergence of new ones are normal.
Due to the highly backward and fragmented nature of Chinese channels, Chinese distributors bear too many non-core functions, leading many to believe these functions are natural for distributors, but they are not.
As a division of labor, manufacturers (brand owners) bear the function of value creation, while merchants (various types, including agents, distributors, and retailers) bear the role of value delivery.
Of course, there is creativity in value delivery; otherwise, there would be no progress. Merchants may also participate in brand owners' value creation, but that is not a core function.
Distributors undertake about four functions: capital, promotion, ordering, and warehousing/distribution.
Capital, warehousing/distribution, and ordering are not core to value delivery. In particular, warehousing/distribution is the transfer of goods, not value delivery.
Which of these functions is the core? I believe it is promotion. Promotion is the true value delivery; the others are derived functions.
02
**Distributors and B2B**
B2B has emerged as a new species, and some have sentenced distributors to 'death,' seemingly thinking that everything distributors can do, B2B can do, with fewer steps and higher efficiency.
Of course, some B2B platforms currently have low integration and efficiency, but that does not negate the efficiency logic of B2B.
In the past, we emphasized distribution and traveling sales because China lacked efficient third parties, and distributors were [forced] to do things outside their core functions. For example, in the United States, distribution is entirely handled by third parties.
With the emergence of B2B, it undertakes part of the channel integration function. This is progress in China's circulation, even though it is combined with the internet.
As an integrator of channels, B2B's advantage lies in the integration segment. Whatever has an integration advantage should be handed over to it in the future, such as order integration and unified warehousing and distribution. As for big data and internet finance, they are derived functions, not core functions.
The United States has long had channel integration services, such as third-party distribution, but distributors still thrive, indicating that not all channel functions have integration advantages.
03
**Promotion Is the Core Function of Distributors**
Promotion is largely an interpersonal activity. For interpersonal activities, small organizations have an advantage.
Unlike the classic product strategies of multinational companies, Chinese companies launch new products much faster than multinationals.
Product promotion relies heavily on the trinity of channels, in addition to backend support (advertising, communication, brand, etc.).
Teacher Shi Wei proposed the trinity of the internet era—cognition, transaction, and relationship—which is the trinity brought by online communication.
The reason Chinese marketing could creatively propose 'using channels to counter brands'—brand-driven and channel-driven—is that Chinese channels are also a trinity: relationship, cognition, and transaction.
Both are trinities, but the logic differs. The internet trinity is premised on communication generating cognition, while the offline trinity is premised on relationship generating cognition.
Communication generating cognition is the advantage of the internet. Relationship generating cognition is the advantage of offline.
Even in the internet age, the traditional trinity will not disappear; it will exist for a long time.
The virtual proportion will rise, but it can never replace reality.
For promotion based on interpersonal relationships, small organizations have an advantage, those with overlapping social and business circles have an advantage, those with traditional social relationships have an advantage, and those with clearer interest centers have an advantage.
I have repeatedly emphasized that B2B certainly has advantages, but do not think it is omnipotent; otherwise, you will have only enemies and no friends.
Acknowledge your weaknesses, then cooperate with those who have strengths, and you will have friends.
04
**Focus on Core Functions**
The world trend is mighty; those who follow it prosper, and those who oppose it perish.
B2B as a channel integrator and distributors stripping non-core functions is progress for Chinese channels.
Even without the internet, China would have reached this point, just not as quickly.
Do not think the current form of distributors is the norm; it is precisely abnormal.
Future distributors will strip warehousing and distribution, focus on core functions, and their advantages will be better utilized.
In the current distributor organizational structure, warehousing and distribution personnel account for too large a proportion, daily work is routinized, and core functions are often forgotten.
Future distributors will be light, possibly without warehouses or vehicles, with significantly fewer drivers, warehouse keepers, and even office staff, reducing management complexity.
Isn't that a good thing?
Focusing on core functions, besides offline relationships, can completely 'transform from army to air force,' doing both the offline trinity and the online trinity well.
As long as you do both trinities well, you will have independent traffic. In the internet age, independent traffic is precious.
With independent traffic, you have status with brand owners and also with B2B platforms.
How can that status compare to the past as a distributor?
From August 22 to 24, the '2018 China Digital Innovation Conference (2018FDIC)' with the theme 'Finding New Engines for Growth' will be held in Shanghai, hosted by the China FMCG Industry Association and organized by New Distribution.
The conference will last 3 days, focusing on two themes: marketing and supply chain, with six parallel forums on brand, channel, communication, B2B, local logistics, and innovative retail. We will invite industry leaders, CEOs, and brand executives to deeply interpret the trends and drivers of digital transformation in the FMCG industry.
We will invite over 500 FMCG enterprise executives, 200+ B2B industry CEOs, and 1000+ major FMCG distributors to gather and discuss how the FMCG industry can use digital tools to achieve rapid growth again in the digital era. This conference will build a bridge for brand owners, distributors, retail enterprises, and marketing agencies, helping FMCG manufacturers obtain the latest information, understand best practices, and master more practical transformation skills.
Proposed Invited Companies
Conference Time
August 22-24, 2018
Conference Venue
Shanghai Baohua Marriott Hotel
Conference Content
August 22: All-day check-in
Afternoon 14:00-17:30: Distributor local logistics parallel forum
Evening 18:30-21:00: New Distribution Night Gala Dinner
August 23: Theme: Marketing Digital Innovation
Morning 9:00-12:00: Marketing Digital Innovation Main Forum
Afternoon 14:00-17:30: Brand, Channel, Communication Parallel Forums
August 24: Theme: FMCG Supply Chain Digital Upgrade
All day: FMCG Supply Chain Conference
Registration Method
Registration is now open. Long press the QR code below or click 'Read the original' to register. The 50% discount special offer is in its last day of hot registration...!
Registration Consultation
Ticket inquiries:
Media cooperation inquiries:
Highlights of New Distribution's Previous Conferences
Click the links below to review the first, second, third, and fourth FMCG + Internet Conferences:
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