---
title: "Where Are Food Wholesalers Headed?"
description: "This article examines the current state, roles, characteristics, strengths, and weaknesses of food wholesalers, and proposes eight possible paths forward, including upgrading to distributors, becoming manufacturers, or forming alliances, while offering practical advice for survival and growth."
author: "王济保"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-02-10"
language: "en"
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# Where Are Food Wholesalers Headed?

> This article examines the current state, roles, characteristics, strengths, and weaknesses of food wholesalers, and proposes eight possible paths forward, including upgrading to distributors, becoming manufacturers, or forming alliances, while offering practical advice for survival and growth.

**Click to read the original article for details**
**I. Current Status and Role of Food Wholesalers**
**Current Status**
In the 1970s and 1980s, food manufacturers had only two requirements for wholesalers: delivery and payment collection. They cared little about whether products actually reached every retail outlet, were purchased by consumers, or expired. Wholesalers each controlled varying numbers of distributors, sub-distributors, and retail outlets, and manufacturers dealt directly with wholesalers. As the market economy matured, especially with the entry of internationally renowned companies that introduced high-level market competition tactics, food manufacturers began to emphasize terminal sales. "Channels are king, winning at the terminal" became the "winning playbook" for every manufacturer. Reducing intermediate layers (wholesaler levels), saving marketing costs, building self-owned marketing channels, and implementing intensive distribution became the "hot" marketing reform directions. **From the earliest agency system to the later distribution system, assisted sales, intensive distribution, setting up distributors, and finally manufacturers directly establishing offices and sales branches, manufacturers extended their reach further and further, while wholesalers' exclusive distribution areas shrank, making their lives increasingly difficult.**
**Role**
1. Immediate sales results. Wholesalers' sales force enables manufacturers to reach more small and medium customers at lower cost. Due to their broad contacts and geographical advantages, product sales can improve quickly.
2. Product transit base. By extensively contacting different manufacturers, wholesalers can efficiently purchase and configure multiple products, quickly supplying them to retailers and customers.
3. Saving inventory costs for enterprises. Wholesalers maintain substantial inventory, reducing inventory costs and risks for manufacturers and retailers.
4. Rapid product distribution. With ample inventory and customer resources, wholesalers can ship quickly and place products at market terminals.
5. Quick capital recovery. With their own networks and connections, wholesalers can quickly place products at terminals and recover funds, facilitating faster capital turnover for themselves and better production for manufacturers, accelerating the flow of capital, logistics, and information.
6. Risk sharing. After purchasing products, wholesalers bear economic risks, such as risks from supply-demand and price fluctuations, risks during transportation and storage, and bad debt risks from advance purchases and credit sales.
7. Information communication platform. They provide suppliers and customers with information about competitors' products, services, and price changes.
8. Service to retail outlets. Large wholesalers often help retailers improve management, such as training sales staff and helping retailers set up accounting and inventory control systems.
**II. Characteristics of Food Wholesalers**
1. Few personnel. Wholesalers typically have just a couple (husband and wife) plus one delivery person. This minimal staffing is common in the startup phase, maximizing cost savings and utilizing existing resources.
2. Low investment and capital. Being an intermediate layer in the channel, wholesalers have limited throughput capacity, low entry barriers, and lower capital occupation; a few tens of thousands of yuan can get started.
3. Low loyalty. With limited capital and lower profits, wholesalers are willing to take fewer risks. They basically sell whatever sells well—if product A sells well today, they stock more of it; if product B sells well tomorrow, they stock more of B. They are heavily influenced by the market and have significantly lower risk-bearing capacity than distributors.
4. Short-sightedness. Since wholesalers are often family-run with no entry barriers, most have lower education levels and brand awareness. They focus on immediate interests, while long-term brand planning and market operations are essentially a blank area.
5. High flexibility. Small boats turn easily. Due to their small scale, wholesalers are not bound by many corporate rules; the boss gives the word, the boss's wife handles the money, so things move fast and flexibly.
6. High clustering. Wholesalers generally gather in large wholesale markets because they rely on high-volume sales for profit. Forming a business circle here facilitates product distribution and speeds up capital recovery.
7. Lack of market appeal and weak networks. Without appeal, there is no network building; without network building, how can distribution coverage be discussed? Due to limited delivery capacity, wholesalers' networks are weak, only having advantages in certain regions.
8. Lack of market operation and inventory management capabilities, especially for food with short shelf lives, prone to expired products.
9. Wholesalers are extremely deficient in comprehensive resources such as distribution, assisted sales, warehousing, trust, and reputation, which is a major bottleneck constraining their growth.
10. Lack of crisis management capability, such as when consumers complain or the industry and commerce bureau inspects and finds unqualified food additives.
**III. Strengths and Weaknesses of Food Wholesalers**
**1. Strengths of Wholesalers**
An important advantage of wholesalers, especially food wholesalers, is whether they have **a strong regional network**. This network or the product categories they represent may be irreplaceable. If you have that, you have your own advantage, which is the guarantee of doing business. Another advantage is **logistics and delivery capability**. Many wholesalers have smaller vehicles that can deliver to small alleys and villages, which many distributors are unwilling or unable to do. Wholesalers' delivery flexibility is also an advantage. For example, I once dealt with a very good wholesaler. At 8 PM, when many companies had closed, a supermarket owner called saying they were out of beer. The wholesaler immediately put down his chopsticks and delivered the goods, returning after 10 PM.
**2. Weaknesses of Wholesalers**
Knowing the advantages, we must also state the disadvantages for future improvement. **Because the entry barrier for food wholesalers is low, there are numerous wholesalers in the market, leading to fierce competition where everyone lives a life of "worse than the top, better than the bottom."** Wholesalers have a bad reputation among many manufacturers for cross-region selling and price undercutting, appearing on many companies' and distributors' blacklists. Many wholesalers' short-sighted behavior leads to adverse consequences. Another disadvantage is that **wholesalers lack professional market operation teams and better networks**. They must grow bigger and stronger, break away from old market operation methods, change their thinking, and strengthen their network advantages and after-sales service to overcome these disadvantages; otherwise, they will eventually be eliminated by the market.
**IV. The Way Out for Food Wholesalers**
**1. Stick to Your Own Business**
Persist in your main business and do your old job well. Love what you do, and go further and stronger on the food wholesale path. **If you insist on being a wholesaler, you must adjust your product structure to form a reasonable profit source model, learn from large wholesalers' personnel and market management experience, and transition toward becoming a professional wholesaler. Strive to be authoritative and professional in the wholesale industry, strengthen logistics and delivery capabilities, and enhance product category management. Solidify your own territory and build it into a base and lifeline.**
Food wholesalers sell many products, some up to thousands. How to effectively increase sales and reduce the cost-to-sales ratio? This requires wholesalers to optimize their product portfolio.
In fact, to optimize product mix, wholesalers only need to understand the following points:
1) Establish an inventory counting system to avoid near-expiry or expired products (food shelf life is generally short).
2) Which products sell well and which bring high gross profit?
3) Which products are sold at negative gross profit?
4) Are products segmented into high, medium, and low price points?
5) What are the reasons for poor sales?
Based on these issues, wholesalers should have a plan: segment products into high, medium, and low-end items—some bring profit, some bring sales volume, and some bring foot traffic. Products with negative gross profit or that barely move should be decisively replaced. This requires wholesalers to strengthen management in this area and establish a long-term effective system.
**2. Upgrade to Distributor**
**While doing well as a wholesaler, consider upgrading to a first-tier distributor.** To become a distributor: First, by expanding your own business, other brand companies may proactively upgrade you. Second, when your capital, network, reputation, logistics, and other capabilities are ready, you can proactively contact manufacturers to discuss first-tier distribution cooperation. Third, if you are doing well as a brand wholesaler, especially when international big brands have high requirements for first-tier distributors, wait for the right time; when the company's channel changes, your advantages will emerge, greatly increasing the possibility of becoming a first-tier distributor. Fourth, competing brands may proactively approach you to discuss first-tier agency.
**3. Transition to Food Manufacturer**
**After being a wholesaler for a long time, you may want to develop to a higher level to avoid being controlled by others, directly becoming a manufacturer and having some distributors and wholesalers work for you.** There are two methods to become a manufacturer: one is low-investment, low-risk OEM (original equipment manufacturing), registering your own brand for OEM operations. The other is directly purchasing equipment for production. To transition to a manufacturer, you must assess your comprehensive capabilities, including the overall coordination of the entire supply chain: procurement, finance, logistics, production, sales, and marketing.
**4. Move Backward in the Food Supply Chain (Backward Development)**
After being a food wholesaler for a long time, you may experience career fatigue or face increasing competitive pressure leading to shrinking profits. At this point, consider becoming a "sitting merchant" again—**open a small supermarket to do retail, move toward the end of the supply chain, and earn downstream profits.**
**5. Establish Industry Alliances to Raise Negotiation Thresholds**
To facilitate negotiations with manufacturers and hypermarkets, **establish industry alliances** to improve your industry status and avoid being at a disadvantage due to your small size.
**6. Move Forward in the Food Supply Chain (Forward Development)**
This means starting from food raw materials and logistics, embedding yourself at the beginning of the supply chain to grasp the source of profits.
**7. Agency + Production**
To reduce market risks and improve profitability, you can simultaneously act as an agent for other manufacturers' brand products while also starting your own brand (full production or OEM) to enhance profitability.
**8. Change Careers**
This is the last resort. Do not change careers lightly unless absolutely necessary, as every industry is like a different mountain. Unless a friend guides you or you have deep research and insights into the new industry.
**V. Some Suggestions for Wholesalers**
**1. Avoid Short-sightedness**
Climb high to see far; avoid being a frog at the bottom of a well. As a wholesaler, you must have unique insights into market operations and brand planning capabilities. Even as a wholesaler, build your wholesale brand to be bigger and stronger, establishing good credibility and reputation with terminal customers, manufacturers, and distributors. Do not harm consumer interests or break the rules for immediate gains.
**2. Eliminate Cross-region Selling and Price Undercutting**
While moving goods quickly, wholesalers must also comply with manufacturers' market sales policies and not break the rules for small gains, inviting hostility from peers. A characteristic of FMCG is fast sales turnover. Sometimes wholesalers maliciously undercut prices to quickly move goods and earn rebates, destroying the manufacturer's price system, severely leading to price inversion and the rapid demise of the product. Always remember: better to break the heavenly rules than to incur public wrath.
**3. Provide Good After-sales Service**
For food wholesale, after-sales service is key. Product after-sales service must be done well. Since food shelf life is short, any slight mistake in sales can result in near-expiry, expired, or damaged products. Timely exchanges and frequent customer visits are essential. You must understand where your advantage lies as a wholesaler; if you don't, then don't do business. Establishing a good reputation at the terminal will have unexpected benefits for future upgrades or taking on new products, especially when you have formed regional or partial advantages; many manufacturers will offer you good contracts and products for agency and distribution.
**In summary, as society develops, the ultimate way out for food wholesalers is no longer to be a "sitting merchant." This is a major trend that no one can change. To adapt to the trend, you must adapt to it; if you don't, you will be eliminated—this is the natural law of survival.**
Introduction: Wang Jibao, Email: wjb2002320130@163.com, Toutiao account: Sales and Life; WeChat public account: Sales Life 123 Things.
With years of practical marketing experience, he is a contributor to many well-known domestic media and magazines, such as "Business", "Sales and Market", "Marketing Communication Network", "Global Brand Network", "Sugar, Tobacco and Alcohol Weekly", "Borui Management Online", "New Food", "Cosmetics Weekly", and dozens of other media websites. He specializes in enterprise marketing operations and planning, brand positioning strategy, distributor management, enterprise management, supply chain management, and sales and market research. Email: wjb2002320130@163.com
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