Over the past six months, New Distribution visited more than 200 distributors across China. Price wars, channel fragmentation, and product homogenization have made competition undeniably harder. Yet we also met distributors that were still performing well in their local markets because they were willing to change how they selected products, served channels, and created value.

Every era calls for a different operating answer. The cases below do not point to one universal formula. They show four directions that distributors can evaluate against their own resources, organization, and market position.

Build a Regional B2B Supply Chain

Many large regional distributors now view self-operated B2B platforms more positively than they did several years ago. One reason is that enough successful local examples have emerged to make the model easier to understand.

New Distribution estimates that more than 60 FMCG B2B platforms are operating normally in China. A number of distributor-led regional platforms have reached annual gross merchandise value of several hundred million yuan in a single city. Meanwhile, more than six million independent stores still need frequent, reliable replenishment, and many have already become comfortable ordering through B2B systems.

Regional distributors possess two natural advantages.

First, supply-chain competition is fundamentally about cost and efficiency: getting the right goods to stores at a lower total cost and with greater speed. Local distributors often have accumulated relationships, warehouse resources, delivery routes, and operating knowledge that lower the cost of serving their home market.

Second, their decision paths are shorter. A local operator can hear market feedback and change purchasing, pricing, assortment, or delivery arrangements quickly. That responsiveness reduces the risks created by a distant, standardized operating model.

But a B2B platform is not simply an ordering app. It requires purchasing power, assortment management, warehouse and delivery density, credit control, and disciplined unit economics. A distributor should enter only when those capabilities reinforce one another.

Move from Product Distribution to Category Management

In wholesale markets in Changsha and Zhengzhou, we observed another group of growing distributors: operators that concentrate on one category and manage it deeply for retailers.

Category management changes the starting question. The traditional distributor asks, “Which of my products can I sell to this store?” A category operator asks, “What products does this store and its shoppers need from this category?”

The operator then builds a broader, more coherent assortment and provides one-stop category service. Snacks, condiments, and household-care products are particularly suitable because stores need many brands, price points, and package formats, while few individual manufacturers can provide a complete solution.

This model rewards specialized purchasing, knowledge of product roles, inventory discipline, and the ability to help a retailer improve category productivity. It is not about carrying more items indiscriminately. It is about understanding which combination of items improves availability, turnover, margin, and shopper choice.

Combine Distribution with Retail—Carefully

Some distributors are opening stores or investing in retail formats. The move can create direct consumer insight, give the company a testing ground for new products, and capture retail margin. It can also create channel conflict and expose a wholesale organization to a very different operating system.

Wholesale and retail can coexist only when responsibilities, pricing, inventory, and customer boundaries are explicit. A distributor should not assume that knowledge of supply automatically produces competence in store location, merchandising, labor scheduling, membership, or consumer operations.

The decision should therefore be capability-led. If the company has a strong local supply chain but no retail operating team, partnering with good retailers may be more valuable than opening stores itself. If it has a repeatable store model and can protect existing customers, retail may become a second growth engine.

Become a Supplier to Instant Retail

Instant retail has become one of the fastest-growing local channels. Major platforms have invested heavily in rapid delivery, while the number of front warehouses and delivery-enabled stores continues to rise. As more orders shift online, physical retailers experience lower walk-in traffic and require a supply chain designed for faster replenishment and a different assortment.

Distributors should pay particular attention to the local expansion of front warehouses and dark stores. The chains behind these locations need reliable, high-frequency, multi-category supply. That need creates an opening for distributors that understand local demand and can replenish quickly.

In Nanjing, for example, a beverage distributor began by supplying water and drinks to instant-retail warehouses across the city. After building trust, it added more categories and eventually became a full-category supplier. The new channel strengthened its original distribution business and doubled its scale.

The lesson is not that every distributor should chase instant retail. The lesson is that channel change creates new supply-chain customers. Distributors that can adapt pack sizes, assortment, delivery frequency, data sharing, and account service may capture that opportunity.

Choose from Your Existing Advantages

These directions require different operating foundations:

  • Regional B2B requires density, procurement, logistics, credit control, and platform operations.
  • Category management requires specialist buying, assortment design, and retailer-facing category service.
  • Self-operated retail requires consumer operations and a repeatable store model.
  • Instant-retail supply requires speed, availability, flexible replenishment, and local channel coverage.

The wrong question is, “Which model is hottest?” The better questions are: Where do we already have a defensible advantage? Which customer problem can we solve better than others? What new capability must be built, and can its economics be proven in one local market before expansion?

Distributors still have many paths to growth. The winners will be those that choose deliberately, test locally, and turn accumulated regional resources into a clearer form of customer value.