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In the cycle of goods from manufacturers to consumers, distributors may face the greatest difficulties. In the manufacturer-distributor game, if they grow too large, they may face integration or market segmentation by manufacturers; if they remain small, they face the threat of being replaced at any time and receive minimal market support. Facing terminals, they are always subjected to endless and insatiable demands for policies and support.

However, these are ultimately market operational issues that can be resolved through negotiation and relationship management. But there is a force that is difficult to change in its disruption and erosion of distributors—it is a future trend and a powerful force compelling distributors to transform.

I. Mergers and Integration Are Rapidly Unfolding Across Industries, Becoming a Trend

With over 30 years of rapid economic development in China, market rules have become increasingly powerful, and market maturity has risen. Many industries have gradually become arenas for giants and oligopolies, leaving less space for second- and third-tier brands. Even highly innovative companies cannot escape the fate of being merged or acquired. In the beer industry, the four giants—Tsingtao, Yanjing, Snow, and Budweiser—dominate; in home appliance retail, Gome and Suning compete as the top two; in the instant noodle industry, Master Kong, Uni-President, Hualong, and Baixiang vie for supremacy. Even the youngest internet industry has gradually formed a pattern of four giants: Alibaba, Baidu, Tencent, and JD.com.

Mergers and integration are not only the result of market rules and competition but also a necessity for China's economic structural adjustment and industry upgrading, as well as for the transformation from a manufacturing and production powerhouse to a creative powerhouse. Moreover, they are required for food safety strategies and technology upgrade strategies. No force can stop this trend.

There are three forces driving industry mergers and integration. First, policy-driven integration led by national regulatory authorities, most evident in the seed industry and agriculture. Second, integration driven by industrial capital within the industry, such as in the beer industry, where companies with sufficient capital and strength lead the consolidation. Third, integration driven by financial capital from outside the industry, such as in the baijiu industry, where companies like Lenovo, VV Group, and Tasly, attracted by the industry's potential, have entered.

The result of integration will inevitably present two scenarios: First, each industry will form a competitive landscape with several oligarchs and several highly innovative companies in different tiers. Second, companies and brands within the industry will become scarce resources, leading to intense competition among distributors for brand rights.

II. Horizontal Integration of Distributors Across Related Industries Will Become a Trend

Industry mergers and integration lead to scarcity of corporate and brand resources. As brands become fewer, the number of distributors will naturally decrease. Those distributors with strong capabilities, standardized management, strong service awareness, and foresight will dominate, at least across related industries. For example, related industries such as seeds, agricultural materials, and fertilizers, or baijiu, beer, and subsidiary foods.

Many may see the trend, but not everyone can act on it. Under the pattern and guidance of trends, distributors must upgrade and transform to achieve success. On one hand, they must strengthen and improve their operational management capabilities, actively promoting corporatization and systematic operations. At the same time, they must from now on make every effort to secure agency rights for quality brands in related industries. They must pursue both aspects with equal vigor; only then can they become true regional leaders.

III. The Disruptive Impact of E-Commerce on Distributors

The rise of e-commerce has a disruptive impact on traditional marketing. It directly changes the traditional cycle of products from manufacturers, distributors, terminals, and consumers, replacing it with direct manufacturer-to-consumer flows. Marketing in many industries has also split into two core segments: first, online product promotion and sales; second, offline logistics, delivery, technical support, and consumer experience services. The most typical examples are the book and apparel industries.

It is based on this that many startups have rapidly risen using the charm of the internet, defeating traditional companies' decades of accumulation in just a few years. Examples include Vancl in the apparel industry, Xiaomi in the mobile phone industry, and Meike Mela in the diamond industry—this is the so-called "slow life, fast brands."

Currently, e-commerce and online shopping can only reach urban and county populations. The vast rural market and rural populations remain beyond reach. However, two major factors will inevitably drive explosive growth of e-commerce and online shopping among rural populations: first, urbanization is making township and village markets more concentrated, generating greater e-commerce demand and service populations; second, smartphones and mobile networks enable low-income people without computers to access the internet, making online shopping more convenient and cost-effective.

This is the trend, this is the future—these forces are quietly disrupting and eroding the future development space of distributors. Perhaps in the near future, distributors' true competitors will be logistics providers. To follow the trend and achieve great things, distributors must build their marketing and service platforms in the following three aspects: first, sufficiently strong network delivery and rapid service, gradually meeting the demand for door-to-door delivery up to the consumer; second, more products and service content, including technical guidance and support, after-sales maintenance services, and personalized consumer experience services; third, scientific and standardized management and systematic operational capabilities.

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