---
title: "Wholesale Markets: A Decline"
description: "“Do you know how hard it was to get this shop five years ago? I paid 80,000 yuan just as a deposit, and if you were late, you missed out,” dealer Mr. Li told the author. This is a nationally renowned wholesale market that was once bustling with shops in high demand, but now many shops are closed, even on the main ground-floor aisle. The market manager called to persuade him to lease an adjacent vacant shop, saying “the price is negotiable, we can give you a discount,” but after thinking it over for days, Mr. Li declined: “In business now, you have to be steady.”"
author: "何雯"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-06-14"
categories: "Dealer Operations"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/znpV2ZgU-jjr0wDc2gzgpA"
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attribution: "New Distribution — https://xinjignxiao.com/en/articles/wholesale-markets-a-decline-a83bdcfb/"
citation: "何雯. “Wholesale Markets: A Decline.” New Distribution, 2025-06-14. https://xinjignxiao.com/en/articles/wholesale-markets-a-decline-a83bdcfb/"
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---

# Wholesale Markets: A Decline

> “Do you know how hard it was to get this shop five years ago? I paid 80,000 yuan just as a deposit, and if you were late, you missed out,” dealer Mr. Li told the author. This is a nationally renowned wholesale market that was once bustling with shops in high demand, but now many shops are closed, even on the main ground-floor aisle. The market manager called to persuade him to lease an adjacent vacant shop, saying “the price is negotiable, we can give you a discount,” but after thinking it over for days, Mr. Li declined: “In business now, you have to be steady.”

“Do you know how hard it was to get this shop five years ago? I paid 80,000 yuan just as a deposit, and if you were late, you missed out,” dealer Mr. Li told the author.
This is a nationally renowned wholesale market that was once bustling with shops in high demand, but now many shops are closed, even on the main ground-floor aisle.
The market manager called to persuade him to lease an adjacent vacant shop, saying “the price is negotiable, we can give you a discount,” but after thinking it over for days, Mr. Li declined: “In business now, you have to be steady.”
This contraction is not an isolated case. After visiting several nationally known food and non-staple wholesale markets, including Changsha Xinqiao, Hefei Changjiang, Zhengzhou Bairong World Trade Mall, and Linyi Huafeng, the author felt deeply that sharply reduced customer flow and slow-moving goods are the norm in these markets.
In in-depth exchanges with dozens of wholesalers and dealers, a consensus is becoming clearer: wholesale markets are declining.
“Those with brand agency rights are barely making ends meet; those without are struggling to survive,” admitted a sugar and wine second-tier wholesaler from Shandong. “There are two reasons: within the same market, identical goods lead to price undercutting; and agents have basically started direct supply, weakening the original second-tier function of wholesale markets.”
A frozen food wholesaler with over a decade of experience was even more blunt: “Now there are no big customers, and the profits from small customers can’t cover costs. Some B2b platforms go directly down to counties and cities—order one day, delivery the next. So now second-tier wholesalers simply can’t operate: either you can’t sell goods, or you have no profit—you’re just working for the market.”
At noon, only a handful of shops in the market are open; by 3 p.m., only a few transport vehicles move slowly through the empty area—this is the current state of a wholesale market in a third-tier city.
Even so, some are trying to break through. “Compared to before, it’s indeed more depressed, but from the perspective of terminal demand, trying to maximize our exposure, shifting to lower-tier markets, and highlighting our own advantages—in my view, that’s the best way out for future channel distributors,” said a leisure food wholesaler.
Wholesale markets, once a core player in distribution channels, are losing their voice.
**Why Were Wholesale Markets So Popular Back Then?**
Before discussing “why wholesale markets have lost ground,” let’s revisit a question: why did wholesale markets come into being?
The prototype of wholesale markets can be traced back to barter in agrarian societies. Because individual transactions were hard to match, people gradually gathered at fixed locations to exchange goods, giving rise to primitive “markets.” By the Tang, Ming, and Qing dynasties, regional merchant groups emerged.
Modern wholesale markets, however, rose rapidly after reform and opening up. China’s vast territory, large population, and huge differences in consumption levels meant that consumers in different regions and income brackets had vastly different demands for goods. In an era when distribution systems and logistics networks were underdeveloped, manufacturers only focused on production and couldn’t deliver goods to every city, street, or small shop. The market was in a stage where “whoever could aggregate goods and have supply sources would win,” making wholesale markets an indispensable part of the regional retail system.
On one hand, wholesale markets relied on industrial clusters, centralized purchasing, and unified distribution to reduce procurement and transportation costs, significantly improving circulation efficiency. On the other hand, a market often housed hundreds or thousands of merchants, offering an extremely complete SKU range from high-end to mass-market, from bestsellers to niche items. Through their ability to aggregate supply, they precisely met the diverse needs of retailers at different levels and in different regions.
For the vast number of small and medium retailers and individual operators, the flexible trading mechanisms provided by wholesale markets—small batches, fast turnover, and high-frequency restocking—greatly alleviated pressure on store inventory and capital turnover. Especially in counties and townships where retail networks had not yet penetrated and delivery capabilities were limited, wholesale markets, with lower operational thresholds and stronger local connections, became the main supply channel for local retailers.
For this reason, in the past, many terminal store owners and local wholesalers found the most effective way to stock up was to “run the market.” With dozens of shops on a street, you could compare brands, specifications, and prices at a glance, and leave with goods in hand. This low-threshold, high-density, high-efficiency trading method gave rise to one booming wholesale market after another.
There, information asymmetry was profit, and shop space was the traffic entrance. Whoever had a good location, sharp vision, and fast purchasing could make money.
**Who Is Hollowing Out Wholesale Markets?**
The prosperity of wholesale markets was an inevitable stage in the development of the distribution system, but this logic is now being rapidly shattered by reality.
1. Channel Fragmentation: Terminals No Longer “Come to Stock Up”
With the impact of online e-commerce and community group buying, product prices are becoming increasingly transparent, and profits are thinning, leaving little room for wholesalers to survive.
“Originally, many store owners would come at 7 a.m. every day to stock up for a week. Now many customers don’t come for two months; they order everything on their phones,” said Mr. Wang, a merchant at a non-staple food wholesale market in Hefei, Anhui. He has been in second-tier leisure food distribution for 15 years, and his turnover has shrunk by nearly half.
In the past, it was a hard slog to run to the market to restock; now, with e-commerce platforms or regional B2b platforms, you can order with one click, get one-stop ordering, transparent prices, and home delivery. Terminal stores can source from multiple channels directly—who would still run to the market?
2. Hypermarkets and Chain Systems Build Their Own Supply Chains, Excluding Wholesale Markets
“When Snacks Very X first opened, they sourced from our market, but now they do all direct procurement, and we have no say at all,” said Mr. Zhang, a snack wholesaler in Changsha, Hunan.
Chain snack brands also sourced from wholesale markets in their early days, but once they expanded their stores and gained scale advantages, they shifted to direct brand supply. For example, Mingming Henmang, through its “factory direct procurement + regional warehousing and distribution” model, flattened its supply chain into a three-tier system of “factory-regional warehouse-store,” saving 30% in costs alone, gradually stripping away wholesale markets.
Additionally, leading supermarkets like Yonghui, RT-Mart, and Sam’s Club, as well as local supermarket chains and CVS, are all increasing their private-label offerings. With goods developed in-house and supply chains under their control, wholesale market merchants have no way to enter—they can’t even get a foot in the door.
3. Dealers Directly Control Terminals: No Longer Distributing to Others, but Selling Themselves
In the past, dealers would distribute goods to second-tier wholesalers, who would then distribute to terminals. But now, with difficult business conditions, compressed profits, and flatter manufacturer channels, dealers are building their own teams, laying out omnichannel strategies, and bypassing traditional intermediate links. This trend of channel sinking means they are directly becoming terminal controllers.
“In the past, wholesale markets played the role of a ‘channel,’ but now everyone wants to control the channel and prices themselves, not wanting to share profits with intermediate links,” said a dealer from Central China bluntly.
Zhao Bo, founder of New Distribution, also mentioned in a livestream that about 100 cities nationwide have already adopted B2b, and it is expected that more than 100 new platforms will emerge in 2025. Through B2b platformization, dealers have integrated the roles and functions of distributors and wholesalers, naturally bypassing wholesale markets.
4. Markets Are “Aging”: Systems and Services Can’t Keep Up
Many traditional wholesale markets still rely on manual bookkeeping and paper delivery notes, appearing outdated and inefficient in the face of the current “digitalization + refinement” trend in the FMCG industry. Not to mention precision marketing, customer management, data analysis—these all require system and team support, which the vast majority of wholesale markets lack.
Now the competition is about “system capability” and “service capability,” not just who has a better location or lower price.
Final Thoughts
Wholesale markets will not completely disappear, but their golden age is indeed over.
In the past, they were the hub of goods circulation and a stronghold that channel distributors had to occupy; now, with channels sinking, supply chains compressing, brands controlling directly, and terminals fragmenting, wholesale markets are gradually being bypassed.
Some markets are trying to transform, becoming distribution centers, e-commerce warehouses, or live-streaming bases, but the path from dense trading scenes to diversified platforms is bound to be long and uncertain.
Mr. Li’s hesitation is a common portrayal of many merchants: “In the past, we relied on foot traffic; now we rely on online traffic. In the past, we competed on location; now we compete on systems.” The market is still there, but they no longer rely on it.
Only by proactively changing can they retain a place; clinging to old logic will only push them further to the margins.


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## Citation metadata

- Publisher: New Distribution
- Author: 何雯
- Published: 2025-06-14
- Canonical: https://xinjignxiao.com/en/articles/wholesale-markets-a-decline-a83bdcfb/
- Original source: https://mp.weixin.qq.com/s/znpV2ZgU-jjr0wDc2gzgpA

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