Introduction: Good experience for my use, good models to copy directly. Author | Zhou Qun Review | Gou Gou Layout | He Wen

Eliminating middlemen is a false proposition Over the past decade, the FMCG industry has undergone significant changes, especially in the channel side. Under the baptism of the Internet, channels have been continuously differentiated: B2B emerged, community group buying boomed, and live-streaming e-commerce rose. Throughout this process, one topic has been hotly debated: 'eliminating middlemen.' In many people's eyes, distributors are middlemen who earn price differences. If they were removed, buyers and sellers could meet directly, shortening transaction links, and both manufacturers and consumers would benefit—a win-win. But is that really the case?

In traditional offline business, the transaction path is generally: manufacturer—distributor—store—consumer. Removing distributors leaves three possible scenarios:

Scenario 1: Consumers buy directly from the factory. Suppose a beverage brand builds a factory 100 kilometers away. The store price is 4 yuan, but at the factory gate, a bottle of water sells for 2 yuan. If a consumer wants to buy at 2 yuan, a round trip takes at least 4 hours. Excluding transportation and other opportunity costs, just time cost: if your monthly salary is 10,000 yuan, working 25 days a month, 8 hours a day, your time is worth 50 yuan per hour. Four hours means an investment of at least 200 yuan, so the actual total cost of buying one bottle of water is 202 yuan.

Scenario 2: The brand builds its own specialty stores, and consumers buy in-store. Suppose a store's rent, utilities, etc., cost 20,000 yuan per month, and at least two clerks are needed, with total compensation of 10,000 yuan per month. That's at least 30,000 yuan in fixed costs per month. If 10,000 bottles are sold per month, the allocated cost alone is 3 yuan per bottle, so the selling price must be higher than 3 yuan.

Scenario 3: The brand directly controls terminals, and consumers buy in-store. Suppose there are 2,100 stores in a region. With each salesperson responsible for 300 stores, 7 salespeople are needed. At a salary of 4,000 yuan each, the monthly fixed personnel cost is 21,000 yuan, plus logistics and distribution costs. The brand's direct operating costs will eventually be passed on to the product unit price, so the consumer's actual purchase cost will not decrease.

The existence of distributors may seem to add intermediate links, but in reality, it reduces transaction costs. In commercial circulation, distributors play a pivotal role, from warehousing and inventory to product distribution and sell-through, as well as risk-bearing for products and capital. These are essentially part of the cost.

Over the past five years, New Distribution has visited a large number of distributors. We have seen that in regional market business, the core is still to leverage distributors. Without a good distributor, it is twice as difficult for a brand to do well in the market. China has a market of 1.3 billion people, with complex market conditions, tangled roots, and diverse channels. These objective realities determine that distributors have their own living space and cannot be eliminated by any group.

More young blood in the trading industry In many people's perception, the FMCG trading industry is old and fragmented, with low continuity. In the early days of commercial circulation, most distributors started their businesses by going out early and returning late, walking the streets, selling goods one by one. Therefore, many distributors are anxious about the future development of their businesses. The older generation knows the hardships of this industry: upstream they face pressure from manufacturers, downstream they face various powerful channels. Trading companies themselves have little technical content, and some distributors are reluctant to let their children do such hard and tiring work, so there are few young people in the trading field. However, this phenomenon is gradually being broken, and the industry is seeing more and more young blood.

A second-generation distributor friend told me that now at manufacturer meetings, more and more young people are sharing on stage. Some manufacturers even encourage older distributors to let their children come out and share. While preparing for the New Distribution Distributor Club, we visited many post-90s distributors. We found that in the field of commercial circulation, more and more post-80s and post-90s are becoming the main force in the trading industry. These young distributors are not simply 'second-generation business successors'; rather, they are 'second-generation creators.' Based on their parents' business, they use various innovations to make the business bigger and better.

For example: Zheng Jinbin of Nantong Shilangman Food Co., Ltd. took over his father's traditional business in 2019. Using an Internet mindset, he boldly tried new things, and based on clear data analysis and more refined management systems, he innovated models, achieving growth from 60 million to over 100 million in three years.

Jia Yongshun, general manager of Xuzhou Jintong Food Trading Company, took over a small wholesale business of 2 million in 2014. From salary and performance reform to corporate operation and extending offline retail, he ultimately achieved 100-fold business growth.

Liu Fen, general manager of Hubei Quanjielai Trading Co., Ltd., chose to start her own business after graduating from university, despite her parents being in distribution. Starting from a brand-new county-level market with a population of less than 600,000, she achieved leapfrog growth in business scale and won the Mengniu Outstanding Contribution Award.

... New Distribution has seen many such cases. We will share these excellent post-80s and post-90s distributor cases through the Distributor Club. Their business practices and succession journeys will surely inspire and provoke thought.

Looking back, why can these young distributors do better in a short time?

Learning: Good experience for my use, good models to copy directly When communicating with these post-80s and post-90s distributors, I usually ask: Compared with the older generation, what do you think are your advantages? The answers are basically the same: Dare to learn and dare to do: apply new methods, new models, and new thinking to business.

Distributors in the entrepreneurial era focused on how to survive better. The business carried the livelihood of the whole family, so they were more conservative in practice, seeking stability. At this stage, distributors were more positioned as executors. Relying on brand dividends, as long as they followed the manufacturer's requirements, did the displays well, launched promotions on time, and executed the manufacturer's policies, they could earn their 'salary.' Many older distributors have become accustomed to past methods and paths, with manufacturers leading and them passively executing. Their thinking has solidified, making change difficult.

Young people, on the other hand, are unwilling to do simple repetitive things. They prefer to try new models and methods, using tools and data to speak, rather than comparing experience and seniority.

A few days ago, I chatted with a second-generation distributor. He said that when he first took over, he knew nothing about the industry, not even how to set prices or run promotions. What did he do? The simplest way was: Good experience for my use, good models to copy directly. In the initial stage, he did what competitors did; in the development stage, he looked at how other excellent distributors of core agency brands did it, then learned and practiced; in the stable stage, he looked at how excellent large distributors nationwide did it, and whether there were good development models or new directions that could be applied to himself.

This approach applies to all distributors. Different types of distributors have something worth learning in different fields. Distributors must not work behind closed doors, because the pitfalls you are stepping into now are likely paths others have already walked and solved. Communicating with different people will help you go faster and more steadily.

A large snack food distributor in Hefei told New Distribution: Information gap is a potential opportunity for incremental business. When you learn about a trend earlier than others and practice it first, once successful, you can lead by a body length. What is an information gap? It is a successful case that already exists but has not been widely disseminated. The simplest and most effective way to obtain information gaps is to communicate with excellent peers. Good cases, good experiences, and good methods will always inspire you at some point; there is always something you can apply.

Gathering excellent peers to build a business community Excellent learning targets are always scarce. Most distributors operate local businesses, and the benchmark distributors they can see are limited. This is also a demand raised by many distributors during interviews: can we organize more excellent peers to learn together? Therefore, over the past six months, New Distribution has been preparing and thinking about the New Distribution Distributor Membership Club. We hope to bring together excellent distributor bosses scattered across the country, share newer business opportunities and more comprehensive business growth cases, so that distributors can find suitable learning targets and path references.

The New Distribution Distributor Membership Club brings together 500 excellent distributor bosses nationwide to create a business evolution community for distributor bosses.

Currently, member recruitment has started and will officially launch on June 5, 2023. If your business is at a bottleneck, if you want to learn more business models, if you want to see how other excellent distributors do it, you are welcome to join the New Distribution Distributor Club to discuss with industry experts and progress together!

_ Scan the QR code to add WeChat, welcome to join!_

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