A few days ago, I read an article about another distributor fleeing. Everyone sighed, as it seems that in the past two years, many distributors have run away. Why? Business is tough! As someone who has been in the industry for 16 years, I've summarized a few points:

  1. Manufacturers aggressively push inventory, without limits or ethics; I won't name specific manufacturers to avoid offending anyone.
  2. Bank credit is tightening, leaving distributors without funds; this is a policy issue with no solution. The only terrifying thing is those who borrowed from high-interest lenders, leading to irreversible ruin.
  3. Market sell-through is slow, goods don't move, but costs keep rising; this is a common factor because consumers are diverting and upgrading, and the original five functions of channel outlets (scenario, traffic, atmosphere, advertising, experience) have failed, leaving only costs.
  4. Failed transformations, whether to e-commerce, manufacturing, retail, or even falling into the cult of "Liu Yimiao".
  5. Team collapse, mutual destruction. In the 21st century, opportunities are abundant; if you don't overwhelm your subordinates with money and then drain them with business demands, they'll become your competitors. Many distributor bosses have a smallholder mentality, unwilling to share profits, accounts, or power. If you're capable, have your son and daughter-in-law work with you; otherwise, if you hire people, you must overcome these hurdles.
  6. Loss of marketing service and operational capabilities. Deficiencies include:
  • Lack of deep distribution capability, unable to fix outlets, personnel, time, work standards, distribution standards, and sales actions become distorted. Once key personnel leave, the market collapses, entering a vicious cycle.
  • Lagging behind manufacturers' operational rhythm, ignoring product freshness management, and being overly concerned with local gains while lacking a global view.
  • Not knowing how to ask for support, lacking tactics and assertiveness; being rich but foolish, spoiled by manufacturers and channels over the years, a consequence of easy business.
  • Fragmented sales channels, with distributors and key personnel potentially rebelling at any time. No strategy for channel integration, mainly due to reluctance to let go, open up, or discard. And so on, and so forth! Of course, there are also those who have successfully upgraded, and I believe they all took the right path. I've observed several types, seemingly like these:
  1. Leveraging supply chain dividends: Upgrading from distributor to supply chain. One type is developing upstream, opening factories, and creating brands. This tests the distributor's market judgment, brand building, channel development, and factory management capabilities, especially needing a good factory manager and marketing director. There are many successful cases; the most common problems are product selection and quality control. Industry issues often stem from these two points. The second type is developing downstream, opening retail stores. This tests the distributor's refined operation, retail thinking transformation, and talent identification, especially retail planning and management talent, like Wang Xiaojian in Yiyang. The third type is building a brand supply chain platform for collaboration. How? Launch your own brand, choose a dozen factories for OEM, collaborate with other manufacturers' sales teams for promotion, and have distributors of the same channel type nationwide help sell, with everyone holding shares and earning better profits. Brands can be single or dual, like Changsha's Sandian Shijia. The fourth type is selling the company to a big player, like Eternal Asia. It's like leaning on a big tree for shade, at least not worrying about funds and exiting safely.
  2. Leveraging category dividends: From being a distributor of single products to a category distributor. For example, specializing in bulk goods, cooked food, short-shelf-life products, bakery, biscuits, 4-5 tier brands, or imported food. Champions can be found in every small category, like Nanjing's Huixiangyuan, Changsha's Nanfang Bingye, Huashang Food, Jifeng, Xiyaya, Hainan's Bingzu Shijia, etc. The key to category dividends is product structure sorting, which at the terminal means monopolizing shelf resources. What category structure do hypermarkets need? What do convenience stores need? What do snack stores need? Can you be more professional than their buyers and merchandisers? Bin Ge from Wangcheng, Changsha, is a master at this.
  3. Leveraging channel dividends: Specializing in special channels: like mooncake group buying, cinema channels, financial system channels, and selling sea cucumber through liquor channels.
  4. Leveraging organizational dividends: The specific approach is to platformize the distributor's organizational structure, with the front office attracting second-tier distributors and middle and senior management to invest and form branch companies. Heavy burdens are shared by all, with everyone having targets. For example, Huaxia Sugar and Wine, with annual sales of 1.5 billion yuan. Or Hunan New Dayang (Yili), combining channels and branches, with annual sales over 300 million yuan. The back office unifies functions like HR, finance, warehousing, and IT. This approach is estimated to bring about a 30% improvement in organizational efficiency.
  5. Leveraging warehousing and distribution dividends: Strengthening and upgrading distributor functions, like enhancing the advantages of unified warehousing and co-distribution, such as Yantai's Wanshanggou in Shandong, the 21-distributor alliance in Qianjiang, Hubei, and Maidelin in Guilin, Guangxi. This is a transformation towards social infrastructure. Although not very mature and with a long road ahead, it's still a direction. Even Liu Qiangdong said he wants to become retail infrastructure; won't this unified warehousing and co-distribution become infrastructure for other partners? For example, in the future, when New Gaoqiao comes, we can cooperate, with openness, inclusiveness, and connection. It just depends on whether time accelerates; I estimate it will become mainstream in 3-5 years.
  6. Leveraging community dividends: For example, the resource cooperation, dissemination, endorsement, and crowdfunding promoted by the China Wine Industry Forum, which recently launched Yunjiu. Or a company's distributor group jointly investing in another enterprise's production and sales, collectively becoming shareholders and distributors. For example, Jugang's Zhongjiu and Wang Wei's Hanke Commune.
  7. Leveraging e-commerce dividends: I've seen some distributors run their own Taobao or JD stores, and others use WeChat official accounts plus micro-shops to sell. I haven't found a case for this, so I hope readers can leave a message to tell me. Of course, the above may not be rigorous, but perhaps it can inspire you. -END-