---
title: "Why Distributors and Secondary Wholesalers Have Irreplaceable Value"
description: "Distributors possess four irreplaceable values: comparative efficiency over manufacturers, representing consumers in negotiations, professional product screening, and serving as local market credibility. Secondary wholesalers will not disappear as long as demand exists, but they must adapt to new consumer-oriented services."
author: "黄润霖、祝有华"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-07-28"
language: "en"
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# Why Distributors and Secondary Wholesalers Have Irreplaceable Value

> Distributors possess four irreplaceable values: comparative efficiency over manufacturers, representing consumers in negotiations, professional product screening, and serving as local market credibility. Secondary wholesalers will not disappear as long as demand exists, but they must adapt to new consumer-oriented services.

壹
**The Four Irreplaceable Values of Distributors**
The topic of distributor value has not just emerged in the last couple of years; it has only become more prominent because distributors have faced tough times recently. Revisiting distributor value today is not about justifying the existence of thousands of distributors, but to remind them not to forget their original purpose while going too far.
The four values I mention below are not exhaustive, but they are singled out because they are irreplaceable.
**1. Distributor Value One: In many matters, distributors can achieve goals more efficiently than manufacturers.**
In the manufacturer-distributor game, many distributors believe their core value lies in their downstream network and social connections, which is also their leverage against manufacturers. In fact, saying manufacturers cannot do these at all is overestimating oneself.
When the industry advocated channel refinement and deep distribution, capable manufacturers proved that they can develop outlets more efficiently than distributors. As for social connections, as long as you are willing to spend money, who cannot make some friends?
Therefore, when distributors negotiate with manufacturers, using their downstream network as a threat or social background as endorsement may work for verbal sparring, but in actual confrontation, distributors will suffer. So, rational distributors do not tell manufacturers that only they can do the job; instead, they make manufacturers understand that while they can do it, they cannot do it as well. Remember, downstream networks and messy social connections are not exclusive.
Thus, the first core value of distributors is comparative value, not absolute value. Next time you take manufacturer representatives to the market, do not say, "Look, Lao Zhao and I are tight; I don't worry about stocking, and collection is just a phone call away!" Instead, say, "From Changsha to Lixian township, my cost per piece for freight is 0.32 yuan, while the cheapest logistics company charges 0.65 yuan. If you manufacturers did it, how much would it cost?"
**2. Distributor Value Two: Represent consumers in negotiations with manufacturers, acting as the representative of regional market consumers.**
Many distributors have forgotten this mission due to deep involvement in market tactics.
I have mentioned in previous articles that manufacturers, distributors, and consumers form a stable triangular relationship. When one party grows too strong, the other two can unite to check it, especially the alliance of distributors and consumers, as the sum of two sides is greater than the third. When a conflict arises between a manufacturer and a single consumer, the manufacturer can abandon that consumer, but it cannot easily abandon a distributor who aggregates many consumers. The distributor's role is to prevent the manufacturer from acting arbitrarily and to keep consumers from going too far.
We see many consumer complaints where distributors directly refer consumers to manufacturers, to save themselves trouble. Eventually, the manufacturer faces the consumer alone, plays ping-pong, and drags the consumer down, leaving resentment in the regional market, which ultimately falls on the distributor.
Distributors are too small and lack risk resistance, which is the main reason they give up representing consumers. More importantly, being a consumer representative seems unprofitable. Now that the internet is here, if distributors do not develop consumer membership systems to change the one-off transaction model; if they do not use the internet to build regional community interaction systems, such as periodic consumer-themed community activities; if they do not leverage the internet's long-tail low-cost effect to become the true voice of consumers in the regional market, they will be removed by manufacturers sooner or later.
**3. Distributor Value Three: Use professional ability to screen products, reducing consumers' purchase risk.**
This is also the main reason I have always opposed micro-commerce. Everyone has the need to buy, but not everyone has the qualification to sell.
When Taobao rose, it was a gray area. Now micro-commerce is rehashing old ideas, showing a lack of thought in making money. I have always emphasized that professionals should do professional work. The so-called sharing economy is about sharing the spare time or idle resources of professionals, so that consumers' experience is not compromised. It is not about using amateurs' superficial skills to make consumers settle. This is like everyone can speak, but to speak interestingly, eloquently, and make people willing to pay and sit and listen, requires years of practice. If you do not have that, you should find another job!
Consumers lack professional judgment when purchasing most products. Manufacturers' promises are not enough to guarantee they will not betray interests for profit. Distributors, immersed in the industry for years and making a living from it, have the professional ability to uncover those manufacturers who are "gold on the outside,败絮 inside." Distributors with professional sales qualifications reduce consumers' purchase risk. However, many distributors abandon professional improvement, focusing only on making money quickly, forgetting the original mission, and trying to benefit from both sides, ultimately pleasing neither!
All distributor business must return to value; otherwise, what is the difference between you and Taobao stores or micro-commerce?
**4. Distributor Value Four: The monk may run away, but the temple remains; distributors are the credit guarantee and quality assurance in the regional market.**
After 2010, most physical stores complained about poor business due to e-commerce impact. The reason is that offline distributors were dragged onto a stage where all rules were set by online stores. Offline physical stores are in a passive position; how can they compete?
China has the concept of "century-old shops," mostly referring to front-shop-back-factory, integrated manufacturing and sales entities. Such old shops have reputation and credibility; they cherish their brand like feathers. Consumers recognize the brand's local accumulation and believe it is not a fly-by-night operation. However, because production and sales functions are not separated, such enterprises find it hard to scale. In a fully competitive market, the integrated model lacks efficiency, which is the historical reason for the emergence of distributors.
In other words, distributors were separated from the manufacturer's functional system, so they must understand which part of the "century-old shop" function they undertake. China is transitioning from a acquaintance society to a stranger society, but acquaintance economy is deeply rooted. Regional physical stores must bear the credit guarantee and quality assurance for acquaintances.
"If I cheat you, even if this 3,000 yuan is all profit, how many 3,000 yuan does my physical store investment represent? I can deceive you once, but not forever; the monk may run away, but the temple remains. If I really cheat you, we will see each other often in this county town. If you speak ill of me to others, how can I continue my business? Is it worth the risk to earn your 3,000 yuan? Rest assured, if you buy anything from me, I cannot run away; my store sign is hanging there, it is my face!" This is a scene I witnessed where a store distributor, after collecting payment, convincingly "brainwashed" the consumer.
贰
**Rest Assured, Not Only Distributors, but Secondary Wholesalers Will Not Disappear**
Recently, many comments and distributors worry: Will middlemen be replaced? Will secondary wholesalers disappear? My answer is: Rest assured, secondary wholesalers will not disappear.
**Only Those Without Value Will Disappear**
Every channel and every link exists because it has value. Can a primary distributor cover all markets? No, so there is a need for regional and segment channel distributors. Whether primary or secondary, they cannot connect with all channels and consumers, so we also need group-buying merchants and wholesale-retail customers. For example, in Beijing, the government wanted to improve the city image and forcibly closed vegetable markets, pushing shopping into supermarkets. As a result, spontaneous morning markets formed on the streets, completing transactions before 7 AM when management staff were off duty. A market or channel exists because of demand. As long as there is demand, people will find ways to meet it. Secondary wholesalers will not disappear. However, this does not mean the liquor distribution channel will not change, nor that current merchants can definitely cope with future competition.
**E-commerce That Does Not Skim the Cream Has Industry Value**
In recent years, the changes in the liquor distribution industry have been lively in two categories: liquor e-commerce and liquor chain stores.
Honestly, I am not particularly optimistic about either. Because both are almost doing cream-skimming—relying on mature offline products to achieve sales and attracting consumers with low prices of mature products. This has no value for the industry or sales transfer. I believe that truly valuable liquor e-commerce must create its own Taobao brands.
Countless facts on Taobao and Tmall tell us: The greatest value the internet and e-commerce bring to the consumer goods industry is the ability to create Taobao brands! There are many successful cases, such as Liebo, Inman, HSTYLE, Greenbox, Yumfang, Afu, Herborist, Qigege, Three Squirrels, etc. With precise product positioning, excellent product quality, and accumulated customer resources, they have formed their own advantages and characteristics, catering to consumer needs. Some may say the liquor industry is special. This notion is a barrier created by industry insiders. Liquor consumption is diverse, and as time goes on, there will be more consumption motives. Even big brands like Moutai, Wuliangye, Yanghe, and Luzhou Laojiao cannot unify. But currently, no institution is researching these segmented consumers and creating products and brands based on their needs. It can be said that there is no real e-commerce in liquor yet. I believe future liquor e-commerce will definitely launch Taobao brands.
**All Consumer-Oriented Services Are Worth Trying**
Looking at liquor chains, to evaluate a chain's quality, you do not necessarily need to look at the number of stores or sales; just look at its service. To survive, liquor chains need not only store sales but also membership-based phone sales and online order response. How quickly can wine be delivered? Delivering wine to consumers within an acceptable time is a need. Can you meet it? How? Is your system perfectly integrated?
Actually, whether it is 20 minutes or 19 minutes, the number itself is not important; what matters is that through your service and system, you meet and satisfy consumer needs. You have professional service, systems, and teams, which are needed not only by consumers but also by manufacturers. Currently, O2O liquor chains are not large in scale, but if they grow bigger, BAT will covet them.
As liquor industry professionals, we cannot mistake narrow vision for industry characteristics. In the future, new institutions in liquor distribution, especially those based on the internet and consumer needs, may not necessarily come from within the industry; they could be "dimensional reduction attacks" from outside. The attackers might be Baidu, Tencent, or even Didi... So, today, all consumer-oriented services are worth trying.
Source: Jin-Xiao-Shang (ID: jin-xiao-shang)
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