Walking down a busy street, you see towering office buildings that seem out of reach. Perhaps in the eyes of most distributors, companies in office buildings are all internet or high-tech firms. The distribution business is just a middleman's margin, with no technical content. In other words, moving offices into an office building would mean being disconnected from the front line—how would you manage salespeople and warehouses? It's completely unnecessary. Is that really the case? Actually, no. Distributors moving their offices into office buildings isn't about showing off or being high-end; it's a state—the future state of distributors. Future distributor bosses will not be doing what current distributors do, that miserable state. In fact, some excellent large distributors have already done this. Recently, the author visited Anshan and toured Hongye Hengda Trading, which was truly impressive. As a trading company, they built a 6-story modern office building, with spacious office areas where everyone has a computer, including salespeople. They have a cafeteria, meeting rooms, reception areas, a library, and a planning room—everything you'd expect, making it hard to tell this is a distribution company. This might be a microcosm of the future distribution business: no longer a simple combination of a few people, a few vehicles, and a warehouse, but truly formalized and corporatized, becoming a team rather than a gang. -01- The Current State of Most Distributor Bosses "Worrying like selling 'white powder' but earning just a bit of hard-earned money" is a true portrayal of many distributors. It seems like a simple business, but it's complex to run. It might be one-sided to say most distributors don't make money, but it's definitely true that most are exhausted. In May, I went to a county-level market for research and met a beverage distributor with annual sales of over 30 million yuan. After seeing his warehouse and walking through his business process, my feeling at the end of the day was: no wonder he's tired. This distributor's company is located in the suburbs of the county town, nearly half an hour's drive to the city center. It's called a company, but it's actually a 2,000-square-meter warehouse with three 25-square-meter rooms partitioned off: one for the boss's office, one for meetings, and one for finance and auditing. Not to mention a comfortable working environment—salespeople don't even have a place to rest at noon; they have to make do in their cars or in the warehouse. In the warehouse, various near-expiry and expired goods are not accurately separated, piled up in a mess, and eventually, whether expired or not, they're all taken away for destruction. The whole environment can be described in three words: dirty, messy, and poor. After going through the entire process, the distributor hasn't freed himself at all; it's just gang warfare. At 6:10 AM, the morning meeting starts. The boss first summarizes recent sales: Area A sold well, Area B didn't. Salespeople take turns speaking, offering words of encouragement. Then the distributor assigns tasks one by one, along with rewards for completion: 100 yuan for covering 80 stores with new products in a week, 150 yuan for 100 stores... At 7 AM, the meeting ends, and salespeople start loading and unloading goods (combining vehicle sales and visit sales), with the boss supervising. There's no dedicated warehouse manager; salespeople grab goods as they see fit, taking a few boxes of each brand. Finally, the salesperson and finance count together, recording with paper and pen. When salespeople return in the evening, they repeat the morning routine: unload, check with finance, and the boss follows along the whole time. After these tasks, salespeople start manually reconciling orders. Since the entire process is manually recorded, data often doesn't match, leading to disputes. The boss has to mediate, understand the situation, and reconciling orders takes nearly an hour. During holidays, the boss handles all promotional activities personally, from planning to execution. Salespeople are just execution machines, mechanically following orders. Moreover, during the May Day holiday, employees were off, but the boss stayed at the warehouse. Because several truckloads of new goods were arriving, he had to supervise unloading and then count them. Distributors are trapped by these simple tasks, unable to break free from heavy basic work, forming a vicious cycle. Doing the same basic work every day, with no change in the company's operating model, how can they achieve growth and profit targets, let alone move offices into an office building? -02- The Root of the Problem The above case might be one-sided, but it's undeniable that most small and medium distributors aren't much better off. Especially in the past two years, "distribution is hard" has become a common saying in the industry. But there are also distributors who do well in this industry: Jiangsu Caizi Trading, Shaanxi Baihui Trading, Anshan Hongye Hengda, etc., all have moved their offices into office buildings. They're also distributors—why can these big players move into office buildings while you can't? Where's the problem? The normal linear thinking is that they do well, but deep down, it's essentially that they manage well, have good profits, and develop well. 1) Outdated business models and poor innovation Over the past decade, sales channels have changed: from the rise of e-commerce like Taobao and JD, to the prevalence of B2B, to the popularity of community group buying and O2O home delivery. There are more and more channels for products to reach consumers, and the dividend of the distribution business is long gone. The underlying logic of consumer demand is changing. Previously, consumers pursued practicality; now, consumption demands are about scenarios, experience, personality, aesthetics, and service. But distributors should ask themselves: Compared to three years ago, five years ago, or even ten years ago, what has changed? Many distributors are still on the old path from over a decade ago. The times are changing; it's no longer a business that a few people and a few vehicles can do well. The market is constantly changing, but distributors haven't. They can't grasp online trends, and offline construction is lacking. Marketing strategies, team management, financial management, customer management—all lag behind. Many distributors' business models have been repeating at a low level for a considerable time. 2) Human-driven, low digitalization The concept of "digital distribution" has been around for a long time, but in reality, few distributors do it well. Relying purely on human drive is not only inefficient but also wastes resources and personnel. Let's analyze the entire distribution business process: it can be summed up in ten words: logistics, outlets, visits, display, sales. Most distributors use simple inventory management tools. Many distributors haven't used or haven't used well the above links. This leads to a problem: without digital management, distributors have to spend a lot of time on these four basic links, unable to break free from heavy basic work. The company lacks true modern governance, and there's no higher gross margin to support distributors in scaling up, making life very hard. 3) High dependence on manufacturers, lack of pioneering spirit In communication with some distributors, I found a problem: some distributors don't proactively find ways to increase profits but wait for manufacturers' policies and rebates. It's undeniable that manufacturer rebates are part of distributors' profits, but over-reliance isn't a good thing. First, manufacturer rebates are limited. Relying on them for profit growth is unrealistic; profits mainly come from the distributor's market operations and continuous customer accumulation. Second, many manufacturers advocate channel flattening, so distributors are at risk of being replaced at any time. Over-reliance on manufacturers will eventually make you cannon fodder in the manufacturer-retailer war. -03- What Will Future Distributors Look Like? 1) Breaking tool limitations: digital management and operations Distributors face a brand-new, internet-based market environment. Internetization means many things that were previously impossible can now be achieved. Through the use of digital tools, every link in the distribution business can become efficient, data-driven, and quantifiable. Digital management and operations can achieve five types of online presence. First, market online presence: Where are expenses invested? Are they invested in precise stores? Do they produce results? Are they settled promptly? Second, order online presence: This is a key point of digital management. Through online orders, you can know the flow of goods, the category and item distribution of products sold in stores, and then formulate corresponding promotional policies to meet terminal demand. Third, inventory online presence: There is complete data on goods in and out of the warehouse and their flow, allowing you to calculate safety stock and reduce the risk of overstocking and cross-regional selling. Fourth, personnel online presence: All work of manufacturer employees, distributor employees, supermarket promoters, sales promoters, and supervisors is online, so all work can be reached. Distributors can use measurable numbers to identify excellent employees. Fifth, customer online presence: Through digital tools, terminal store owners can communicate online with the company, place orders in real time, and settle expenses promptly, greatly improving overall digital efficiency. 2) Breaking time and space limitations: online-offline integrated distributors Today, consumers mainly get information from the internet. Therefore, distributors must pay attention to online-offline integrated layout. The market share of online is growing. E-commerce, B2B, community group buying, and the live-streaming that has risen in the past two years are indeed directions for future development. In the past, it was difficult for distributors to directly reach the C-end; consumer education could only rely on brand advertising. Now, distributors can directly reach consumers online, even create consumption scenarios online for consumer education, achieving a combination of offline channels and online. 3) Breaking physical regional limitations: capable of covering a province or even the whole country The distribution industry has been iterating rapidly in recent years, and the trend of large distributors has begun to emerge in the past two years. The industry is moving from a trapezoid to a pyramid shape. Especially if small and medium distributors blindly follow the old model, with industry collisions, they will surely be swept away by the waves of trends. It's not hard to see that in recent years, large regional distributors have used their scale advantages to do large-scale distribution, continuously expanding their business areas, and while fighting small distributors, they also acquire them, making their business bigger and bigger. Some industry experts predict that after regional distributor integration, the next stage will see capital entering the market, integrating high-quality regional large distributors, with the ultimate direction being group development. 4) Breaking role limitations: doing ODM and OEM I once discussed this topic with a Master Kong water distributor, and we reached the same conclusion: Distributors have their own teams, good resources, and cover more than 1,000 outlets. They can completely try to create their own brands, doing ODM and OEM. Especially in industries with low market concentration, distributors can use their channel resources to quickly introduce products to terminals, such as condiments and leisure snacks. Finally, I want to say that I'm not advocating that distributors move their offices into office buildings; that's not the goal. Instead, I hope distributor friends understand that behind moving into an office building is having the time and energy to deeply think about the future business, to direct the country, rather than just moving goods and selling goods.