---
title: "Why Is It Increasingly Hard for FMCG Distributors to Make Money Despite Their Hard Work?"
description: "A financial journalist's encounter with a beer distributor who personally delivers goods highlights the grueling reality of FMCG distribution. The article analyzes why distributors are working harder yet earning less, and offers strategic paths for future growth, including brand operation, terminal refinement, digital capabilities, and premium product focus."
author: "陈思廷"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-10-24"
language: "en"
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# Why Is It Increasingly Hard for FMCG Distributors to Make Money Despite Their Hard Work?

> A financial journalist's encounter with a beer distributor who personally delivers goods highlights the grueling reality of FMCG distribution. The article analyzes why distributors are working harder yet earning less, and offers strategic paths for future growth, including brand operation, terminal refinement, digital capabilities, and premium product focus.

A few days ago, in the well-known "New Beer" WeChat group, a financial journalist friend shared an interesting experience. He went to a small store to buy drinks and happened to see an electric tricycle delivering beer to the store. The deliveryman was a middle-aged man with fair skin and a bit of a belly. He first loaded several plastic crates full of empty bottles from the store onto the tricycle, then unloaded several cases of new beer, moving quickly and skillfully. The weather was hot, sweat dripping from his forehead, and his back was soaked with sweat.

The journalist asked curiously, "How much does your boss pay you a month for delivering beer?" The chubby deliveryman turned around, looked at the journalist, and said, "I am the boss."

The "New Beer" community is currently one of the most active discussion groups in China. The journalist's experience sparked a hot topic among group members: Why does being a beer distributor still require such physical labor today?

In fact, not only beer distributors, but most FMCG businesses are labor-intensive; and it's not just physical labor—FMCG distributors are both mentally and physically exhausted.

**01 FMCG Distributors Are Finding It Increasingly Tiring to Make Money**

Distributors act as the connector between brands and retail terminals in the FMCG industry, amplifying brand market coverage. Traditionally, distributors have had to not only advance funds but also sell, deliver, and collect payments, covering almost all work after products leave the factory. It can be said that over 80% of FMCG products purchased by consumers are delivered piece by piece to each terminal by distributors nationwide. The delivery function was assigned to distributors by the market in an era lacking commercial infrastructure—a historical choice.

Image source: pexels

No one doesn't yearn for a better life, and no distributor doesn't want to earn money more easily and with more dignity, but everything seems to go against their wishes. Today, even if distributors are willing to work harder, business is becoming more physically and mentally demanding, and making money is increasingly difficult. Looking back, business was always easier in the past. Competition wasn't as fierce, brands had large sales teams, selling was less difficult, and although margins were thin, there was greater security. But today, everything is moving toward increasing difficulty.

Recently, New Distribution has intensively visited distributor friends across the country, and there is widespread feedback about the following phenomena and difficulties:
1) Various labor and operating costs have risen significantly, but manufacturers' growth targets remain unchanged, putting increasing pressure on sales, and staff turnover is rising.
2) Due to consumption sentiment and sporadic COVID-19 outbreaks, sales are unstable and increasingly difficult to predict.
3) Top brands are also under great pressure for growth. When sales growth stalls, major brands have intensified internal rectification of distributor team compliance, causing great distress.
4) Some leading brands have begun frequently replacing regional managers. New regional managers often impose extremely strict requirements on market actions and targets, and any failure to meet them may lead to replacement.
5) Under immense pressure, some brands have begun to legitimately carve up distributor markets under the guise of "network flattening to improve terminal service capabilities." This so-called flattening actually increases the number of distributors to boost inventory pressure, as well-known brands never lack distributors willing to enter. New distributors also have to more actively cooperate with inventory loading.

The above issues are only part of what distributors face today. Labor is joyful, and laborers are great. But **FMCG distributors should seriously consider: society has progressed tremendously, yet we are still working as hard as in the past, even earning less and becoming more tired. Is something wrong?**

**02 Basic Judgments for Distributors Planning Their Business**

Earning money is becoming more tiring and difficult—this is a real problem many FMCG distributors face today. The pain of reality cannot be solved by thinking at the surface level; we must look behind reality for causes and answers. Distributors should first have several basic judgments in mind:

**First, "distributor" as a group title has symbolic meaning far greater than its practical meaning.** This group is increasingly differentiated, from annual revenues of hundreds of thousands to billions, all called distributors, but their business natures are completely different. In the hierarchy of "super merchants," "large merchants," "medium merchants," and "small merchants or second-tier wholesalers," you must first see where you stand. Different positions mean different perspectives and different problems.

**Second, the main physical labor of distributors is in warehousing and delivery; the mental labor is mainly in market sales and promotion.** Warehousing and delivery have low entry barriers and low technical content, making it a "labor-intensive" business that constantly compresses costs, destined to become increasingly tiring and less profitable. Market sales and promotion are "mental" businesses with high technical requirements and thus larger profit margins.

**Third, China has entered an era of high-quality development.** The lower the price of goods, the more they emphasize undifferentiated coverage, leading to greater competition and thinner distributor profits; the more mid-to-high-end products emphasize market promotion and operational capability, the weaker the competition relatively, but the higher the technical requirements and the thicker distributor profits.

**Fourth, in the distribution field, although scale is no longer the only factor, it remains a key foundation.** Without a sufficiently large territory and without leaping from second-tier wholesaler to at least medium-sized distributor, you are not qualified to talk about the future.

**Fifth, in the entire FMCG distribution chain, the closer to the C-end, the thicker the profits.** In difficult times, the more quality terminals you control, the better your terminal relationships, and even if you have C-end traffic, your business will be more stable and profits more assured.

**Sixth, human energy is limited; distributors ultimately must choose only one path between mental and physical labor.** When possible, separate people from goods; if the business model allows, outsource warehousing and delivery to professional third parties and focus on the high-profit "mental" part—this is worthwhile.

With these basic judgments, we can roughly outline a clearer future and make correct choices based on our actual situations.

**03 Several Path Choices for Making FMCG Business Better**

If you are still a small distributor or second-tier wholesaler, the urgent task is still to find a quality brand to establish a base. While securing the base, seek to expand territory through distribution. Only when your scale exceeds 30 million yuan do you have the right to choose a future development path.

If you are already a medium-sized distributor with scale above 30 million, there are multiple paths from 30 million to 300 million:

**Path One: If you have an excellent brand and very good relationships with the manufacturer, you can choose to be a firm brand operator, i.e., exclusive operation.** Obtain a sufficiently large territory and enough market resources for this brand, use a dedicated brand team to enhance your professional market promotion and operational capabilities. If there are better third-party warehousing and delivery services, outsourcing this function also reduces management risk and costs.

**Path Two: Penetrate downward, refine and deepen.** Focus on terminal needs, capture a group of core quality terminals, use digital tools and operational methods to help terminals do better business, improve your procurement level, and provide terminals with more and better products. Help terminals jointly build and operate consumers, thereby having the opportunity to cultivate new brands or private labels.

**Path Three: Overlay internet capabilities on traditional business, such as O2O, live streaming, etc.** FMCG new retail is booming, but the operational capabilities of new retail are scarce among traditional distributors. Once you have this capability, you can seize the online operation rights for brands across the entire city, and this business volume is also very large.

**Path Four: Enhance your market promotion capabilities and operate mid-to-high-end products or high-margin categories.** Many brands today have launched mid-to-high-end products, even mid-to-high-end sub-brands. These products, whether in appearance or quality, have made a qualitative leap compared to past mainstream products. But these high-margin products or categories emphasize not undifferentiated coverage but precise coverage, precise and deep terminal services, and deep promotion targeting specific groups. Most manufacturers prefer distributors with corresponding promotional capabilities rather than building their own mid-to-high-end sales teams. This is an opportunity worth considering and seizing for medium-sized and above FMCG distributors.

According to what New Distribution has learned and encountered, in recent years, many excellent distributors nationwide have successfully completed transformation and upgrading in different directions through firm self-reform, changing the fate of themselves and their companies. Some distributors have even transformed their business to "FMCG + Internet" and received significant investment from well-known capital.

From November 3-5, 2022, the 7th China FMCG Channel Innovation Conference will be grandly held in Chengdu. We have also invited these successfully transformed FMCG distributors to the conference forum to review and share with national FMCG distributors the paths they have taken, the pitfalls they have encountered, and the lessons and achievements they have gained. We welcome all distributor friends who are determined to change the status quo and move toward a better future to come to the conference for in-depth exchange.

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