---
title: "Will Wholesalers Die? Not Necessarily"
description: "In a rapidly changing business world, the wholesale industry seems stuck in the past. However, changes are occurring, and while many secondary wholesalers face extinction due to e-commerce and channel optimization, some are thriving by developing unique strategies and transforming their businesses."
author: "王剑冰"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-10-13"
categories: "Dealer Operations"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/CHraVnmcmOGScaZWPQJHkg"
translation: "https://xinjignxiao.com/zh/articles/%E6%89%B9%E5%8F%91%E5%95%86%E5%B0%86%E6%AD%BB-%E6%9C%AA%E5%BF%85-40662a00.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/will-wholesalers-die-not-necessarily-40662a00/"
citation: "王剑冰. “Will Wholesalers Die? Not Necessarily.” New Distribution, 2016-10-13. https://xinjignxiao.com/en/articles/will-wholesalers-die-not-necessarily-40662a00/"
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---

# Will Wholesalers Die? Not Necessarily

> In a rapidly changing business world, the wholesale industry seems stuck in the past. However, changes are occurring, and while many secondary wholesalers face extinction due to e-commerce and channel optimization, some are thriving by developing unique strategies and transforming their businesses.

> In a rapidly changing business world, the wholesale industry seems to be living in yesterday's world.
>
> With a waist bag, speaking pure dialect, bargaining loudly, and spitting on hands before counting money—these traits have persisted among wholesalers for years. In a landscape dominated by giants and regional powers, wholesalers repeatedly buy in bulk and sell in batches.
>
> But in recent years, changes are indeed taking place in this "outdated" industry. With intensifying competition, e-commerce impact, and waves of channel optimization, wholesalers as intermediaries—especially secondary wholesalers—seem to have lost their raison d'être. The claim "secondary wholesalers will die" is gaining traction, causing widespread anxiety among them.
>
> Yet, smart secondary wholesalers, facing a new round of fierce competition, have already developed unique skills.

**Have Secondary Wholesalers Been "Revolutionized"?**
Zhang Hong (pseudonym), who runs an alcohol wholesale business, tells a story of ups and downs in business.
Zhang started his wholesale business in his early twenties. Through diligent delivery and small profits with quick turnover, he quickly gained recognition from retail outlets. As sales increased, primary wholesalers offered higher margins, and Zhang's wallet grew. Within a few years, he bought a car, changed houses, and acquired multiple storefronts.
At the peak of his success, a turning point appeared. If life were a roller coaster, before 2012, Zhang's life was on the rise; after 2012, it began a thrilling descent.
After the ban on "three public consumptions" (official receptions, official vehicles, and overseas trips), Zhang's goods suddenly stopped selling. Consumers who were previously price-insensitive changed, past bestsellers became dead stock, and imported goods gained popularity, seizing significant market share. This rendered much of Zhang's upstream resources useless.
In desperation, Zhang had to stock up heavily and diversify his product range, but orders continued to decline. When he visited retail outlets, he learned their business was also suffering. Where did the business go? All answers pointed to e-commerce. E-commerce emerged and completely disrupted the original market. Even though Zhang had squeezed profits to the limit, some outlets still complained that online stores sold to consumers at prices lower than his wholesale prices. As retail outlets were impacted, Zhang inevitably suffered.
When it rains, it pours. Before Zhang could think of a solution, competitors began to attack.
Several long-term customers suddenly switched suppliers because former secondary wholesalers at Zhang's level had developed into primary wholesalers. With business deteriorating, they had to pick up the terminal resources they had accumulated during their secondary wholesaler days and compete with Zhang. In close combat, Zhang was at a price disadvantage and couldn't gain an edge in customer relationships. The margins given up by primary wholesalers could be compensated through manufacturers' tiered policies, but for Zhang, losing long-term customers was like cutting off his lifeline.
Not just Zhang, but all secondary wholesalers in recent years have lamented that "business is hard to do."
With information transparency, the purchase prices that secondary wholesalers used to keep secret are no longer a secret. Once terminals and even consumers became smarter, the days of secondary wholesalers making money quietly came to an end. Moreover, terminals can now access market information online, knowing which goods are overstocked and which are in short supply. With the ability to order on demand, the risk of inventory pressure falls on secondary wholesalers.
Secondly, established manufacturers, under the "chaotic punches" of new business formats, have been reforming their channels. Kweichow Moutai first partnered with Yonghui Superstores to establish a trading company for direct sales. Last year, it signed a deal with large retail terminal Youa Co., Ltd., making it a special distributor. As a result, secondary wholesalers became the targets of "revolution," losing their profitable positions.
Consumer preferences have also become unpredictable. Terms like "small and beautiful," "high appearance value," and "stylish" left secondary wholesalers, the "old-timers," bewildered. They had big question marks about how to adjust their product structures.
Now, high inventory, shrinking profits, and plummeting sales are three mountains pressing on Zhang Hong. Watching many peers struggle to catch their breath, he began to wonder if he could survive.
Before the sword is fully sharpened, one is already in the martial world. Market changes have been happening quietly. In an era of rapid change, those who cannot keep up with learning are destined to be eliminated. The question of "life or death" actually points to the survival of the fittest among secondary wholesalers.

**Unique Skills**
In an environment of widespread lament, many secondary wholesalers not only survive but thrive. Wang Peng (pseudonym) is one of them.
Wang Peng, from a farming background, went to Chongqing's Chaotianmen Dock alone after graduating from high school in 1981 and gradually entered the seasoning wholesale business. After decades of hard work, Wang now has over ten storefronts, covering a wide range of terminals, supplying many hotels and Western restaurants.
However, two years ago, Wang's business nearly collapsed.
Wang was a long-term seasoning supplier for "Chongqing Flavor" (a restaurant chain). Typically, terminal payments are settled monthly, or every two or three months. But due to rapid expansion and cash flow difficulties, Chongqing Flavor requested a one-year credit period from Wang and other suppliers.
Wang privately learned that Chongqing Flavor not only owed suppliers but also raised funds from private sources, yet business showed no improvement. He had a bad feeling.
In November 2014, a text message from a peer confirmed Wang's premonition: Many Chongqing Flavor stores closed, and the owner disappeared. Creditors panicked and gathered at the storefronts to demand payment. In total, Chongqing Flavor owed over 97 million yuan and was unable to repay.
Hundreds of thousands of yuan in payments went down the drain. Wang seemed not to have learned his lesson; after easing financial pressure, he began offering credit to hotels again.
In fact, besides selling on credit to terminals, Wang also paid advance payments to upstream suppliers, providing them with cash flow flexibility, and took on the thankless tasks that most manufacturers, general agents, distributors, and terminals couldn't or wouldn't do.
Because hotels often call to order seasonings on the evening they receive orders, Wang confirms inventory overnight and arranges delivery early the next morning. Only after the terminal confirms receipt can he go back to sleep.
Hotel needs are complex and changeable, requiring suppliers to have a rich product range. Wang deals in over 2,000 types of seasonings, of which only about 100 are commonly used. He bears the inventory risk himself.
In 2012, after receiving cheese orders from several terminals, Wang mistakenly thought cheese dishes would become popular. To quickly build a supply advantage, he personally went to other places to purchase a large batch of imported cheese. Unexpectedly, the cheese craze was short-lived, and terminals quickly lost interest. A large quantity of goods piled up in the warehouse and couldn't be returned. Facing a loss, Wang came up with an idea.
Wang had good relationships with key people at terminals. He gathered the chefs from various hotels, explained his situation, introduced multiple uses of cheese, and offered some "ideas," appealing to both emotion and interest. The chefs returned and launched corresponding dishes, informing their purchasers of the needed ingredients. After several rounds, Wang managed to overcome the crisis.
Since then, Wang has often used this method to help manufacturers distribute excess inventory and complete new product launches. Not only did he make money, but he also enhanced his bargaining power, creating a virtuous cycle.
Wang believes that as intermediaries in the channel, secondary wholesalers can hardly survive without unique skills. And he discovered this skill from the thankless tasks that no one wanted to touch.
Many secondary wholesalers blame e-commerce for their plight, but those without functional value would have been replaced by peers long before e-commerce learned their tricks.
Wang doesn't like the word "replaced." Whether to "fight on the summit" with new forces or complete his own transformation and upgrade, he prefers the latter.

**Conquering the New Arena**
This year marks the 31st year Qin Jian has been in the clothing wholesale business. Over years of business, he has seen many ups and downs and witnessed how the traditional clothing industry has gradually walked into a dead end.
In the past, in a market-oriented clothing industry, as long as products were of good quality and design, they would sell. But now, the rise of e-commerce and fast-fashion brands has captured a large number of consumers. Their products are closer to users, with trendy styles and low prices. Traditional clothing has no advantage compared to them.
However, Qin learned that to open an online store on Tmall, one must first pay over 100,000 yuan in entry fees, and to make consumers find you among countless online stores, one must spend tens of thousands of yuan daily on bid ranking. The costs are not low. Besides, he considers himself a "rough guy" who doesn't understand e-commerce.
The model of building brand influence through physical stores is too heavy; the capital occupation of storefronts and inventory could easily bankrupt him.
Qin came up with a "quasi-direct sales" idea. Every secondary wholesaler has a large number of terminal resources. Why not mobilize these terminals and develop them into franchisees of his brand? The storefronts are already there. Qin provides goods and decoration costs, while franchisees provide space and labor, and they split the profits equally. This solves the problem from wholesale to brand direct sales, and product prices can be reduced by more than half.
But whether consumers will accept the clothing designs is still unknown. E-commerce can accurately reflect consumer preferences, but Qin doesn't understand it. So he decided to "outsource" e-commerce. Since old-timers can't keep up with trends or handle e-commerce, why not outsource this business to those more skilled? Qin's idea is to choose an excellent online store operator as a partner, who provides design ideas closest to consumer preferences, while Qin handles capital, inventory, and shipping.
This is Qin's attempt. In the turbulent world of secondary wholesale, countless other transformation and upgrade stories are unfolding.
A B2B fruit e-commerce platform has a "terminal service provider" concept. They plan to develop an e-commerce system where terminals can attach, and the platform will help operators with online operations for free. This model saves terminals from store rent and labor costs and spares them from learning e-commerce. Once the platform gathers enough terminals, it not only gains stronger bargaining power with upstream suppliers but also can access regional information flows and participate in goods allocation.
This is a very "internet-thinking" model, but more secondary wholesalers are transforming in their own familiar ways: either growing into primary wholesalers and dominating regional markets, or focusing on vertical fields to become professional secondary wholesalers, or following the example of wholesalers in Kunming, forming alliances and establishing trading companies. No matter how they transform, the key is to find their unique advantage and perfect it.
Looking at the entire wholesale industry, not only secondary wholesalers are transforming; the wholesale market itself is also developing. Developed countries have made significant progress in building new wholesale markets. China will inevitably learn from their experience and transform wholesale markets into modern procurement centers integrating information release, price formation, commodity distribution, logistics, display, order taking, and e-commerce.
By then, facing a different arena, wholesalers will experience a new round of dramatic changes. Times are evolving, and changes happen at any moment. Every industry transformation will see some fall, and new leaders will rise with the trend.

Editor: Tang Liang tangliangcq@126.com


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## Citation metadata

- Publisher: New Distribution
- Author: 王剑冰
- Published: 2016-10-13
- Canonical: https://xinjignxiao.com/en/articles/will-wholesalers-die-not-necessarily-40662a00/
- Original source: https://mp.weixin.qq.com/s/CHraVnmcmOGScaZWPQJHkg

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