Why Manufacturers Still Need Distributors in the Age of Direct Supply

When the call for “de‑distributor‑ization” surged, the author calmly revealed the underlying logic of fast‑moving consumer goods (FMCG) channel competition: manufacturers’ true allies remain distributors who can both “hold the line” and “strike out.” Direct‑supply models enjoy a short‑term honeymoon but face long‑term difficulties, while chain systems exert strong bargaining power, and small independent stores cannot bear the massive costs of a distributor‑free model.

Examples illustrate the anxiety of distributors: a beer distributor worries about being abandoned after 20 years of partnership, while many distributors have exited the FMCG sector because they lack competitiveness. Chain systems increasingly seek direct supply from manufacturers, promoting a “de‑distributor” approach as a new channel model. Manufacturers view this as a way to increase profit margins and use direct supply as leverage against other distributors.

However, the direct‑supply model proves unsustainable. Initially, rapid growth of chain systems can meet short‑term sales targets, but over time manufacturers face mounting financial pressure (accounts receivable), logistics costs, personnel management, and regional relationship maintenance. Scaling direct supply to thousands of independent stores would require an unmanageable number of sales and management staff, far exceeding practical limits.

From a profit‑maximization perspective, direct supply to terminals—whether chain systems or scattered stores—is economically inefficient for manufacturers. Instead, manufacturers benefit more from partnering with competitive distributors who can convert resources into market wins.

The article emphasizes that distributors must develop “wild‑battle” capabilities: proactively monitor competitors, fine‑tune terminal operations, and execute aggressive market actions. Case studies show distributors organizing teams, holding mobilization meetings, rewarding staff, and conducting targeted “grab‑the‑competition” campaigns that successfully halted competitor gains within three months.

Digitalization is presented as the key furnace for forging this core competitiveness. By adopting digital tools, distributors transform from passive “sitting merchants” into data‑driven operators, achieving terminal visibility, precise sales activation, and data‑based decision‑making. This digital upgrade is not for its own sake but to survive intense market competition.

In conclusion, the fast‑moving consumer goods channel battle never stops. As competition intensifies, the value of capable distributors grows, demanding higher standards, digital capabilities, and a proactive “defend and attack” mindset. Distributors that wait for better conditions or manufacturer support risk being eliminated, while those that embrace digital transformation and aggressive market tactics will thrive and become indispensable partners in industry consolidation.