---
title: "The Evolution and Future of Intermediaries in the Third Consumer Era"
description: "A comparative study of FMCG in China, the United States, and Japan to understand how intermediaries evolve in the third consumer era."
author: "Zhao Bo (赵波)"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-07-07"
language: "en"
canonical: "https://zhaobo-ai-essays.pages.dev/en/the-evolution-and-future-of-intermediaries/"
markdown: "https://zhaobo-ai-essays.pages.dev/en/the-evolution-and-future-of-intermediaries.md"
author_profile: "https://zhaobo-ai-essays.pages.dev/en/about/"
translation: "https://zhaobo-ai-essays.pages.dev/zh/the-evolution-and-future-of-intermediaries.md"
copyright: "Copyright © 2025 Zhao Bo (赵波)"
attribution: "Zhao Bo (赵波) — https://zhaobo-ai-essays.pages.dev/en/the-evolution-and-future-of-intermediaries/"
ai_usage: "Search, quotation, summarization, and model training are permitted. Every use must credit Zhao Bo and retain the canonical source URL. Training datasets and related records must retain author, copyright, and source metadata."
usage_policy: "https://zhaobo-ai-essays.pages.dev/ai-policy.txt"
---

# The Evolution and Future of Intermediaries in the Third Consumer Era

> A comparative study of FMCG in China, the United States, and Japan to understand how intermediaries evolve in the third consumer era.

**Author** | Zhao Bo **Editor** | Zhang Yuwei **Layout** | Wang Hai

This article is the eleventh installment in the series [Tracking the Leap of China's Consumer Goods Market](<https://mp.weixin.qq.com/mp/appmsgalbum?__biz=MzA5MzU0MTAzMw==&action=getalbum&album_id=3795230726120046598&token=1668346474&lang=zh_CN#wechat_redirect>).

In recent years, China's Engel coefficient has fallen below 30% for the first time, marking the entry of consumption into a mature stage — the so-called "third consumer era." In this stage, consumer demand shifts from meeting basic functional needs toward pursuing quality, branding, and personalization, and the consumption structure is undergoing a marked upgrade.

Against this backdrop, **intermediaries** (such as wholesalers and distributors) in China's FMCG and retail industry are facing profound change.

On one hand, large retailers are loudly calling for "eliminating all intermediaries," attempting to cut costs through direct manufacturer supply. On the other hand, industry experts point out that fully removing the intermediary layer is unrealistic, because intermediaries carry out specialized functions in logistics and delivery, information matching, credit guarantees, and inventory management — functions that effectively lower transaction costs.

In fact, when a company tries to "eliminate the middleman," it ultimately has only two paths: internalize these intermediary functions itself, or replace traditional intermediaries with more efficient new ones. Extensive practice has shown that internalizing distribution functions often leads to higher management costs.

Therefore, "eliminating the middleman" is, in essence, **"replacing the middleman"**: the value of the intermediary layer still exists, but the players filling that role are being replaced at an accelerating pace.

Against the backdrop of the "third consumer era," intermediaries in China's FMCG/retail industry are evolving from the shelf-stockers and regional brand agents of the past into new-style **category operation service providers** and the **supply-demand bridge** between brands and consumers.

This article systematically analyzes this evolutionary path, focusing on: the current structural and functional transformation of intermediaries in China's FMCG and retail industry, and future evolutionary trends; a horizontal comparison of typical intermediary enterprises in the mature consumer markets of the United States and Japan (such as Sysco and McLane in the US, and Japan's five major trading houses), examining the roles, profit models, organizational structures, and development strategies they play at a highly mature stage of consumption; and, building on this, a summary of the general patterns and differentiated paths by which intermediaries evolve — as an economy enters a mature consumption stage — from "brand promoter" to "service platform," "supply-demand bridge," and "intensive ecosystem organization."

**Definition of Concepts**

The **third consumer era** described in this article: a theory originating from New Distribution founder Zhao Bo's research on China's consumer market, used to describe the consumption pattern when per-capita GDP is relatively high and the Engel coefficient falls below 30%. In this era, the individual becomes the primary unit of consumption, pursuing quality-oriented and symbolic consumption, showing a preference for brand names, individuality, and experience, with consumers beginning to focus on higher-order needs (for example, health, enjoyment, and customized goods and services).

Traditionally, manufacturers viewed distributors as a "reservoir," pushing products as far down into every tier of the market as possible through shelf-stocking. In an era when consumers' basic needs were not yet fully met, distributors could profit simply by holding exclusive agency rights and controlling terminal networks.

But once consumption becomes highly saturated and markets are flooded with homogeneous goods, the traditional distributor model is challenged. It is worth noting that the ecological space for intermediaries persists over the long run, but a particular form of intermediary (such as the traditional distributor) may no longer fit the new environment.

**"Category operator" and "category operation service provider": this is a concept New Distribution has put forward over the past two years, referring to intermediaries upgrading from the past role of representing a single brand and earning the buy-sell spread, into service providers for category management and operation.**

Category operators are no longer centered on brand agency authorized by manufacturers; instead, they root themselves in a specific product category, digging deep into product-mix curation, supply chain coordination, and terminal marketing to strengthen that category's competitiveness at retail.

For example, some leading regional distributors no longer call themselves the distributor of a certain brand. Instead, they have built their own product-selection and design teams, focused on assembling product mixes according to retail customers' needs. Some even team up with upstream manufacturers to custom-develop new products for retailers, providing category value-added services that neither other distributors nor the retailers themselves can replace.

In essence, the category operator plays the role of a "purchasing consultant" or "buyer" for the retail side, while the traditional distributor plays the role of "salesperson" for the manufacturer — the two are fundamentally different.

"Brand promoter" vs. "service platform": "brand promoter" refers to the functional positioning of a traditional intermediary **oriented toward selling the manufacturer's products**. Driven by the manufacturer, their main task is to push branded goods into as many terminal outlets as possible to expand market share.

By contrast, the "service platform" emphasizes a functional shift for the intermediary **oriented toward serving both suppliers and channel customers**. A service platform not only sells products but also provides comprehensive services such as logistics and delivery, financial credit, information systems, and category management, acting as a supply chain platform.

In the third consumer era, large intermediaries are shifting from brand promoter to service platform: on one hand providing upstream manufacturers with more efficient channel services, and on the other providing downstream retailers with one-stop supply chain support.

**As consumption enters a stage of high stratification and diversification, intermediaries further evolve into a supply-demand bridge — that is, they become able to keenly sense consumer demand and feed it back to the supply side**, achieving efficient matching between supply and demand.

This requires intermediaries to have data-analysis and market-response capabilities — for instance, guiding manufacturers to adjust their product mix based on terminal sales data, or even directly participating in custom product development. The "intensive ecosystem organization" is a still higher form of intermediary development, meaning the intermediary is no longer an isolated trading go-between, but instead builds an **industry ecosystem** through capital and platforms, integrating upstream and downstream supply chain resources to achieve economies of scale and scope.

Japan's five major general trading houses invest in upstream resources and downstream channels worldwide, capturing returns across every link of the industry chain, while also using their investment relationships to secure trade agency rights — building a vast ecosystem spanning raw material supply, manufacturing and processing, and distribution and retail.

Under this model, the intermediary becomes a cross-industry supply chain organizer, capturing long-term value through intensive operations and ecosystem synergy.

**International Comparison:**

**The Role of Intermediaries in Mature Consumer Markets**

Countries at a mature stage of consumption (such as the United States and Japan) have long since undergone upgrades in consumption structure and distribution transformation, and the structure of their intermediaries offers valuable lessons. Particularly in industries characterized by low unit value, high frequency, and high-density delivery (LBS) — such as food and food-service supply, pharmaceutical distribution, and convenience-store retail — these countries have produced their own distinctive intermediary giants. Below, typical representatives from the United States and Japan are selected for comparative analysis.

**United States: Giants of Food-Service and Convenience Retail Distribution**

The US consumer market is highly developed, and specialized, large-scale third-party distribution systems have emerged in areas such as food service and convenience retail, typified by **Sysco** and **McLane**.

Sysco — a food-service distribution giant: Founded in 1969, Sysco has grown through sustained mergers and acquisitions into a global food supply chain leader with annual revenue approaching $80 billion. As the largest food-service distributor in the United States, Sysco has more than 58,000 employees, operates 343 distribution facilities, and serves more than 700,000 customers across more than 90 countries worldwide. Its core business is providing one-stop delivery of food and kitchen supplies — including fresh and frozen goods, dry groceries, and even tableware — to restaurants, hotels, schools, and similar customers.

**Profit model: Sysco wins through a "big and comprehensive" category offering combined with efficient logistics, using scale purchasing to secure low prices and then profiting on the wholesale spread. The company also places heavy emphasis on developing its own private-label products to raise gross margin and customer stickiness.**

**Organization and service: Sysco has built an extensive warehousing and distribution network across the United States, and has established local sales teams to provide hands-on service.**

**In recent years, Sysco has upgraded from a pure distributor into a service platform: it has launched programs such as "Total Team Selling," which combines fresh produce with its broad distribution network through team collaboration to improve responsiveness to customers; and "Cutting Edge Solutions," a platform for customizing innovative products and solutions for customers, even offering value-added services such as menu-development guidance and culinary training.**

**These initiatives mean Sysco is no longer just selling goods — it has become a partner that helps improve its customers' operations, strengthening customer loyalty while consolidating its own market position.**

**In addition, Sysco has invested in technology to improve supply chain efficiency — for example, using artificial intelligence for inventory forecasting and route optimization, so it can respond to customer orders faster and reduce waste. On order policy, Sysco has even eliminated minimum order quantities, letting customers order more flexibly and raising the level of service under higher delivery frequency.**

**Overall, in America's third consumer era, Sysco plays the role of a supply chain integrator and service provider for the food-service industry**: leveraging an asset-heavy logistics network and soft service capabilities to help countless restaurants obtain a rich supply of ingredients at lower cost and higher efficiency.

**McLane — the backbone of convenience-retail supply chains: Founded in 1894, McLane is one of the oldest and largest distribution enterprises in the United States. McLane is now a wholly owned subsidiary of Warren Buffett's Berkshire Hathaway, with a core business that includes providing supply chain solutions for food and everyday goods to convenience stores, supermarket chains, big-box retailers, drugstores, and quick-service restaurant chains** across the country.

McLane operates more than 80 large distribution centers in the United States, has one of the country's largest private truck fleets, and is able to procure, warehouse, and deliver more than 50,000 consumer products to roughly 110,000 retail outlets nationwide.

Role and function: **McLane can be seen as the "hidden hub" of the American retail system. Through a highly intensive logistics layout, it efficiently delivers the goods of countless manufacturers to retail outlets across the country, achieving** a "long-haul plus last-mile" supply chain connection.

In the convenience-store sector — for chains such as 7-Eleven — McLane performs the function of restocking shelves on a regular schedule, allowing even a single small store to enjoy the low prices and on-time delivery of scale purchasing. Likewise, in the quick-service restaurant sector, McLane's food-service division delivers ingredients and packaging to restaurants.

Profit model: **McLane's main sources of revenue are the wholesale spread and logistics service fees. Because its downstream customers are mostly large chains, its margins are low but volumes are extremely high, and it wins through operational efficiency. Walmart long used McLane as its own distribution subsidiary before selling it to Berkshire — precisely because McLane is so well matched to the low-cost, high-frequency delivery needs of big-box and convenience formats.**

**Organization and strategy: McLane is divided into two business units, Grocery and Foodservice, each operating the supply chain for a different format, while also expanding into new categories through acquisitions (such as its acquisition of Empire Distributors to enter liquor distribution).**

**The company continues to invest in logistics technology and inventory-management systems, integrating with the information systems of suppliers and retailers to improve supply chain visibility and replenishment efficiency.**

**Strategically, FMCG distribution in the United States relies more heavily on third-party long-haul distributors plus regional wholesalers like McLane, thereby lowering total social inventory and delivery costs.**

**In the third consumer era, McLane plays the role of** a "supply-demand bridge" — helping thousands of upstream manufacturers get their goods into scattered terminals, while also solving problems of scale purchasing, unified delivery, and payment-term financing for countless small downstream retailers. It is an indispensable intermediary link in America's convenience-retail ecosystem.

Summary of the US model:

American intermediaries lean toward specialization and **scale monopoly**: giant companies emerge in different subsectors, each digging deep into the supply chain of its own industry. For example, food-service distribution is dominated by Sysco and similar companies, convenience and grocery distribution is dominated by McLane and similar companies, and pharmaceutical distribution is controlled by the "big three" — McKesson, AmerisourceBergen, and their peers.

These intermediary giants, through highly intensive logistics and extended services, have consolidated their value in a mature consumer society: on one hand, reducing the high cost of every direct-supply transaction for manufacturers; on the other, helping terminal customers obtain high-frequency, small-batch supply and value-added services, becoming the **guardians of efficiency and service** within the supply chain.

**Japan: General Trading Houses and a Diversified Supply Chain Ecosystem**

Unlike the American emphasis on specialization, Japan's intermediary distribution system is characterized by **high comprehensiveness and networking**, typified by the "five major general trading houses" — Mitsubishi Corporation, Mitsui & Co., Itochu Corporation, Marubeni Corporation, and Sumitomo Corporation. These trading houses are not, in the traditional sense, companies that simply wholesale within a single industry — they are comprehensive conglomerates involved in resources, manufacturing, distribution, retail, and many other fields, playing a unique intermediary role in Japan's mature consumer society.

**Origins of the role: Japan's trading houses originated in the trading divisions of the zaibatsu after the Meiji Restoration, evolved independently into large trading companies after World War II, and gradually formed today's general-trading-house model through cross-shareholding and industrial coordination. They not only serve as intermediaries for domestic and international trade**, but through investment, embed themselves deeply into both the upstream and downstream of the industry chain, weaving themselves into the ecosystem of production and distribution.

For instance, a trading house will invest in upstream resources such as raw-material mines and agricultural plantations, while also investing in manufacturing enterprises and sales channels, thereby capturing investment returns while also securing product agency rights or exclusive distribution rights at those points in the industry chain. This "trade plus investment" dual-engine model is the foundation of the trading houses' profitability: investment brings dividends and capital appreciation, while the trading business earns spreads or commissions by controlling channels and information networks. The two reinforce each other — the broader the investment footprint, the deeper the trading house's involvement in the entire industry chain, and the better it can integrate upstream and downstream to improve transaction efficiency and capture value.

**Function within the supply chain ecosystem: Within Japan, the general trading houses are extensively involved in food and consumer-goods distribution. Take Itochu Corporation as an example: its food-distribution division imports large volumes of overseas grain and food ingredients to supply the Japanese market, and it holds a controlling stake in the major convenience-store chain FamilyMart, achieving closed-loop control from upstream procurement to terminal retail.**

Similarly, Mitsubishi Corporation is a major shareholder in the convenience-store chain **Lawson, assisting it with merchandise procurement and supply chain management.**

**It can be said that the trading houses have embedded themselves into Japan's retail distribution system** through equity partnerships, joint ventures, and similar arrangements: acting simultaneously as wholesale suppliers and as providers of financial, information, and logistics support to retail enterprises.

In the realm of high-frequency delivery, Japan's convenience stores and supermarkets have highly developed fresh-food delivery systems, backed both by specialized logistics companies and, often, by trading houses providing capital and merchandise supply chain support, ensuring goods flow smoothly from around the world into the domestic market.

At the same time, the trading houses also operate vast **B2B wholesale networks**, serving countless small and medium-sized retailers and restaurants. For example, comprehensive wholesale trading companies and food-distribution enterprises in which Mitsui & Co. has invested provide daily ingredient-delivery services to restaurants and shops.

The trading houses have also made inroads into pharmaceutical distribution (such as Sumitomo Corporation's stake in the pharmaceutical wholesaler Alfresa), leveraging their capital and network advantages to support the flow of pharmaceuticals. In this way, the general trading houses have built a cross-industry, cross-regional supply chain ecosystem, serving as **multi-faceted connecting nodes** both within Japan and globally.

**The profit model of the general trading houses can be summarized as "investment plus trade": earning profits through investment in key industry segments, and using that position to secure trade-monopoly rights that generate recurring income.**

**At the same time, the trading houses use their global networks to help Japanese manufacturers expand into overseas markets**, providing a full suite of services such as market research, customs clearance and logistics, and local distribution, and collecting service fees or a share of profits.

This highly coordinated model has allowed the trading houses, even after Japan's economy slowed and hit the "ceiling" of domestic demand, to still find growth momentum through international expansion and diversified operations. In recent years, as global commodity prices have risen, the trading houses' profits in resources and energy have surged, driving overall profits to record highs.

Warren Buffett, too, has made large investments in Japan's five major trading houses, drawn by their stable cash flows and diversified investment portfolios.

**Organizational structure: All five trading houses have business divisions organized by industry — such as metals and resources, energy and chemicals, food and consumer goods, machinery and equipment, and finance and logistics — with each division seeking opportunities worldwide and working in coordination. In addition, the trading houses actually run specific businesses through a large number of subsidiaries and joint ventures under their umbrella.**

**For example, Itochu has deep footprints in consumer areas such as food distribution, textiles and apparel, and e-commerce; Marubeni has traditional strengths in grain trading and agriculture; and Mitsubishi and Mitsui are powerful in metals, mining, and automobiles, but each also has a food and daily-life division.**

**Organizationally, they emphasize networks and information sharing**, and with their enormous workforces (each trading house typically employs anywhere from several thousand to tens of thousands of people) and global branch networks, they weave an intelligence and logistics network that spans both the supply and demand sides.

This network lets the trading houses spot shifts in consumer trends faster than ordinary manufacturers can, and lets them deploy global resources to meet new market demand. For example, when Japanese consumers begin to favor a particular overseas specialty food, a trading house can quickly source it in bulk from its place of origin and bring it into the Japanese market, satisfying the diverse demands of consumption upgrading.

Summary of the Japanese model:

The general trading house is a **unique and advanced form of intermediary** within Japan's distribution system. Unlike America's specialized wholesalers, a trading house is more like an **industry-chain strategist and resource organizer**: through capital and networks, it forges a loose alliance among a great many enterprises, meeting domestic Japanese consumer demand while cementing its own control over the trading segment.

In Japan's third consumer era (roughly the 1970s–2000s, a period of economic stagnation yet consumption diversification), the trading houses helped many Japanese manufacturers reach overseas markets for growth, while also bringing overseas consumer goods in to enrich domestic choice — playing a bridging role on both the supply and demand sides.

Although the trading houses' profit margins are not particularly high, they win on sheer scale and resilience. In an environment where Japanese "consumption tends toward saturation and the intermediary layer hollows out," they have still, through transformation into investment and deeper services, firmly held an important position in the distribution sector.

**Summary of the International Comparison:**

In sum, as mature consumer economies, the United States and Japan show different intermediary paths: **the United States** tends toward specialized giants emerging along vertical industry divisions, dominating the market through superior logistics and service efficiency; **Japan**, through the cross-industry intermediary organization of the general trading house, achieves a high degree of intensive integration of supply-and-demand networks.

Though the two differ in form, their core commonality lies in this: both acknowledge that the intermediary, in a mature market, plays an indispensable role in lowering transaction costs and integrating the supply chain — rather than simply being eliminated.

In the United States, without Sysco and McLane, it would be very difficult for restaurants and convenience stores to each deal directly with thousands of suppliers;

In Japan, without the general trading houses, many manufacturers and retailers would lose crucial capital and supply chain support. It can be said that, however their form evolves, the intermediary's **service essence** in a mature market remains the same: to act as a more efficient supply-demand bridge, delivering better overall efficiency and value-added service than upstream and downstream enterprises could achieve by transacting directly with each other. This offers a valuable lesson for China's FMCG industry.

**The Evolutionary Path of Intermediary Functions**

Based on the international experience above, we can summarize the evolutionary path intermediaries follow as they enter a mature consumption stage (the third consumer era) as a process from "**brand promoter**" to "**service platform**" to "**supply-demand bridge**," and ultimately toward "**intensive ecosystem organization**." This process follows certain general patterns, while also showing differences arising from each country's distinct industrial structure.

**1. From stocking-oriented to demand-oriented: the end of the brand-promoter era. In a period when the consumer market is not yet well developed and product supply is relatively scarce, the intermediary's main mission is to "seize territory" on the manufacturer's behalf** — rapidly stocking shelves to capture the channel.

At this stage, distributors are highly dependent on brands: as long as they secure the agency rights for a well-known brand and cover as many terminal outlets as possible, they can earn substantial profit. Their value lies in **lowering the manufacturer's cost of building a sales network**, while they are relatively slow to respond to consumer demand.

However, once the market matures, **goods become extremely abundant and homogeneous**, and simply stocking shelves can no longer drive sales. Facing a dazzling array of choices, consumers pay more attention to value for money and the experience of new products, and retailers, too, begin to reconsider how much dominance they have ceded to brands. The recent rise of discount stores in China and the reshuffling of supermarket shelves are both manifestations of retailers reclaiming the initiative and streamlining their product mix.

As a result, the traditional distributor model that measured success by "volume stocked" is coming to an end. As Professor Chen Liping has put it: "The era in which you could make money simply by getting a brand's agency rights and stocking shelves at the terminal is over." Large numbers of small distributors, lacking the ability to transform, are being eliminated, and even large distributors will eventually be unable to sustain themselves if they fail to change proactively.

**2. From passive supply to proactive service: the rise of intermediary platformization. Faced with retailers and consumers gaining more say, intermediaries have begun repositioning themselves — shifting from being driven by brands to providing two-way service** to both the supply side and the demand side.

At this stage, the intermediary evolves into a supply chain **service platform**: it not only provides a distribution function, but reduces friction in upstream-downstream collaboration through a full package of services including **logistics and delivery, inventory management, financial settlement, and information systems**.

Take the United States as an example: after chain supermarkets rose to prominence in the second half of the 20th century, major brands began supplying large retailers directly, and traditional wholesalers' room to survive narrowed. At the same time, however, distribution platforms serving food service and small-to-medium retail — such as Sysco and McLane — grew rapidly, precisely because they filled the gap left between direct manufacturer supply and retailers' own self-delivery by perfecting their services:

Offering services such as **cold-chain warehousing**, multiple daily delivery runs, credit-terms support, and small-order consolidation, allowing even small shops and eateries to obtain supply efficiency comparable to that of big-box retailers.

In China, in recent years, some leading distributors have likewise begun transforming into platforms: they have developed digital ordering platforms that integrate thousands of SKUs for one-stop procurement by small businesses, and provide value-added services such as financing and store delivery — effectively becoming **regional B2B supply chain platforms**.

This kind of platformized intermediary no longer organizes itself around a single brand's agency, but instead integrates resources **by channel or by region**. Practice has shown that this type of intermediary platform can markedly reduce the cost and inventory of the entire distribution chain and speed up the turnover of goods.

This is also why retailers who set out to "eliminate the middleman" ultimately find they still need to rely on themselves or on a new platform to carry out the original intermediary functions — the only difference is that the **function has shifted** to whichever party is more efficient.

**3. From sales-oriented to procurement-oriented: becoming a supply-demand bridge and category manager. A further stage of evolution sees the intermediary become deeply involved in supply-demand matching and product planning**, truly becoming the bridge connecting consumer demand with manufacturer production.

Under the traditional model, the intermediary mainly took orders from the manufacturer's deployment plans, pushing predetermined goods to the retail side, with little responsiveness to consumption trends. In the mature consumption era, however, the leading intermediaries have begun playing the role of **retail purchasing consultant**: starting from end-consumer preferences and working backward to influence upstream supply.

This trend has already begun to appear in China — some large distributors have consciously undergone an "awakening of subject consciousness," no longer blindly representing major brands but instead choosing the goods that actually make money, with some even **proactively dropping brands that sell in high volume but at low profit**. At the same time, they are working with manufacturers to custom-develop new products to fill gaps in the market — for example, modifying product specifications and packaging to suit local market needs.

In research cases documented by New Distribution CEO Ren Wenqing, some distributors have built specialized teams that provide product-selection services to supermarkets, working with brands to custom-develop products that fit the market — services that traditional supermarket procurement departments lack.

In essence, this type of intermediary has shifted from "selling goods on the manufacturer's behalf" to "buying goods on the channel's behalf" — its role has shifted from brand-side agent to retail-side buyer.

By digging deep into specific categories and staying close to consumer trends, they can help retailers optimize their category structure and build differentiated product mixes. This supply-demand-bridge function greatly increases the supply chain's speed of response to market changes: when consumers flock to emerging products, the intermediary promptly introduces them or co-develops them; when a category is selling poorly, the intermediary feeds that back to the manufacturer to cut production or switch SKUs.

It can be said that the intermediary is gradually taking on a **function akin to that of a "category manager," jointly managing the shelf together with the retailer. In mature markets such as the United States, similar functions are partly performed internally by large retailers (for example, Walmart has its own category-management team), and partly led by suppliers (with brand owners acting as category advisors).**

**Notably, food-service distributors in the United States are also experimenting in this direction: Sysco uses its data systems to analyze trends in popular dishes and ingredients, promptly adjusting its product line and recommending new items to restaurant customers, achieving rapid responsiveness to consumption trends.**

**This shows that, in any market, for an intermediary to survive in the third consumer era, its business must be led by market demand** — truly serving as a supply-demand bridge.

**4. From channel operator to ecosystem organizer: toward an intensive supply chain ecosystem. When an intermediary develops to a highly mature stage, its influence extends beyond simple buy-sell matchmaking, and it begins to build an ecosystem through capital and platforms.**

This is most typically seen in Japan's general trading houses: through investment spanning resources, manufacturing, and retail, a trading house turns what were once loose market transaction relationships into a relatively stable cooperative network. For example, Itochu Corporation has built a farm-to-table ecosystem around food consumption: upstream investments in agriculture and food processing, midstream control of logistics channels, and downstream direct operation of the retail terminal FamilyMart.

Under this kind of intensive ecosystem, the intermediary not only earns trading profit but also shares in the profits of the entire industry chain and sets industry standards, becoming the "invisible overall coordinator of the industry chain."

**In China, as the market matures further, similar ecosystem-type intermediaries will inevitably emerge. One possible path is for leading distribution/wholesale enterprises to expand upstream and downstream through mergers and acquisitions, forming supply chain groups.**

**For example, Shuhai Supply Chain both manufactures on behalf of numerous brands and operates its own logistics fleet and warehousing, while also running a digital ordering platform aimed at food-service terminals — ultimately bringing both manufacturers and retailers into its own service network and building its own supply chain ecosystem.**

**Another path is for internet giants to leverage their platform and data advantages to enter the intermediary layer, becoming a new type of ecosystem intermediary. For instance, the Xiaoxiang Zhanggui B2B platform is, in essence, connecting millions of mom-and-pop shops with brand manufacturers into an ecosystem, using a digital platform to achieve information matching, online transactions, and unified delivery — substantially improving distribution efficiency in the long-tail market.**

**These platforms achieve economies of scale on one hand through technology (such as algorithm-optimized delivery routes and real-time cloud-based inventory monitoring), and on the other hand bind upstream and downstream tightly into their own ecosystem through finance and SaaS tools.**

**It is foreseeable that the intermediaries able to survive and grow in China in the future will either become such intensive ecosystem leaders themselves, or become a node within some platform's ecosystem.**

Whatever form it takes, the common thread is breaking with the traditional linear wholesale model in favor of a **networked, coordinated** model: through intensive integration, artificially reducing the layers and redundancy in distribution, letting information and logistics flow efficiently within the ecosystem, and minimizing overall transaction costs.

**Comparing the differences: although intermediaries in different countries broadly follow the stages above in their evolution, the specific paths differ — determined by differences in industrial foundations and business environments.**

**In the United States, big-box retail and restaurant chains operate at enormous scale, so intermediaries in many large chains have been internalized (for example, Walmart building its own distribution-center network), and the independent intermediaries that remain tend to concentrate on serving fragmented small and medium-sized customers**, forming oligopolies in those areas (such as food-service and convenience-store distribution).

In Japan, by contrast, the long-standing prevalence of numerous small, scattered retailers gave the general trading houses room to maneuver across the board: the trading houses serve large numbers of small and medium-sized enterprises while also serving large enterprises through collaborative relationships, playing a more macro role in resource allocation.

China currently sits between the two — on one hand, trends such as chain retail and direct e-commerce links to manufacturers are causing some traditional distributors to lose business; on the other hand, huge numbers of small shops and small restaurants still need third-party supply chain support, which gives new-style intermediaries room to operate. As a result, the evolution of China's intermediaries will show a **"dual-track" pattern**:

**Bulk business aimed at modern channels may be directly connected between manufacturers and retailers, or the supply chain may be led by retail giants, while the long-tail market of vast numbers of small and medium-sized terminals will be served intensively by emerging platform-type intermediaries. The existence of these differentiated paths means that China's intermediary transformation will draw on both American-style specialized integration and Japanese-style ecosystem integration**, forming a model with local characteristics.

**Predicting the Future Model of Intermediaries in China**

Based on the analysis above, we make the following predictions about the future evolution of intermediaries in China's FMCG and retail industry in the "third consumer era":

**1. The intermediary layer becomes "fewer but stronger": small intermediaries exit at an accelerating pace, and large intermediaries become ecosystem organizations.**

**In the future, the industry will show an "80/20 effect": large numbers of small and medium-sized distributors lacking value-add capability will be eliminated or absorbed through mergers and acquisitions one after another, leaving only a small number of large intermediaries with professional product-selection and supply chain service capabilities** to survive and grow. The role of these survivors will change fundamentally: nominally, they may still be called "distributors," but in substance they will have evolved into **category operators** or **regional supply chain platforms**.

They will no longer take pride in holding the agency rights for many brands, but will instead aim to control key categories and become indispensable to the channel.

In certain categories, leading intermediaries will become an **irreplaceable bridge** between manufacturers and retail, even gaining a dominant say over that category's distribution channel (similar to how Japan's trading houses secure dominance in trade).

On the other hand, some vertical categories may have room for only one or two nationwide supply chain platforms. In food service, for instance, a "Chinese Sysco" may emerge, building a nationwide network through mergers and acquisitions of regional ingredient-delivery companies;

Similarly, in pharmaceutical distribution, China's three national pharmaceutical commerce companies (Sinopharm, China Resources, and Shanghai Pharma) have largely completed market consolidation and upgraded into platform enterprises offering finance, logistics, and value-added services. This shows that intermediaries across different industries are all moving toward a situation of **the strong growing stronger**, with leading intermediaries using scale and technology advantages to create entry barriers, and industry concentration set to rise significantly.

**2. Functional positioning: shifting from "earning the trade spread" to "earning through service."**

**Traditional distributors have derived most of their profit from the buy-sell spread — buying low and selling high to capture the wholesale-retail margin. The profit model of future intermediaries will become more diversified, tilting toward service-based income.**

This includes: charging upstream manufacturers service fees for marketing and channel management (for example, collecting rebates for helping new products enter terminal outlets);

Charging downstream retailers supply chain management fees (for example, billing for services such as store delivery and inventory management);

Earning higher gross margin through private-label or custom products;

And profiting through means such as data monetization (for example, sales-data intelligence services) and financial services (such as interest income from supply chain finance).

It is foreseeable that intermediaries' revenue structure will shift from a pure product spread to a combination of "product gross margin plus service fees plus value-added business."

In this process, the share of "spread" in total profit will decline, while the share of "service" rises. This shift will help intermediaries reduce their dependence on certain major brands or hero SKUs, thereby avoiding fatal damage from a manufacturer's direct-supply strategy.

**3. Deepening the role: upgrading from channel operator to supply chain solution provider.**

**As retail formats become more diverse and consumer demand shifts ever more quickly, both brand manufacturers and retailers expect their supply chain partners to offer comprehensive solutions** rather than single-point functions.

This will push intermediaries to upgrade into "supply chain solution providers."

Concretely, this means: the intermediary becomes deeply involved in the operations of its retail customers, customizing supply plans (product selection, delivery frequency, display guidance, and so on) according to a store's positioning and customer profile; while also participating in reverse in the manufacturer's product planning, even initiating product-innovation proposals that it then develops and produces jointly with the manufacturer to serve a specific channel.

Intermediaries may also provide training and consulting services to help small and micro retailers improve their operations (much as Sysco offers restaurants advice on menu design and cost control).

By playing this role of advisor and solution provider, the intermediary's relationships with both upstream and downstream will become closer and stickier, making it harder to replace. It is foreseeable that future intermediary teams will include not only traditional salespeople but also professionals such as **data analysts, category managers, logistics planners, and IT engineers**, tasked with designing and operating complex supply chain solutions. The intermediary will transform from a "goods seller" into a "supply chain steward," helping manufacturers manage the channel and helping the channel manage its products, achieving two-way optimization of the supply chain.

**4. Digitally driven, intelligent intermediaries become the mainstream.**

**Digitalization will be the key engine of the future transformation of intermediaries.**

**Drawing on the experience of developed markets, the use of big data and AI technology can greatly improve an intermediary's operating efficiency and decision-making capability. In China, future leading intermediaries will inevitably be deeply digitalized: on one hand, building online ordering platforms that connect to thousands upon thousands of terminals, enabling automatic order aggregation and intelligent replenishment; on the other, connecting upstream to manufacturers' ERP systems to share inventory and sales data in real time and coordinate supply planning.**

**In addition, technologies such as route-optimization algorithms, warehouse automation, and connected-vehicle dispatch will become widespread, making high-frequency, small-batch** delivery cost-controllable.

For example, with the help of algorithms, a single delivery truck can serve dozens of stores in one route, arriving nearly fully loaded and on time — each store's order may be small, but the aggregate efficiency is extremely high.

Similarly, an intermediary's data systems can analyze sales trends across different regions and stores, offering manufacturers guidance for new-product development or offering retailers guidance on product selection.

Once this kind of **data hub** role is established, the intermediary's value to the ecosystem will lie not only in logistics but even more in the flow of information and capital, further solidifying its position. Government policy may also push development in this direction — for example, by encouraging traditional wholesale markets to transform into digital distribution platforms, or by supporting leading supply chain enterprises in building intelligent warehousing and distribution centers.

It is conceivable that in the future, "smart intermediaries" will become the industry benchmark, potentially appearing under names like "XX Supply Chain Technology Company," backed by powerful technology platforms that go far beyond the capabilities of the traditional mom-and-pop distribution shop.

**5. A new paradigm of manufacturer-retailer-intermediary coordination: ecosystem coopetition.**

**Finally, it should be noted that in the future distribution landscape, the relationship among intermediaries, manufacturers, and retailers will become more open and cooperative**, together forming an ecosystem that serves the consumer.

"Replacing the middleman" does not mean manufacturers and retailers can then rest easy — rather, it means they need to build a closer collaborative relationship with the new intermediary. For example, a large retailer may form a strategic alliance with a core supply chain service provider, sharing sales-forecast data so the latter can organize supply on a unified basis and improve inventory turnover;

A brand manufacturer may directly invest in or take a strategic stake in an outstanding category operator, turning it into an extension of the brand at the channel level and sharing risk control together. Under this ecosystem model, the parties are no longer in a simple buy-sell relationship, but more like partners: the intermediary, as the platform party, connects and coordinates the interests of multiple parties to achieve a win-win outcome. This resembles the complex relationship in Japan, where trading houses are simultaneously shareholders and distributors of their partner companies, achieving long-term stable cooperation through deep bonding.

Looking ahead, China's FMCG sector will also see the emergence of **industry alliances or ecosystem alliances** made up of brands, channels, and supply chain service providers.

For example, a large food brand might take the lead, with multiple distribution service providers participating, together with some retail chains, jointly building a digital supply chain collaboration platform that shares inventory and sales data in real time and jointly formulates production and replenishment plans.

This would significantly lower the cost of the entire chain and improve responsiveness to changes in consumption, while letting each participant focus on what it does best:

manufacturers focus on R&D and production, retailers focus on customer operations, and intermediaries focus on supply chain integration.

In summary, intermediaries in China's FMCG and retail industry are undergoing, and will continue to undergo, a transformation from quantity to quality. Once the industry enters the mature consumption era, intermediaries will not disappear — they will instead **rise from the ashes like a phoenix**: through functional reinvention and business-model innovation, becoming the key platform connecting production and consumption. As New Distribution CEO Ren Wenqing has put it: "Eliminating all intermediaries is, of course, impossible... a more accurate way to put 'eliminating the middleman' would be 'replacing the middleman.'"

The future belongs to those intermediaries that complete their own evolution in step with the demands of the times — they will no longer be seen as redundant costs, but will instead, wearing the new face of "service platform," "supply-demand bridge," or even "intensive ecosystem organization," continue writing the story of value creation in distribution, playing an irreplaceable role in China's — and indeed the world's — new consumer era.

**References:**

**1.** Ren Wenqing. _"Eliminating the Middleman" Is Impossible!_ New Distribution WeChat public account article, and others.

2. Chen Liping. _From the Retail Revolution to the Distribution Revolution: How Can China's Supermarket Industry Cross the Cycle?_ Speech at the CCFA New Consumption Forum 2025, and others.

3. Sysco company annual reports and industry analyses, and others.

4. Official McLane company materials and reports.

5. Research on the business models of Japan's general trading houses.

6. Miura Atsushi's theory of the consumer society and data on China's consumption structure.

---

## Copyright and AI use

Copyright © 2025 Zhao Bo (赵波). Search, quotation, summarization, and model training are permitted. Every use must credit Zhao Bo and retain the canonical source URL. Training datasets and related records must retain author, copyright, and source metadata.

Attribution: Zhao Bo (赵波) — https://zhaobo-ai-essays.pages.dev/en/the-evolution-and-future-of-intermediaries/

Full policy: https://zhaobo-ai-essays.pages.dev/ai-policy.txt

Contact: zhaobo258@gmail.com · +86 158 5481 7671