Your distributor model was built for a shelf that is disappearing

For most of my career the distributor did three things, and did them well. They carried your stock, they covered the outlets you could never reach yourself, and they collected the cash. You paid a margin for that, and it was a fair trade, because coverage and credit and logistics across a fragmented market were genuinely hard, and they were genuinely good at it.

That deal is quietly coming apart. Not because distributors are bad, but because the things you were paying them for are getting easier, while the things you actually need now are things the old contract never asked for.

What changed underneath

Start with the obvious. Social commerce went from nothing to one of the largest selling channels in Southeast Asia in a handful of years. Quick commerce is small as a share of total retail but growing fast and habit forming where it lands. Business to business platforms now let a brand reach the small independent store directly, which used to be the distributor's whole reason to exist.

Be careful not to overstate it. The physical shelf is not vanishing. Traditional trade still runs most of Indonesia, the Philippines and Vietnam, and will for years. But it is fragmenting. A growing slice of demand now moves through channels your distributor does not own, cannot see, and was never set up to serve. The shelf is not disappearing everywhere at once. It is splintering, and the splinters are where the growth is.

The terms still pay for the old job

Here is the mismatch. You are still paying a coverage margin in a world where coverage is getting cheaper and data is getting scarcer.

The distributor's real value now is not carrying boxes. It is shaping demand in their territory, executing differently by channel, and knowing what is actually selling to whom. That is harder and rarer than logistics ever was. But almost no contract pays for it. The terms still reward cases moved, so that is what you get. You are funding the part that is becoming a commodity and getting none of the part that is becoming the whole point.

Running both at once

So you do the obvious thing. You start going direct where you can, and you keep the distributor where you must, and now you are running a hybrid whether you planned to or not. I ran exactly that across Asia, distributor led in some channels and direct to market in others, at the same time, in the same markets.

It is awkward, and the mistake is treating the awkwardness as temporary. Who owns the shopper. Who carries the margin. What happens when your direct price and your distributor price meet in the same store. None of that resolves itself if you wait. The work is to rewrite the deal, not to wait for one model to win. Pay the distributor properly for the job that is genuinely hard now, which is demand and execution and data. Take back the parts that are not hard anymore. And stop pretending one set of terms can fit a channel that ships pallets and a channel that ships a phone order in twenty minutes.

The point

The shelf is not disappearing everywhere at once, but the job your distributor was built for is shrinking, and your contract is still priced for that old job. Rewrite the deal around what is hard now, not what was hard ten years ago. Do it before the channel shift does it for you, because it is doing it either way.