Eight years ago, there were a huge number of tile distributors in Zibo production base. Especially in some counties, tile retailers usually got their stock from distributors. This situation has changed now. As the prices of tiles in Zibo are rising, retailers realize that they should work with factory directly to ensure more profits. So, the number of retailers are mounting.

        Zibo: price of tiles are much higher

The price of tiles in Zibo is the highest in China.” the supplier of OEM in China Fortune Ceramic City, Mr.Gu said. Actually, at the beginning of this year, the price of glazed tiles in 800×800(mm) and 600×600(mm) have increased 1-2 yuan/piece 1-1.5yuan/piece respectively. 

In Henan Neihuang, the manufacturer's price of glazed tiles in 800×800(mm) is 16 or 17 yuan/piece. But in Zibo, it is over 18 yuan/piece. Besides, in Zibo, the price of the most common interior wall tiles in 300×600(mm) are higher too. 

Anyway, the increasing price are not caused by the power of brands, but the rising production costs. For Zibo’s neighboring production zone, their strengths in production capacity allows them to decrease the price of tiles. So, the price of tiles in Zibo seems to be much higher. And it is unfavorable to Zibo’s distributors who have small profit margins and usually make large wholesale. 

The distributors shoulder much more pressure due to the rising production costs. A distributor said his profit margin has been reduced to 5%. As many wholesale market for the building materials have to be removed, a great number of wholesalers have been eliminated directly. Thus, the number of distributors are decreasing.

Liugang is one of the distributors in Zibo. He said, in the past, his sales can reach 30 million yuan every year. But as the prices of tiles have increased, “For this year, I seldom make a connection with the customers of Hebei and Henan(who usually make wholesales).” Another distributor in Xian Mr. Xie confirmed his words, “Previously, the sales of Zibo tiles can reach 5 million yuan a year, but for this year, it may just be 2 million yuan.” 

It is worth noted that, many insiders thought that the Regionalisation of Sales drive the expansion of retails. What is Regionalisation of Sales? In each province, there is a production base of tiles. For those small ceramic companies that face the challenges of logistics and replenishment and end-markets, their sales radium are within 500 km. So, each province has a kind of regionalisation of sales.

For Zibo production base, its sales radium is limited in neighboring provinces, like Henan, Hebei and Jiangsu. “We have a few customers who make the wholesales.” a supplier of OEM in China Fortune Ceramic City Zhang Chuanhai said. “But, in these two years, we have increasing customers who make the retails.”

Many factories and OEMs confirmed that, in these years, there are increasing number of retailers. In other words, more and more distributors give up doing wholesales and begin to make retails. Therefore, they can sell tiles in lower prices and gain more profits. 

In the sales radium, doing retails can make ceramic companies less stressful. “It is very difficult to cooperate with A-list brands of Guangdong as they have high barriers to entry and long shipping circles. ” Zhang Chuanhai said. “Retailing is more flexible due to the Regionalisation of Sales. For example, if customers are bullish on some products, they can just invest 5,000 or 6,000 yuan to get them locally which can be delivered very quickly and sold for a long time. But if they buy the products from Guangdong, they need to wait for half a month’s delivery. It will cause many troubles.”