Distribution channel of fmcg products in india. Distribution Cost Optimization for an FMCG Organization 2022-10-05
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Fast-moving consumer goods (FMCG) products refer to a wide range of everyday items such as food, beverages, toiletries, and household cleaning products that are purchased and consumed quickly. In India, the distribution of FMCG products is a crucial aspect of the supply chain, as it plays a significant role in ensuring that these products are readily available to consumers in various parts of the country.
One of the primary channels of distribution for FMCG products in India is through wholesalers and distributors. These intermediaries play a crucial role in connecting manufacturers with retailers, and they often have a wide network of contacts in various regions. Wholesalers and distributors typically purchase products in large quantities from manufacturers and then sell them to retailers at a markup. This helps to reduce the cost of distribution for manufacturers and ensures that their products are widely available.
Another important channel of distribution for FMCG products in India is through modern trade outlets such as supermarkets and hypermarkets. These outlets are typically owned by large retail chains and offer a wide range of products under one roof. They typically have a centralized distribution system that allows them to receive goods from manufacturers and distribute them to their various stores across the country. This helps to ensure that FMCG products are readily available to consumers in urban areas.
In addition to these channels, FMCG products are also distributed through traditional trade outlets such as small stores and roadside vendors. These outlets are prevalent in rural areas and smaller towns, and they often rely on local wholesalers and distributors to obtain products. The distribution of FMCG products through traditional trade outlets is often more challenging due to the lack of infrastructure and the dispersed nature of these markets. However, these outlets are still an important channel of distribution, as they provide access to consumers in remote and underserved areas.
Overall, the distribution of FMCG products in India is a complex process that involves a network of intermediaries and outlets. The distribution channels used depend on the nature of the product and the target market, and manufacturers often use a combination of channels to reach their customers. To ensure the smooth distribution of their products, manufacturers must work closely with intermediaries and outlets to ensure that their products are widely available and easily accessible to consumers.
Channels of Distribution
Automotive Eg: Autonation, Penske and consumer electronics Eg: Redington, Ingram players have long followed this in the west. The big firms are growing bigger and small-time companies are catching up as well. A tech and user friendly delivery management system therefore works best to crystallise the process. Control over the demand data allows B2B E-commerce players to offer Private Label products, especially in categories with lower brand loyalty. This increase is spurred by the disruption by marketplace platforms such as Big Basket, Udaan, Dunzo, Amazon Pantry, Flipkart, Jio Mart.
How to address Channel Conflicts in FMCG Distribution?
This is how many experts in the FMCG business can gauge brand loyalty for their products and sell more consistently. This is because they neither acquire title to the goods nor negotiate purchase or sale. In this channel, the producer sells to big retailers like departmental stores and chain stores who in turn sell to customer. India has over 9 million retail outlets in the distribution channel. Fifteen companies own these 62 brands, and 27 of these are owned by Hindustan Lever.
FMCG Market by Type and Distribution Channel: Global Opportunity Analysis and Industry Forecast, 2018
The small vendors might procure items from wholesalers on a weekly basis and keep their cash flow rolling. However, the growth of the FMCG market affected by the high competition in the major market players of FMCG market. Years in the Business:. Big firms adopt direct selling in order to cut distribution cost and because they have sufficient facilities to sell directly to the consumers. This has been possible due to its practice of producing products of a global standard in India. A subset of FMCGs are Fast Moving Consumer Electronics which include innovative electronic products such as mobile phones, MP3 players, digital cameras, GPS Systems and Laptops.
Numeric Distribution in FMCG: 5 Best KPIs to Market Your Product
This is the simplest and the shortest channel. Middlemen Considerations: The cost and efficiency of distribution depend largely upon the nature and type of middlemen as given in the following factors: Availability: When middlemen as desired are not available, an entrepreneur may have to establish his own distribution network. Rising income increases the purchases of FMCG products. These are replaced more frequently than other electronic products. With the growth in the segment and even better potential for the forthcoming years, will it be logical for an FMCG Company to not automate distribution channels, given an entire growth pie is up for grabs? All these companies have a proper distribution network along with proper product promotion tools which have helped them to regularly increase their sales and visibility on the Indian scene.
FMCG spans across goods of daily routine, ranging from food and beverages to stationery and personal care. Manufacturer ƒ Wholesalerƒ Retailerƒ Customer: This is the traditional channel of distribution. They also have a niche vertical of imported products from 8 different countries from Europe and Asia. Generally this procedure is followed for marketing industrial goods like raw materials, machines, machine parts, tools, machine oils, etc. This category has 18 major brands, aggregating Rs. FMCG industry provides a wide range of consumables and accordingly the amount of money circulated against FMCG products is also very high.
Structure Of FMCG Distribution Channels The FMCG channel structure varies across countries but all channels can be described using simple concepts such as directness, levels, density, variety, novelty. The right percentage is then calculated by multiplying this figure by 100. The industry thus needs a centralised system that permits a dual-purpose tracking. As Shakti brand endorsers known as Shakti Ammas they borrowed money from their respective SHGs and with that capital purchased HUL products to sell in their villages. A department stores has different departments for different types of goods textiles, leather goods, stationery, furniture, books, etc.
They are channels along which the goods, information and finance flow in the system. Britannia takes the fifth place, followed by Colgate 6 , Nirma 7 , Coca-Cola 8 and Parle 9. Nestlé first made its presence in India in 1912. The market has many players. FMCG retail landscape in India is dominated by traditional trade with its mom-and pop stores sells which accounts for ~86% the market Fig 1.
Re-defined Video SOPs for each function for cost monitoring and control 9. Product Considerations: The type and nature of the product influence the number and type of middlemen to be chosen for distributing the product. Right from the days of liberalization to today, this distribution system has evolved and has also stood the test of time. ADVERTISEMENTS: The Government may take the responsibility of supplying some essential commodities directly from its warehouse to retailers ration shops. There are two middlemen in this channel of distribution, namely, wholesaler and retailer.
What New Tech In Distribution Does FMCG In India Need?
Social commerce, reseller models and O2O Online to Offline have emerged as popular alternative channels in China and have enabled disruption across all retail categories — Food to Furniture to Fashion. With the emergence of B2B marketplaces, traditional processes have been disrupted and the ensuing channel conflict is now unavoidable. With the advent of technology, a customer today can approach alternate channels such as social media, marketplace platforms or company websites and apps for their favorite brands. Channel decisions are among the most important decisions that management faces and will directly affect every other marketing decision. Some of the most powerful companies in the FMCG sector are: Hindustan Unilever Ltd. This is also known as public distribution.