How India's traditional FMCG distributor network is changing
Rupesh Mishra, a mid-sized distributor of a global soaps and hygiene products company in Delhi-NCR, has seen the number of his orders shrink by a third since November last year. “I know there was a distributors’ agitation going on in Maharashtra. But we have no one fighting for us,” he rues. “ Kuch toh badalna hi padega ab (I need to change a few things now). I inherited this distribution business from my father 15 years ago but I can no longer sustain it this way,” he says.
Mishra is among the millions of traditional distributors who are finding themselves at a cross-roads as the way in which India’s fast moving consumer goods (FMCG) are distributed is changing dramatically. FMCG companies are selling their products at least 15-20% cheaper to digitised business-to-business (B2B) platforms such as Mukesh Ambani’s Reliance JioMart, Udaan and German multinational Metro AG’s Indian arm Metro Cash & Carry.
“The rise of ecommerce is helping companies serve pin codes that were underserved due to the lack of physical presence,” says Varun Berry, managing director of Britannia, one of India’s largest FMCG companies, adding that neighbourhood (kirana) stores will continue to be a key growth driver.
“A higher digital adoption in India, with more than 500 million internet subscribers, has fundamentally changed the way Indians shop,” he adds. Most chief executives of FMCG companies ET spoke to said while neighbourhood grocery stores will continue to be the indisputable bedrock of distribution of daily essentials, a change in distribution dynamics is inevitable.
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