Our Blog

 

Distributing FMCG products in India is probably the toughest, as compared to other countries. As India, is covered with rough terrain, deserts, snow and versatile climatic conditions with lesser connection of fair weather roads in some areas.  So FMCG companies in the country have to constantly venture out ways to save cost, find optimal network configuration and manage variables like retailer's order size, transportation, vehicle load capacity etc. But what drives FMCG companies throughout the globe is it's vast and multifaceted population. In fact, FMCG companies in India stand in the fourth position as a sector to contribute in the country's GDP.

The FMCG industries need to focus more on the rural areas as ,India is mostly composed of villages and increasing demand pull in small towns has been noticed to be greater than in metros but we are unable to deliver due to lack of network present there. According to IAPL 2014 , there are 5 metro towns ,5 mini metros ,39 tier 1 towns, 29 tire 2 towns, 169 tier 3 towns,  84 Tire 4 towns, 626 non tire large towns ,1973 non tier medium towns, 2184 non tire small towns and 2476 non tier very small towns present in India and FMCG companies still need to explore many places.

 Even global markets are now a days targeting smaller town. One of the major problems in rural areas (like Motha, Amisha ,Alamelu in Tamil Nadu) is distribution of fake products due to the unavailability of the actual products in the market and the fake products found in abundance. This in turn, is influential in decreasing the brand value of the product ,and should be avoided. But the fact that, circulation of fake product is increasing in those areas is an indication of a huge market lying there. Huge brands like Nestlé has made strategic plan to reach over 1.2 lakh villages within next 2 to 3 years. The Reliance industries have also entered retail business to increase their brand popularity. Moreover, the sort of products manufactured also decides the expansion of distribution for example high priced goods should not enter to retail business in small towns and customized goods should rather be made available in D2C.

As we know, the shelf life of FMCG goods are extremely low, our first focus should be on peripheral marketing rather than competitive advertising and distributing because if the quality of products degrade, it affects the brand. 

Besides that ,the tie-in of company warehouses ,stockists, distributors wholesalers and retailers is important for the smooth sailing of the product. According to research ,in India the distribution plan goes as follows ,from farms to factories ,to carrying and forwarding agents, to distributors ,to outlets, and at last to consumers and fork. Distribution vary from brand to brand as dairy products like “Omfed” , are generally sold through vegetable markets. Salesman should inquiry the retailers several times a week.

. Distribution at tourist spot should be, good as people there are in need of cool chain products and are ready to buy it at any price . Efficient warehousing practices also helps us in expanding our reach, as a lot of effort is put in the production process the product , should be as fresh when leaving the warehouse as during arrival.

 Direct reach can established connect with the retailer and influence the behaviour of purchase. Due to pandemic the sales of small retail stores where heavily affected, so they purchased less goods from wholesellers ,this directed people to buy straight from the distributors appointed by a company .So lockdown was influential in making a good relationship between the consumer and company, and the company to reach directly to the consumers, increases their profit efficiently via D2C business.

Smarter alternatives to traditional forms of distribution should be encouraged like convertible smart scooter to carry products (pitched in Shark Tank India), or electric scooters in general which has just one time investment instead of older means. The process of indirect testing or demonstration can also be practiced. Let us understand it through an example, let us suppose a person sells noodles in a locality and successfully establishes a good business in his area, getting good reviews from customers. Here the company " Maggi ",funds this small business and asks it to brand the stall in their name and as the popularity of the small outlet or restaurant grows, conversely the brand value of the product also increases  i.e the people of that locality want to buy the product. This helps in major distribution of Maggi in that locality. 

In the outlet universe, where there are category outlets , company outlets ,direct coverage outlets and effective coverage outlets (where the company delivers atleast one stock per month) we need to decide which outlet to choose. The  Nielsen- Numeric distribution , gives us the data of company outlets as a percentage of category outlets . The obvious thing is that we should decrease the gap between direct coverage and company outlets and pitch your category outlets which do not have your products to sell your products  . But let us dig deep into it through an example.

 

Weighted distribution=(2000+10000+20000)÷(20000+30000+10000+20000+35000)=43%

 

 

 

 

 

 

Weighted distribution= (30000+10000+35000)÷(20000+30000+10000+20000+35000)=65%

The aim is to improve weighted distribution, and as we can see ,we can improve our weighted distribution even without changing or expanding our reach and just by using proper strategies. In FMCG industry, people are really concerned about ROI (Return of Interest) but while making any major changes in the distribution process, Return of Interest ,is affected , thus  companies are required to keep calm and be open to experimentation to achieve results.