Distribution Opportunities in India

Distribution is the backbone of Indian market - feeding its massive retail system spanning across length and breadth of the country. Estimated to be $ 714 billion (2019) -   Indian retail market is expected to grow at 10% CAGR to reach US$ 1.2 trillion by 2025. Unlike developed markets, over 70% of Indian b2b distribution market is in unorganized sector, having its own dynamics peculiar to Indian social and cultural ethos. Understanding this market, its players, their respective roles and overall market dynamics is vital for success of any brand.  Indian Distribution Model A specific feature of Indian distribution model is presence of many intermediaries - almost too many in certain cases. A study by McKinsey and CII (Faida Study in 1995) found presence of 7 to 11 intermediaries in agro distribution channels.   These intermediaries bring costs and benefits in varying degrees. The wholesaler model, for instance—in which large, powerful wholesalers buy produc...

Setting price for a product is tough - keep it high and miss out on valuable sales. Set it low and miss out on revenue target. Fortunately, there are industry conventions and realistic ways of determining final price. This articles discusses how to realistically price a product keeping in mind distribution cost and avoid common mistakes.  Choice of distribution channel plays major part in determining right end-user or consumer price. The journey of a product from factory gate to consumer door passes through a chain of businesses or intermediaries - CNF agents, super stockists, wholesalers, distributors, retailers etc. Each of these intermediaries charge a fee or commission (called mark-up). Manufacturer must take into account all these commissions while determining final end-user price. Sum of all these commissions to intermediaries is collectively called trade margin. So, Final Price = Product Cost + Manufacturer's Profit + Trade Margin. Realistic Trade Margin W...