Distribution Opportunities in India

Distribution is the backbone of Indian market. It ensures smooth passage of a product from factory gate to retailers across India. No matter how good a product or how competitive the pricing - it’s unlikely to grow big and reach sizeable market without distribution support. Its comparatively easy to drive marketing campaign and create awareness/demand through large spending in Electronic And Print Media - but sales is unlikely to grow if consumers do not find the product in nearby retail store. Online is surely an alternative - but is still in its infancy - accounting for only 2% of total Indian retail market.   So, how does one plan for distribution ? Ensuring a product reaches large number of consumers across a vast country like India using poor infrastructure (transportation, warehouse, cold chain etc.) is a challenge. The challenge gets even more difficult given huge diversity of language, custom and local regulations. Indian distribution industry is highly fragmented - ...

Manufacturers create brands for building unique product identity. Brands build specific values around them to attract and retain targeted consumers and need a path or channel to reach consumers across the country. A channel consists of several organizations or entities - all aligned to a common goal of creating a path for the product to traverse from factory gate to consumer's door step.  Each entity in the channel is independent, having specific interests. Managing relationship between manufacturer and channel partners plays a key role in sucess or failure of a brand. Management books are full of examples of how lack of distribution channel killed good products. The relationship between brand and channel partner should be based on a clear understanding of each other's roles and responsibilities. When formalized in a written agreement between the two parties in a legally binding format that is enforceable in a court of law - the agreement is called contract. A legally bindin...

We all know distributors help manufacturers by re-selling products. But there are many other ways a distributor adds values in manufacturing process that need to be understood. Its true, distribution channel costs money - sometimes as high as 40% to 50% of MRP. But a properly aligned distribution  channel also adds enormous value through tangible and intangible ways. Knowing these facts can help manufacturers make optimum use of their distribution channels. This article describes some known and some not-so-known facts about how distribution channel adds value in manufacturing. 1.  Bulk Breaking Companies produce in lots, but consumers buy in single piece. So, we have retailers who buy in moderate quantity and sell in single units. However, the nature of manufacturing is such that, its     completely uneconomic for even a small or medium sized company to sell to retailers. Distributors break manufacturing  lot into pieces or dozens or whatever units the...

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...