Distribution Opportunities in India

  Manufacturers and channel partners are two sides of same coin - one produces and the other sells. Together, they make a successful business entity. Though the relationship is mutually beneficial and one should court the other like a perfect marriage - in reality, it does not happen always. As part of vanik.com online platform - everyday we come across large number of manufacturers looking for channel partners - as also eager channel partners seeking suitable manufacturers. We connect the two and many of them manage to build successful distribution channels - benefiting both partners. However, in several cases, in spite of best intentions on both sides - deals do not materialize.  Why does it happen ? What are the deal breakers in manufacturer - distributor negotiation ?  Based on my research - here's a short list that both manufacturers and channel partners should be aware of to avoid future disappointment. This Is Not A General 'Why Deals Break' Type Article A deal ma...

Wholesale and Distribution are two key components of any B2B sales channel. While distribution is more organized and account for lion's share of b2b sales in urban areas - wholesale remains a prime source of retail supply in rural areas. In a country like India where 90% of retail market is unorganized, spanning across millions of small stores - its impossible to reach significant number of stores directly through distributors. Usually, companies develop strong distribution channel in Tier-1 Tier-2 cities - but as one goes deep in the countryside, dependence on wholesale channel increases. Majority B2B supply to retailers in rural India happens through wholesalers. Typically, a brand selling Pan-India - may have a wholesale component ranging from 20% to as high as 50-70% depending upon category and concerned brand's dependence on rural market. Wholesale Vs. Distribution Both wholesaler and distributor buys from manufacturer in bulk and sell to retailers. However, the similarity...

Distribution Channel has the potential to grow sales far beyond local market - propelling your company to new heights. You may just be a decision away from breakthrough in sales - a decision on right distribution channel. In an earlier blog article - I explained what all channels are available for your business and how to select the right combination. ( Please read Your Product Is Doomed To Fail Without Distribution ) You may select right channel combination and Vanik.com can help you find right channel partners. However, is that enough to make you successful ? Regretfully - No. You have to prepare yourself - do necessary homework to ensure success.  So, what homework needs to be done before starting any discussion with potential channel partners ? 1. Commercials - Distributor / Wholesaler Margin The first and foremost task is to decide on margins for channel partners. Low margin for channel partners will help your bottom line but may fail to attract channel partners. Simila...

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 - ...

Customer is oxygen for business. More customer means higher sales and thus better financial health. To remain in business - manufacturers have no option but to seek out more customers in larger markets. Effective distribution strategy enables a business to achieve this goal without significant investment in sales infrastructure. So, how should a business go about building distribution channel ? The first task is to create a distribution plan charting a path for accessing market. Ideally, businesses should consult experienced distribution trade professionals to prepare customized distribution plan matching their products. Failure to do so may lead to loss of money and wastage of resources or in worse case - loss of brand image and reputation.  This article outlines essential parts of a distribution plan. In case you need a customized distribution plan prepared by experienced distribution trade professionals - please tell us here . 1. Analysis Of End-User Foundation of a dis...

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...

Indian companies, specially FMCG companies today are staring at a major disruption in their distribution model. Other than some basic technology interventions to track primary (sales from the FMCG company to their Distributors), and in some cases, secondary sales (sales from the Distributor to the Retailers), very little changed over the decades. Products go from brands’ manufacturing facilities to their Distribution Center (DC), on to C&F agents in each state, on to the hundreds of Distributors (DB) in that state, and finally on to the retailers, where consumers/shoppers purchase them. The primary reason for the lack of change is the more or less static retail environment we have seen –close to 90% of retail even today is dominated by mom & pop outlets, or what we call GENERAL TRADE (GT) in India, this was as high as 98% till a decade or so ago. Looking at the evolution of FMCG Distribution in India since 1950, we can categorize it in the following categories: Distri...