Distribution Opportunities in India

Indian businesses have always aspired to sell in overseas markets. For a successful entrepreneur, there's nothing more exciting and satisfying than conquering foreign market. Higher margin, easier bank credit, tax free revenue and various export incentives are some of the attractions of overseas markets. Besides, thriving overseas presence is an insurance against any instability in domestic market. However, not much information is available on the topic, specially for small and medium Indian enterprises. In a series of articles, we shall discuss preparations and planning required before venturing out to overseas markets, various routes for overseas entry with comparative advantages/disadvantages and sources of information. In preparation and planning stage - a business must objectively assess whether its ready for overseas market. To help a business evaluate its position - here's few pointers. 1. Domestic Distribution First - Overseas Comes Later A business must establis...

The core of marketing is, and always been, understanding the target audience and customizing presentation for achieving desired goals. Depending upon target audience - the presentation undergoes major changes and has variously been coined as B2C (Business To Consumer), B2B (Business To Business), B2G (Business To Government) etc. While B2B marketing employs highly rational, detailed and analytic presentations to hammer home value propositions and return on investment, B2C marketing employs emotion-driven, catchy, impulse-based communication designed to appeal customer desire. Deficiency Of B2B And B2C Marketing A common thread that runs through both approaches is a largely one-way communication to convince the customer to buy a product or service, mostly overlooking customer's unique views, liking and tastes. Though B2C marketing is meant to be directed at individual consumers' desire - in practice it targets a particular demography such as 18-25 year-old women, or 35-50 ye...

What is the biggest challenge SMEs face in India ?  SMEs in India are fraught with challenges - from credit, cash flow, capacity utilization to trained manpower and technology. However, what's the biggest one ? A recent survey by Mumbai based A&A Business Consulting has brought out interesting facts. Contrary to popular belief - largest chunk of 47 percent surveyed SMEs cited sales growth as main problem they are facing rather than working capital or credit (1). Many SMEs start on a profitable idea, grow well during initial days but growth tapers down with time. The result is very few SME success stories - most SMEs are stuck with very low sales growth - remaining small for ever. This typical Indian phenomenon has been recognized by experts long back and termed 'Missing Middle' - meaning there are few large firms, many tiny ones and nothing in between (2). Why Sales Growth Slows Down Most of India's micros and small enterprises can be found in 5000 industry ...

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...