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aws账号(www.2km.me)_Global brands in India have a mutiny at hand

admin2022-01-1115

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FROM Unilever Plc to Colgate-Palmolive Co, consumer goods makers in India are facing distribution blues that have nothing to do with pandemic-induced shortages and bottlenecks.

The trusted middlemen that brands have traditionally relied on to reach millions of small neighborhood stores in 8,000 towns and 660,000 villages are in revolt.

It’s a mutiny that the multinationals have invited upon themselves.

About 90% of what gets consumed in the continent-sized economy flows through a pipe known as “general trade”: Brands appoint third-party distributors who stock bulk inventory, despatch goods in small quantities to shops in their area, collect cash and offer retailers unsecured credit at zero interest (without the cumbersome “know-your-customer,” or KYC, checks of the formal financial system).

Distributors also take the onus of compliance with existing rules and regulations for the brands as they’re the ones dealing directly with the the last-mile outlet, known as “kirana.”

Each of these services is important in its own right. Together, they’re worth at least 11.5% of the final price of merchandise, estimates Sumit Aggarwal, a United States-trained engineer who returned to run his family’s consumer goods distribution business in north India.

Yet, the distributors’ share of the pie is barely 5%-to-6%. The rest of their value addition benefits other stakeholders, including consumers.

If the pipe is only now gurgling with discontent, it’s because a new breed of rivals has arrived.

Better-funded bulk suppliers such as Walmart Inc, billionaire Mukesh Ambani’s JioMart and Germany’s Metro AG as well as business-to-business e-commerce firms like Udaan and Big Basket are flexing their superior financial muscles to win over the small shopkeeper.The price at which distributors get merchandise from brands allows for only 10%-12% margins for retailers. Apps are offering as much as 20%.

Since none of the new-age intermediaries are operationally profitable, the deep discounts are very likely backed by investor capital, of which there is no shortage at present. Retailers are switching to more modern suppliers, and the traditional distribution chain is up in arms.

The Economic Times last month chronicled the story of Vipresh Shah, a Reckitt Benckiser Group Plc distributor in a small town 200 miles south of Mumbai.

When the newspaper caught up with him, Shah, who has been selling Dettol bars to shops in his area for 14 years, hadn’t had a single order in eight days.

Storeowners are buying the same soap 15% cheaper on the JioMart Partner app and accusing Shah of ripping them off.

Daring to take on the behemoths, the middlemen are sending an SOS: “Don’t turn us into a bunch of frustrated Willy Lomans from Death of a Salesman.

We, too, can digitise and compete.” Distributors in India’s Maharashtra state stopped supplying Hindustan Unilever Ltd’s Kissan range of ketchups and sauces from Jan 1 and threatened to expand the blockade to personal-care products and detergents.

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