InvestorQ : Do you see any major changes happening in the FMCG distribution business?
sara Kunju made post

Do you see any major changes happening in the FMCG distribution business?

Mary Joseph answered.
4 months ago

I think it is not just a change but a major shift that is happening. The concept of customer ownership is change and that is the whole issue. For example, today when you order food over Swiggy or Zomato, you become the customer of these internet platforms and the restaurants only execute the order. In ecommerce sales, the portal owns the customer, not the retail outlet or the FMCG company. FMCG companies are reconciling to the shift.

However, the old time distributors are not able to remain agnostic to this shift as they see their core base being undermined. The new model of distribution model is all about robust digital platforms, micro customization and quick delivery as you see in Blinkit, Dunzo and Instamart. The whole model is moving to push and pull is not really all that exciting. The old distributors still want the old models to sustain and that is not happening.

Where does that leave the old distribution model? I think it is important to read the writing on the wall and it is quite clear. Unfortunately for the old distributors, the pandemic fast-tracked the new model of distribution which is here to stay. Today, people want service, comfort and convenience at a good price. Normally old models don’t just go out of business but just that they gradually become irrelevant over time.

That is what the traditional distributors must avoid and change and adopt a more future driven approach. Distributors of FMCG companies must see this writing on the wall and adapt quickly. Such arm twisting will not work beyond a point in this business.