IntroductionOver the years, many big FMCG companies of the world have striven to make inroads into India’s expanding markets. New domestic players have also emerged, threatening to capture market share from global giants. Both international players and Indian giants have focused considerable research efforts on understanding the buying patterns of the Indian consumer. Based on the results of these extensive studies, most companies now offer a fairly demarcated basket of products and pack sizes for the country’s urban and rural consumers, respectively. Organisations have also invested significantly in developing a distribution network that can reach these products to their consumers. However, what is interesting to note is that these companies’ direct distribution, while better in urban areas, tends to dissipate as urban becomes urban and rural. Naturally, there is no debate on how direct distribution is superior (better margins, better control over how products are marketed, etc.) to indirect distribution; companies strive continuously to improve it. However, they believe that trying to cover 100% of their market through direct distribution is not a good or practical idea. This is because of two firm beliefs. Firstly, it is assumed that 80% of the sales will accrue from 20% of the country (Pareto principle). So, even though 60-70% of the population lives in rural India, the most companies’ main focus is on urban areas. Secondly, even though there is evidently some potential in rural India, it is considered economically unviable to service the outlying, scattered areas of the country directly. It is believed that indirect distribution is a better method to make inroads to these rural markets – goods will travel across territories via the wholesaler network and assure good enough coverage of that region. <figure class="image"><img style="aspect-ratio:1000/1000;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//1_1712575505.png" width="1000" height="1000"></figure>So, even companies that considered the gold standard in distribution have created a distribution system with some direct distribution but also relies significantly on indirect distribution. How conventional distribution works and the impactCompanies appoint distributors for designated areas. Distributors are expected to service all the retailers in their respective areas. Now, companies have primary sales targets to achieve, so they 'push' material using monthly/quarterly volume-based discounts to these distributors every month (end) to achieve those targets. Distributors who have limited working capital, when ‘pushed’ to keep stock higher than required for immediate consumption, often end up with working capital issues. To release capital, distributors also begin to push stocks to retailers. When burdened with this unwanted stock, retailers delay the payment to distributors. This leads to higher outstanding in the market for the distributor. When their outstanding increases beyond a comfortable level, distributors enter the vicious loop of trying to free their working capital by pushing big volumes at lower margins and passing on part of their schemes and margins to these retailers. The combined pressure of high outstanding and lower retention of margin creates viability issues for some distributors, forcing them to cut their costs and scale by compromising the reach and/or frequency of serving “smaller” retailers. Therefore, in almost every market, there are retailers who are not serviced by the distributors because they do not order in big volumes. These retailers remain underserved or not served at all by company-appointed distributors. This is common, not just in upcountry or rural regions but also in the heart of urban areas where retailers are left out of the distribution network. <figure class="image"><img style="aspect-ratio:1000/1000;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//2_1712575556.png" width="1000" height="1000"></figure>There indeed is a certain level of demand (footfalls) at these small retailers. If a company’s products are not present at these retail outlets, it is sales loss for the company, however small. The summation of such lost opportunity at the vast multitude of small retailers is a huge number, and this is not lost on the managers of FMCG companies. So, to reach these retailers, companies have a system of indirect distribution in place. Companies sell in bulk to big wholesalers at cheaper rates with the intention of getting sales from these unserved areas. Since this indirect network is in place, companies don’t believe that they have any ‘reach’ problem. However, unbeknownst to them, the wholesalers’ modus operandi is creating a bigger problem for the company.     The conundrum with wholesalersWholesalers are passive sellers who mostly sell only to those who approach them. Even if they service retailers, they decide<ul><li>Which outlets will they serve.</li><li>Which products will they keep.</li><li>What price will they bill the retailers. </li></ul>This makes the complete system opaque to the company. The company is left with no option but to make more and more effort to please the wholesaler to increase sales and protect market share. So, increasing sales becomes synonymous with better schemes for volume buyers. Better schemes for volume buyers create price disparity, which in turn hurts the company’s direct distribution channel. This reliance on wholesalers creates a vicious loop which is fed by the desire to achieve higher sales numbers in the short term. <figure class="image"><img style="aspect-ratio:1000/1000;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//3_1712575572.png" width="1000" height="1000"></figure>The conventional ‘fix’ and why it does not workA few companies have realized the problems presented by wholesaling and have tried to solve them using one or both of the following approaches to increase the scope of direct distribution.1. The frequency lever It is believed that the cost of serving small orders from small and scattered retailers is very high. Hence, companies try to reduce the frequency with which orders are collected from small retailers. Then, whenever they visit, they can receive bigger orders, which will make up for transportation costs. This practice, by design, forces retailers to keep larger quantities than their immediate need, which blocks working capital. Since small retailers are more constrained by the shortage of cash than the bigger retailers, their natural response to this mode of operation is to limit the product range to protect the working capital and also to find a wholesaler willing to service them more frequently, which would reduce the need to keep higher stock. In both options, the range kept at the retailer’s end gets compromised, depriving the company of reaping the benefits of untapped market potential. <figure class="image"><img style="aspect-ratio:1000/1000;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//4_1712575608.png" width="1000" height="1000"></figure>2. Aggregation: Increasing order volume using sub-stockist Companies sometimes appoint a sub-stockist who would aggregate all orders from smaller retailers and buy one large lot from the appointed distributor.  It is expected that this sub-stockist will supply the material to small and scattered outlets, which the appointed distributor does not serve. However, two things happen in this mode of operation. <ul><li>Sub-stockists start billing retailers mapped to appointed distributors creating territory conflicts in the market.</li><li>Sub-stockists bill small parties but, with regular service, sales from these outlets start to grow, which then looks lucrative for the appointed distributor. This also leads to territory conflict between two parties and fuels price war from time –to-time, creating viability issues for both parties. If sub-stockists lose many of their retail counters to distributors, they may drop the business of the company. </li></ul><figure class="image"><img style="aspect-ratio:1000/1000;" src="https://new-stage-be.vectorconsulting.in/storage/editor_uploads//5_1712575625.png" width="1000" height="1000"></figure>In these circumstances, to stay viable, both stockists and distributors are likely to start cherry-picking retailers who give high-volume orders and service only those. Or they may choose to reduce order-taking frequency. In either case, availability at retail counters reduce. Lower availability will lead to lower sales. COVID-19 lockdown – A solar eclipse in distributionIn spite of all its limitations, FMCG companies, along with their whole distribution ecosystem of distributors, retailers, etc, have learned to live with the conventional way of doing business mainly because many others in their industry follow similar practices and suffer from the same problems. However, with COVID-19 and the consequent lockdown of the country, this distribution system got a major shock. Since most large wholesalers/sub-stockists are located in populous COVID-affected metros/Tier-I cities, they found themselves in containment areas and red zones with crippling restrictions on vehicle movements. Markets are open only for limited time slots, and moving stock along the usual route is nearly impossible for these wholesalers/sub-stockists. Most wholesalers have been forced to restrict their sales to walk-in customers (if they can open) or shut shop temporarily. Even during this period of lockdown, demand for FMCG products did not abate since this category mostly constitutes essential items. However, since retailers could no longer rely on their usual wholesalers, they had to turn to the local distributors. Like the long solar eclipse on May 29, 1919 which offered an opportunity, for the first time, to view and validate Einstein’s theory of General Relativity (by shutting down unrelated factors which are difficult to normally control), this forced exit of wholesalers from the distribution network, offered an unprecedented opportunity to understand the true nature of demand distribution across various geographies of India. As discussed, this is not discernible in the normal course due to the effects of wholesaling, discount schemes and heavy skew in distribution systems towards urban, as compared to rural. This unique situation has given companies an opportunity, for the first time, to see pure direct distribution in action. This period can reveal: <ul><li>What is the customer buying pattern (product and territory mix)? Do rural and urban consumers have significantly different product choices? Are urban consumers really more than rural?</li><li>What is the impact of direct distribution on availability in the market (in the absence of indirect distribution)? Are the company’s products now available with more or fewer retailers? Is there a change in the range of a company’s products available at retailers?</li><li>What is the potential of sales that was hidden by indirect distribution? What is the true viability of direct distribution?</li></ul>The results of the research conducted by Vector consultants have been surprising but conclusive: 1. Shift in Urban/Rural Sales MixContrary to expectations that the potential of urban consumers is significantly higher than that of rural consumers, it was found that this may not be true or has changed over time. Industry sources have revealed that many product categories, despite the decline in overall volumes largely due to supply issues, saw a marked shift in secondary sales split between urban and rural markets. Pent-up demand for a range of products is now coming to the fore from rural/semi-rural areas. One Sales manager from a leading FMCG in Punjab (the state had strict lockdown measures in place) shared that their rural/urban sales split has changed from 20/80 to 30/70. That is a whopping 10% point jump that occurred in the last few months. Similar trends were reported from UP and Karnataka. With almost 14 million mom –and-pop stores serving essentials to the population, it is not a far-fetched assumption that the sum of all consumption in rural/urban areas will at least equal that of urban markets, if not outweigh it. 2. Demand pattern of products is changingWhat is even more surprising is that many of the products in which they are seeing an increasing offtake from the rural and rurban areas are products primarily targeted at the urban consumers! Sources in the FMCG industry point out that categories like UHT milk, breakfast cereals, hand sanitizers and liquid soaps are flying off the shelves. 3. Availability at retail counters has made a quantum jumpVector consultants have also observed an increase in product range availability and sales across surveyed stores in Mumbai and Kolkata.Conversations with retailers made the reason for this clear. Earlier, these retailers mostly sourced their products from wholesalers who only carried and sold them a limited range. Now that they were sourcing from distributors, along with the fast movers, all the relevant range is also piggybacking into the store. The fact that there is increased demand for a whole range of products from customers, who are now relying heavily on the local stores because of movement restrictions during lockdown, is helping. However, it is evident that if retailers can be serviced by distributors, product range availability will improve.4. Small and till-date unserved retailers are several times more in number than the existing base of retailers in the direct distribution networkThis new pattern of buying from retailers is also making these counters viable for distributors to serve. Moreover, distributors are trying to serve ALL demand right now as any sales at this time is precious. They have given up the tendency to cherry-pick retailers (aided by the fact that most retailers are ready to pay upfront and schemes/margin cuts are non-existent). This has revealed the vast, underserved number of stores for direct distribution to companies. Much to the surprise of many distributors and FMCG companies, the number of counters has doubled in many areas. This has resulted in these distributors seeing a significant jump in sales, especially in rural areas. Even if we consider that some of this may be because e-commerce and modern trade faltered, FMCG companies still saw sales growth here (and at better margins!).  These observations and trends clearly strengthen and validate Vector’s work in enabling clients to exploit the true potential of their sales by making sure that they can effectively tap consumption opportunities at small markets/numeric stores while enhancing their range and shelf-share at large stores and urban centres.The TOC Way of DistributionUsing TOC pull distribution, we solve problems/conflicts using a powerful thinking process which helps us state the core conflict and invalidate erroneous assumptions that have long prevented simple, elegant, and powerful solutions from being adopted.The conflict in distribution is: Cost of Servicing v/s Consumption Opportunity In order to continuously increase sales, stock must be supplied to ALL points of sales. A sale happens NOT when a distributor or wholesaler buys stock from a company. A sale happens when a consumer buys the product. All else is a stock transfer from one location to another! But, in order to minimize the Cost of Sales, companies MUST minimize all variable costs. Fixed costs of distribution cannot be brought down dramatically beyond a point. Variable costs – freight of servicing, for instance, can be minimized. Distributors are trying to accomplish this by servicing large orders or servicing infrequently. It makes business sense! We’ve realized above what limiting direct distribution reach can do to a company’s sales! Therefore, how do we serve ALL retailers (points of sale) without becoming unviable?To break this conflict, we propose a breakthrough solution involving a significant release of a distributor’s working capital from inventory, thus achieving high ROI. This released working capital is deployed to reach out to ALL relevant retailers DIRECTLY without increasing variable costs! The current lockdown and transition period post-lockdown is a unique opportunity like a solar eclipse, which will block all the noise in the distribution network and unveil the true potential of not only direct distribution but also challenge archaic beliefs of sales and marketing managers about product mix, market mix, and the power of the small neighbourhood kirana store. What remains to be seen is who will realize this opportunity and make the correct tactical moves. It will also be interesting to see which set of companies will be brutally honest when they see what unfolds in the coming weeks and then face the mirror about what needs to change. Only these companies will become immune to future pandemics and will be in a position to continuously increase their market share, in good times and more so in “bad times”.

Key Takeaways

A study was conducted to understand the impact of the absence of wholesaling on the market availability of FMCG products during and immediately after the complete lockdown. The results are surprising but conclusive.

Solar eclipse in sales & distribution

<h5>Introduction</h5>Over the years, many big FMCG companies of the world have striven to make inroads into India’s expanding markets. New domestic players have also emerged, threatening to capture market share from global giants. Both international players and Indian giants have focused considerable research efforts on understanding the buying patterns of the Indian consumer. Based on the results of these extensive studies, most companies now offer a fairly demarcated basket of products and pack sizes for the country’s urban and rural consumers, respectively. Organisations have also invested significantly in developing a distribution network that can reach these products to their consumers. However, what is interesting to note is that these companies’ direct distribution, while better in urban areas, tends to dissipate as urban becomes urban and rural. Naturally, there is no debate on how direct distribution is superior (better margins, better control over how products are marketed, etc.) to indirect distribution; companies strive continuously to improve it. However, they believe that trying to cover 100% of their market through direct distribution is not a good or practical idea. This is because of two firm beliefs. Firstly, it is assumed that 80% of the sales will accrue from 20% of the country (Pareto principle). So, even though 60%-70% of the population lives in rural India, the most companies’ main focus is on urban areas. Secondly, even though there is evidently some potential in rural India, it is considered economically unviable to service the outlying, scattered areas of the country directly. It is believed that indirect distribution is a better method to make inroads to these rural markets – goods will travel across territories via the wholesaler network and assure good enough coverage of that region. <figure class="image"><img style="aspect-ratio:4000/3359;" src="https://backend.vectorconsulting.in/storage/editor_uploads//cg-article-5-image-1_1733792231.jpg" width="4000" height="3359"></figure>So, even companies that considered the gold standard in distribution have created a distribution system with some direct distribution but also relies significantly on indirect distribution. <h5>How conventional distribution works and the impact</h5>Companies appoint distributors for designated areas. Distributors are expected to service all the retailers in their respective areas. Now, companies have primary sales targets to achieve, so they 'push' material using monthly/quarterly volume-based discounts to these distributors every month (end) to achieve those targets. Distributors who have limited working capital, when ‘pushed’ to keep stock higher than required for immediate consumption, often end up with working capital issues. To release capital, distributors also begin to push stocks to retailers. When burdened with this unwanted stock, retailers delay the payment to distributors. This leads to higher outstanding in the market for the distributor. When their outstanding increases beyond a comfortable level, distributors enter the vicious loop of trying to free their working capital by pushing big volumes at lower margins and passing on part of their schemes and margins to these retailers. The combined pressure of high outstanding and lower retention of margin creates viability issues for some distributors, forcing them to cut their costs and scale by compromising the reach and/or frequency of serving “smaller” retailers. Therefore, in almost every market, there are retailers who are not serviced by the distributors because they do not order in big volumes. These retailers remain underserved or not served at all by company-appointed distributors. This is common, not just in upcountry or rural regions but also in the heart of urban areas where retailers are left out of the distribution network.<figure class="image"><img style="aspect-ratio:4000/3459;" src="https://backend.vectorconsulting.in/storage/editor_uploads//cg-article-5-image-2_1733792249.jpg" width="4000" height="3459"></figure>There indeed is a certain level of demand (footfalls) at these small retailers. If a company’s products are not present at these retail outlets, it is sales loss for the company, however small. The summation of such lost opportunity at the vast multitude of small retailers is a huge number, and this is not lost on the managers of FMCG companies. So, to reach these retailers, companies have a system of indirect distribution in place. Companies sell in bulk to big wholesalers at cheaper rates with the intention of getting sales from these unserved areas. Since this indirect network is in place, companies don’t believe that they have any ‘reach’ problem. However, unbeknownst to them, the wholesalers’ modus operandi is creating a bigger problem for the company.     <h5>The conundrum with wholesalers</h5>Wholesalers are passive sellers who mostly sell only to those who approach them. Even if they service retailers, they decide<ul><li>Which outlets will they serve.</li><li>Which products will they keep.</li><li>What price will they bill the retailers. </li></ul>This makes the complete system opaque to the company. The company is left with no option but to make more and more effort to please the wholesaler to increase sales and protect market share. So, increasing sales becomes synonymous with better schemes for volume buyers. Better schemes for volume buyers create price disparity, which in turn hurts the company’s direct distribution channel. This reliance on wholesalers creates a vicious loop which is fed by the desire to achieve higher sales numbers in the short term. <figure class="image"><img style="aspect-ratio:4000/4319;" src="https://backend.vectorconsulting.in/storage/editor_uploads//cg-article-5-image-3_1733792265.jpg" width="4000" height="4319"></figure><h5>The conventional ‘fix’ and why it does not work</h5>A few companies have realised the problems presented by wholesaling and have tried to solve them using one or both of the following approaches to increase the scope of direct distribution.1. The frequency lever It is believed that the cost of serving small orders from small and scattered retailers is very high. Hence, companies try to reduce the frequency with which orders are collected from small retailers. Then, whenever they visit, they can receive bigger orders, which will make up for transportation costs. This practice, by design, forces retailers to keep larger quantities than their immediate need, which blocks working capital. Since small retailers are more constrained by the shortage of cash than the bigger retailers, their natural response to this mode of operation is to limit the product range to protect the working capital and also to find a wholesaler willing to service them more frequently, which would reduce the need to keep higher stock. In both options, the range kept at the retailer’s end gets compromised, depriving the company of reaping the benefits of untapped market potential. <figure class="image"><img style="aspect-ratio:4000/4349;" src="https://backend.vectorconsulting.in/storage/editor_uploads//cg-article-5-image-4_1733792281.jpg" width="4000" height="4349"></figure>2. Aggregation: Increasing order volume using sub-stockist Companies sometimes appoint a sub-stockist who would aggregate all orders from smaller retailers and buy one large lot from the appointed distributor.  It is expected that this sub-stockist will supply the material to small and scattered outlets, which the appointed distributor does not serve. However, two things happen in this mode of operation. <ul><li>Sub-stockists start billing retailers mapped to appointed distributors creating territory conflicts in the market.</li><li>Sub-stockists bill small parties but, with regular service, sales from these outlets start to grow, which then looks lucrative for the appointed distributor. This also leads to territory conflict between two parties and fuels price war from time –to-time, creating viability issues for both parties. If sub-stockists lose many of their retail counters to distributors, they may drop the business of the company. </li></ul><figure class="image"><img style="aspect-ratio:4000/4619;" src="https://backend.vectorconsulting.in/storage/editor_uploads//cg-article-5-image-5_1733792291.jpg" width="4000" height="4619"></figure>In these circumstances, to stay viable, both stockists and distributors are likely to start cherry-picking retailers who give high-volume orders and service only those. Or they may choose to reduce order-taking frequency. In either case, availability at retail counters reduce. Lower availability will lead to lower sales. <h5>COVID-19 lockdown – A solar eclipse in distribution</h5>In spite of all its limitations, FMCG companies, along with their whole distribution ecosystem of distributors, retailers, etc, have learned to live with the conventional way of doing business mainly because many others in their industry follow similar practices and suffer from the same problems. However, with COVID-19 and the consequent lockdown of the country, this distribution system got a major shock. Since most large wholesalers/sub-stockists are located in populous COVID-affected metros/Tier-I cities, they found themselves in containment areas and red zones with crippling restrictions on vehicle movements. Markets are open only for limited time slots, and moving stock along the usual route is nearly impossible for these wholesalers/sub-stockists. Most wholesalers have been forced to restrict their sales to walk-in customers (if they can open) or shut shop temporarily. Even during this period of lockdown, demand for FMCG products did not abate since this category mostly constitutes essential items. However, since retailers could no longer rely on their usual wholesalers, they had to turn to the local distributors. Like the long solar eclipse on May 29, 1919 which offered an opportunity, for the first time, to view and validate Einstein’s theory of General Relativity (by shutting down unrelated factors which are difficult to normally control), this forced exit of wholesalers from the distribution network, offered an unprecedented opportunity to understand the true nature of demand distribution across various geographies of India. As discussed, this is not discernible in the normal course due to the effects of wholesaling, discount schemes and heavy skew in distribution systems towards urban, as compared to rural. This unique situation has given companies an opportunity, for the first time, to see pure direct distribution in action. This period can reveal: <ul><li>What is the customer buying pattern (product and territory mix)? Do rural and urban consumers have significantly different product choices? Are urban consumers really more than rural?</li><li>What is the impact of direct distribution on availability in the market (in the absence of indirect distribution)? Are the company’s products now available with more or fewer retailers? Is there a change in the range of a company’s products available at retailers?</li><li>What is the potential of sales that was hidden by indirect distribution? What is the true viability of direct distribution?</li></ul>The results of the research conducted by Vector consultants have been surprising but conclusive: 1. Shift in Urban/Rural Sales MixContrary to expectations that the potential of urban consumers is significantly higher than that of rural consumers, it was found that this may not be true or has changed over time. Industry sources have revealed that many product categories, despite the decline in overall volumes largely due to supply issues, saw a marked shift in secondary sales split between urban and rural markets. Pent-up demand for a range of products is now coming to the fore from rural/semi-rural areas. One Sales manager from a leading FMCG in Punjab (the state had strict lockdown measures in place) shared that their rural/urban sales split has changed from 20/80 to 30/70. That is a whopping 10% point jump that occurred in the last few months. Similar trends were reported from UP and Karnataka. With almost 14 million mom –and-pop stores serving essentials to the population, it is not a far-fetched assumption that the sum of all consumption in rural/urban areas will at least equal that of urban markets, if not outweigh it. 2. Demand pattern of products is changingWhat is even more surprising is that many of the products in which they are seeing an increasing offtake from the rural and rurban areas are products primarily targeted at the urban consumers! Sources in the FMCG industry point out that categories like UHT milk, breakfast cereals, hand sanitizers and liquid soaps are flying off the shelves. 3. Availability at retail counters has made a quantum jumpVector consultants have also observed an increase in product range availability and sales across surveyed stores in Mumbai and Kolkata.Conversations with retailers made the reason for this clear. Earlier, these retailers mostly sourced their products from wholesalers who only carried and sold them a limited range. Now that they were sourcing from distributors, along with the fast movers, all the relevant range is also piggybacking into the store. The fact that there is increased demand for a whole range of products from customers, who are now relying heavily on the local stores because of movement restrictions during lockdown, is helping. However, it is evident that if retailers can be serviced by distributors, product range availability will improve.4. Small and till-date unserved retailers are several times more in number than the existing base of retailers in the direct distribution networkThis new pattern of buying from retailers is also making these counters viable for distributors to serve. Moreover, distributors are trying to serve ALL demand right now as any sales at this time is precious. They have given up the tendency to cherry-pick retailers (aided by the fact that most retailers are ready to pay upfront and schemes/margin cuts are non-existent). This has revealed the vast, underserved number of stores for direct distribution to companies. Much to the surprise of many distributors and FMCG companies, the number of counters has doubled in many areas. This has resulted in these distributors seeing a significant jump in sales, especially in rural areas. Even if we consider that some of this may be because e-commerce and modern trade faltered, FMCG companies still saw sales growth here (and at better margins!).  These observations and trends clearly strengthen and validate Vector’s work in enabling clients to exploit the true potential of their sales by making sure that they can effectively tap consumption opportunities at small markets/numeric stores while enhancing their range and shelf-share at large stores and urban centres.<h5>The pull-based distribution model</h5>Using the pull distribution, we solve problems/conflicts using a powerful thinking process which helps us state the core conflict and invalidate erroneous assumptions that have long prevented simple, elegant, and powerful solutions from being adopted.The conflict in distribution is: Cost of Servicing v/s Consumption Opportunity In order to continuously increase sales, stock must be supplied to ALL points of sales. A sale happens NOT when a distributor or wholesaler buys stock from a company. A sale happens when a consumer buys the product. All else is a stock transfer from one location to another! But, in order to minimise the Cost of Sales, companies MUST minimise all variable costs. Fixed costs of distribution cannot be brought down dramatically beyond a point. Variable costs – freight of servicing, for instance, can be minimized. Distributors are trying to accomplish this by servicing large orders or servicing infrequently. It makes business sense! We’ve realised above what limiting direct distribution reach can do to a company’s sales! Therefore, how do we serve ALL retailers (points of sale) without becoming unviable?To break this conflict, we propose a breakthrough solution involving a significant release of a distributor’s working capital from inventory, thus achieving high ROI. This released working capital is deployed to reach out to ALL relevant retailers DIRECTLY without increasing variable costs! The current lockdown and transition period post-lockdown is a unique opportunity like a solar eclipse, which will block all the noise in the distribution network and unveil the true potential of not only direct distribution but also challenge archaic beliefs of sales and marketing managers about product mix, market mix, and the power of the small neighbourhood Kirana store. What remains to be seen is who will realise this opportunity and make the correct tactical moves. It will also be interesting to see which set of companies will be brutally honest when they see what unfolds in the coming weeks and then face the mirror about what needs to change. Only these companies will become immune to future pandemics and will be in a position to continuously increase their market share, in good times and more so in “bad times”.

<h4>Solar eclipse in sales & distribution </h4>

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Vector Consulting Group - Research and Publications: COVID-19 pandemic gave FMCG companies an opportunity to relook at their distribution models? Know more.

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