DISTRIBUTION DISRUPTIONS

I come from a World of traditional FMCG distribution having spent over 15+ years in it. We appoint a State level Stockist who bills it to City/town level distributor and then to Retailers. Walking upto 40 outlets in a daily sales route is a norm. Best days of my career, having learnt many nuances of people and business management right at the grassroots level.

Distribution is getting disrupted in unimaginable ways in past few years not just at the Retail level but also at the Consumer level. Enumerating some of the latest distribution disruptions:

CASH & CARRY

A retailer is the consumer here. With a business registration, Retailer can shop in this mega store located in outskirts where bulk buying alone is encouraged. METRO Wholesale India is the first one to start this format soon followed by Walmart & Reliance Market.

UDAAN

A B2B marketplace where buyers are again Institutional buyers with business registration. A Retailer or a Corporate can get access to multiple product categories under one platform. udaan.com is an online format of Cash&Carry store and for its resounding success, it managed to raise 1.5bn $ so far.

Distribution Cos.

Interesting model in distribution space where they create a platform similar to Amazon in offline World. Companies are creating their own distribution infrastructure and allowing brands to get onboarded to it. WGBL & Reliance Retail are pioneers in this model. Specialised operators like Waycool Food and Products Private Limited focus on Cold Storage brands only. It’s a big win-win for newer brands to reach Pan India market on the word go.

DARK STORES

New concept in the digital world where dark stores act as a backend for a frontend app/ entity. Why should a brand waste money on prime real estate when they actually don’t have any consumer facing? Many restaurant brands that we see on Swiggy / Zomato exists with dark store formats only. Cost efficiency is the key here. Quick commerce platforms Zepto do operate this way as well.

OO-DO MODEL

Webrooming is a concept in digital shopping where consumer research the product online and end up buying offline. Digital shopping lacks touch-and-feel factor. Order Offline-Deliver Online (OO-DO) model works to negate this anxiety. In a Lenskart.com store, a consumer can try the product and get convinced by buy it. Store keeps only sample inventory. Final order is fulfilled from a centralised factory and shipped directly to consumer’s address without any store level intervention.

QUICK COMMERCE

A quickest Unicorn status acquired by 2 Stanford College dropouts made this format popular in India. With dark stores in backend, an app efficiently delivers grocery at consumer doorsteps within minutes (ignore 10 min marketing story). Scale at which a platform builds multiple dark stores amplifies efficiency and customer experience. Quickly to join this bandwagon – Swiggy & Zomato for whom this proves to be a natural extension. None are expected to make money till a tipping point.

3PL

Third party logistics providers (3PL) are mushrooming to meet up the demands of brands & consumers. Increasingly people are inclined to use services like Porter / Lynk/ Dunzo for their basic delivery of packages instantly. Companies like Emiza / ShipDelight Logistics Technologies / Telyport help brands keep inventory in their warehouses and deliver them instantly (2 - 24 hours) to customers in a city. This enables brands to compete with the likes of Amazon Prime delivery promise.

Above are some happening trends and there might be more to it. Exciting times ahead for distribution models and there may be a future where a retailer will buy a product for a consumer from a platform and deliver it thru their store (all instantaneously). Imagine a weekly purchase of a retailer being fulfilled digitally by a distribution model and that speaks scale (few cos like Jumbotail & FMCG brands are working on this).

Digital play is the way forward everywhere and a combination of Online/Offline will work wonder for every stakeholder in the gambit of distribution.

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