Project report for Wholesale distribution

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Introduction

There has been a significant expansion in distribution channels in India during the past few years. The Indian retail market, currently estimated at $490 billion, is projected to grow at a compounded annual growth rate of 6% to reach $865 billion by 2023, according to Oxford Economics. The total number of retail distribution outlets in the country is estimated at over 12 million, mostly family owned businesses. An annual growth rate for the fast moving consumer goods (FMCG) sector is predicted at 11% during the next 10 years. Most Indian manufacturers use a three-tier selling and distribution structure that has evolved over the years. This structure involves redistribution stockists, wholesalers, and retailers. As an example, an FMCG company operating on an all-India basis could have between 40 and 80 redistribution stockists (RS). The RS will sell the product to between 100 and 450 wholesalers. Finally, both the RS and wholesalers will service between 250,000-750,000 retailers throughout the country. The RS will sell to both large and small retailers in the cities as well as interior parts of India. Depending on how a company chooses to manage and supervise these relations, its sales staff may vary from 75 to 500 employees.  Wholesaling is profitable by maintaining low costs with high turnover, with typical FMCG product margins anywhere from 4-5%. Many wholesalers operate out of wholesale markets. In urban areas, the more enterprising retailers provide credit and home-delivery.  Now, with the advent of shopping malls, companies talk of direct delivery and discounts for large retail outlets.There has been a significant expansion in distribution channels in India in recent years. India is expected to become the world's third-largest consumer economy by 2025.India’s Business to Business (B2B) e-commerce market is expected to reach $700 billion by 2020. So the opportunity of the distribution industry is enormous

Market potential & Strategy

Most Indian manufacturers use a three-tier selling and distribution structure that has evolved over the years.  This structure involves redistribution stockists, wholesalers, and retailers.Wholesaling is profitable by maintaining low costs with high turnover, with typical FMCG product margins anywhere from four to five percent. Most FMCG and pharmaceutical companies use clearing and forwarding (C&F) agents for distribution, as the consumer behaviour is changing, the scope of logistc distribution is also increasing. Prompt delivery,enough time on credt sales etc are the key differentiator. Also there will be manufacturer or service provider based SOP( Standard Operating Procedures) in place.

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