In India, retail is growing at an exponential rate. If you are looking for a lucrative business as a distributor, the FMCG sector is the most sought after one. Over the next 10 years, distributorship opportunities in FMCG are expected to grow at 10-12% each year, according to Forrester Research.
However, it is important to note that the industry is highly competitive. To make your distributorship opportunities in FMCG successful, you must conduct thorough research to understand what type of distributorship works best for you.
This article is a complete guide to help you learn more about distributorship opportunities in FMCG and how to get started.
What is FMCG Distribution?
FMCG or Fast Moving Consumer Goods are products that have lower pricing but high consumption. Household products, clothing and food are the best examples of it. A consumer purchases the products from a retail store. Big Bazaar, D-mart or even the local grocery stores are examples of FMCG retailers.
An FMCG distributor is an individual who acts like a bridge between the manufacturer and the retailer. His role is to promote the products of a particular FMCG company that chooses him for distribution in certain locations. Depending upon the type of retailer you choose, the distributorship opportunities in FMCG vary.
Types of FMCG Distributorships
There are five types of FMCG distributorship opportunities that you can choose from:
1. Traditional FMCG Distributorship
This is one of the most common distributorship opportunities in FMCG to get started with. The general stores, local grocery stores and other smaller units are your outlets. The FMCG distributor procures goods directly from the manufacturers and distributes them to these stores based on the inventory requirements.
Points to remember:
- In the case of the traditional distributorship model, you need to know your local market very well.
- The reputation that you maintain in the market is extremely important to ensure that you have regular orders and make the most of distributorship opportunities in FMCG in this sector.
- You must also have a good transport network to ensure that your deliveries are on time.
- You also need a godown and necessary infrastructure to store your inventory in prime condition.
2. Wholesale Distributorship
These are distributors who mostly deal with perishable goods like wheat flour, pulses, rice etc. Retail outlets normally purchase them from a wholesaler. So a wholesale distributor is responsible for procuring these products from the source and delivering them to the wholesaler. Like other distributorship opportunities in FMCG, this sector also comes with certain demands.
Points to remember:
- You will not be dealing with any retail outlet directly with this distributorship opportunity in FMCG.
- Your storage and transportation procedures must be of the highest quality because you would mostly be dealing in perishable commodities.
- The wholesalers that you distribute to, must have a good network in the market in order to explore more distributorship opportunities in FMCG.
3. Modern Trade Distributorship
Modern trade outlets are the large retail stores that offer the most lucrative distributorship opportunities in FMCG. The best examples are D-Mart, Reliance Fresh and Big Bazaar. This market is difficult to break into because large corporations like these already have their vendors and distributors in place.
However, there are some options for you to enter the market. Get in touch with existing modern trade distributors. If there are any unique products that you can procure, you can find new distributorship opportunities in FMCG to distribute it through them.
Alternatively, you need to build a very strong network in the modern trade sector so that you can approach the retailers directly.
Points to Remember:
- Maintaining inventories with this scale of distribution is very challenging, making this one of the hardest distributorship opportunities in FMCG to fulfil.
- The investment in your inventories and the infrastructure to manage the stock is high.
- You need a very sophisticated transportation network in order to get more distributorship opportunities in FMCG with modern trade retailers.
- The best commodity to invest in is food and grain as most large modern trade distributors deal with premium foods, cosmetics and other items.
4. Institutional Distributorship
You can opt for direct Institutional Distributorship with institutions. Multinational corporations, railways or other government organisations come under this category. Personal monitoring is the biggest advantage that lets you explore lucrative distributorship opportunities in FMCG when you deal with these organisations. As soon as the stock is delivered in the given duration, your payment is processed.
Any FMCG company that provides products for these institutions prefers to use a distributor instead of choosing a retailer or a wholesaler.
Points to remember:
- Managing inventories for these opportunities is also very challenging.
- This is the best option for you if you have good contacts in government institutions.
- Only if you work on a contract basis, you will have to provide a payment-related grace period which may go up to 90 days.
5. Super Stockist Distributorship
You can find great distributorship opportunities in FMCG not only in the urban sector but also in rural areas. Super stockist distributors are responsible for getting the stocks of FMCG Companies to the small distributors in rural areas. They, in turn, deliver it to the retail outlets.
Super Stockist distributorship opportunities in FMCG make you the primary medium of procuring commodities for these sub-stockists.
Points to remember:
- In order to get more distributorship opportunities in FMCG in this model, you need to decide your location first.
- Having your godown in the district headquarters is the best option to provide FMCG distribution to rural areas.
You can pick any mode of distribution if you have a solid business plan. In order to become a distributor, here are some basics that you should keep in mind:
- Decide what FMCG product you want to deal in.
- Understand your local market and study the best distributorship opportunities in FMCG to sell the products.
- Ensure you have the necessary capital investment for your inventory.
- Get your logistics in place to improve your outcome. This includes your transport, labor, inventory management software etc.
- Invest in a godown only when you have a plan. Ensure that your godown supports scalability.
With choices for all scales of businesses, you can enjoy many lucrative distributorship opportunities in FMCG. However, it is also one of the most competitive sectors in India today. If you plan well and get started at the earliest, you can reap its benefits for the rest of your life.
|We hope our article answered all your questions. To get details about other franchise businesses in India, you can visit these linked articles:|
|How to become a distributor in India?||Organic products distributor||Wholesale distributor of Jewellery|
|How to start a distribution business?||Hindustan Unilever Distributorship cost||How to start online distribution business?|
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Q. Do I need any license to become a FMCG distributor?
Ans. Yes, a license is necessary for you to get started on monetising your distributorship opportunities in FMCG. First, you need to register your business as per the regulations in your state. Then, you need a license from the FMCG manufacturer in order to be able to distribute their products. This means that you will be under contract with the FMCG manufacturers that you choose. They recognise you as an authorised distributor who can sell their products to various retail outlets.
Q. What is the difference between a FMCG distributor and a wholesaler?
Ans. An FMCG distributor usually works exclusively with FMCG manufacturers. They normally have only one FMCG manufacturer from each sector that they procure the goods from. Wholesalers on the other hand, do not have any such obligation. They procure goods from distributors and sell them to retailers.
Q. Is there growth as an FMCG distributor?
Ans. As mentioned in the article, the distributorship opportunities in FMCG are expected to grow at a rate of 10% per year. This means that the demand and opportunities for FMCG distributors will increase as well.
Q. Is modern trade distribution better than traditional distribution?
Ans. The great thing about FMCG products is that the demand for certain products is always high, irrespective of whether they are sold through traditional or modern trade outlets. Of course, the volume that you sell through a modern trade retailer is much higher in comparison to traditional retailers. However, the latter depends upon your network in your locality. On the other hand, the pressure of maintaining inventory and dealing with large organisations makes modern trade distribution highly challenging. In the end, the type of distributorship opportunities in FMCG that you get or opt for depends upon your infrastructure and distribution capabilities.
Q. What are some vital skills that I need as a FMCG distributor?
Ans. In order to be a good FMCG distributor, you need to have good networking skills, people-management skills, planning and execution skills and relationship management skills. Problem solving is a big asset when it comes to getting more distributorship opportunities in FMCG as you may be faced with many issues related to transportation and funding, among others.