Product Distribution Models in India
Distribution channels are the main strength of the Indian market. It helps companies reach their products not only in their home state but also in other states of the country and globally
More than 70% of the B2B distribution market in India is unorganized. Reaching a sizable market is the biggest challenge for small and medium size companies.
Taking the products beyond the local market becomes even more challenging due to language barriers, diverse cultures, high transportation costs, etc.
In a few cases, India’s distribution model may have many intermediaries. Costs and benefits vary based on the number of intermediaries. Let’s take an example of a wholesale model — in which large wholesalers buy products directly from manufacturers and sell them to their existing retailers — this will provide less control over your product distribution as wholesalers are free to sell your products anywhere at any cost they can. You get only limited reach in this case.
distributor model — In this model, distributors act as an extension of your brand and operate within a specified territory, margins are also structured by manufacturers which gives more control to the brand over the selling process of their products
Other distribution channels- Other distributor channels include dealers, who as both wholesalers and retailers and directly deal with manufacturers. Stockiest and sub-stockist are also a part of this distribution model
C&F Agents :
C&F agents are carrying and forwarding agents. They are the 3rd party service providers responsible for providing transportation, logistics, warehousing, distribution, and fulfillment services for a particular region on behalf of manufactures
C&F Agent’s Commission: They get 2% to 8% commission from the company (Manufactures) depending upon product and volume
Super Stockiest also acts as a small-scale C&F Agent. There is one major difference between Super Stockists and C&F agents. While a Super Stockiest mainly focuses on logistics and transportation but also takes care of some sales, marketing, and other activities in addition to logistics, transportation & warehousing.
Small and medium size companies who are looking to capture a smaller market prefer appointing Super Stockist and they are more cost-effective and amenable
Super Stockiest Commission: 6% — 8% depending upon product and volume
Wholesalers are people who buy products in wholesale quantities either directly from distributors or from manufacturers and resell the products on higher margins to their retailers. They are free to sell the products at any cost and in any location of their choice.
Wholesale markets can be found in every city, Sadar Bazar is a famous wholesale market located in Delhi, and Gandhi Market is to wholesale clothes and fabrics. BurraBazaar is a popular wholesale bazaar in Kolkata.
Distributors buy products directly from manufacturers like wholesalers, however, they act as an extension of a brand. Distributors not only fulfill the orders but also work closely with manufacturers and share sales performance reports, market trends & customer feedback.
Distributors also take part in brand marketing, sales promotions, and other favorable activities for the brand as per their distribution agreements
Distributor’s commission: Distributors get 8% — 20% commission based upon product and volume
Dealer: Dealers are large retailers who buy products directly from manufacturers in huge quantities and work closely with manufacturers/brands that sell directly to end consumers from their retail counters.
Dealers are mostly appointed for branded products
A retailer can be a local shop where end consumers buy the products from
Retailers get a maximum commission between 15% to 30% as the volume is low
In this model, the brand invests money in marketing and brand building. Franchises use brand equity to sell their products or services in their local market.
Franchises are mostly offered by well-known brands. Franchisor gives license to Franchise to use their process, intellectual property, business model, and authority to sell their products or services to end users or organizations
A distribution channel is essential to growing your sales and reaching a sizable market with the help of valuable online resources such as WantedDistributors .One can easily find target channel partners with their key information such as background, retail network, location, infrastructure, investment budget, etc. in seconds, get the hand-holding by industry experts, and appoint distribution partners in record time.