Every product from snacks to medicines needs a suitable distribution channel to reach its target audience. This is very clearly illustrated by the leading snack manufacturer, Kiwi Foods. They being one of the best snacks manufacturers in India, produce the most amazing quality of snacks. The number one reason why they are the leading snack manufacturer in India is because they have got one of the most effective distribution channels for supplying their products to wholesalers and retailers. Their manufactured snacks travel through various cities in Northern India. Let’s learn more about distribution channels in the field of FMCG.
Depending upon the kind of product and your target audience, you can choose to involve no channel partner or channel partners like retailers. When you are working with no channel partner involved then, you may be able to deliver the product directly to the consumer, however, this is not feasible when you are targeting a wide range of audiences. This is where the retailers, wholesalers and distributors come into play. This is how we define the channel of distribution and the choice of the distribution channel varies as per the type of product, its consumption and target audience. The type of FMCG distribution model followed in rural areas is different from that of urban. These two models are explained below:-
FMCG Urban Distribution:-
In urban areas, the distribution channel begins with the factories, which is the manufacturing unit for the products. From here, it moves to CFA, clearing and forwarding agencies. CFA stores the stock of the product and further sends it to the distributors as per their requirements. Distributors in return pay the required amount to them. Now depending upon the area of a state and no. of distributor’s present, no. of CFA units may vary from one state to another. CFA is also confined to send the products only in the allocated areas. Now, moving ahead to the distributor, they follow two ways of further selling the products. Either they can directly send it to the retailers, from where the end-user can purchase it. Or, the second channel that a distributor can follow is selling the product to a wholesaler, from where the small shopkeepers/retailers come to further purchase the product. In this second model, the distributor is unable to sell the product directly to these small scale shopkeepers. This is how FMCG distribution works where the density of population is high and infrastructure is developed.
FMCG Rural Distribution:-
Unlike rural areas, the density of population is less, scattered and infrastructure is also not well developed. Hence, FMCG rural distribution works on a different approach. This also begins with factories, then goes to CFA from where it goes to super stockiest. This super stockiest is like a mini CFA, which is usually located in district headquarters. They further sell the products to sub-distributors, which works with multiple organizations. They further sell the products to small villages, from where it reaches local households.
Conclusion:-
Efficient distribution channel is an indispensable part of any FMCG business. No matter if you are the best snack manufacturer in India or a budding one, an effective distribution channel is must.
