FMCG Products ,An investment Opportunity for all

Fmcg Product Distribution an Opportunity & challenge In India

Hello Friends

I am  Shirish Sales Strategist and training Consultant from Pune.Welcome to my Blog. I wish to discuss with You,  the various  opportunities for Investment and moderate to good returns in Consumer goods industry. One can look forward to Avg 20% to 35 % returns on investment over a period of time.I have Started my career in Fmcg Industry and have been  trained  from Frontline Sales representative to the State level head . In every economy rich or poor the Vicious Circle of Boom and recession hits in almost between 8-12 years. the impact of recession comes on Consumer goods Demand Supply Cycle ,especially as buyers restrict their purchases- resulting into stoppage in production, so no sales as no demand and economy get  stucked in between as ,Cash revolving stops to some extent

However  Only  One Industry which is hardly affected is Fast moving consumers goods industry ,as it caters to daily needs products of consumers and irrespective of funds availability they are consumed. If see the Statistics for the recession we had in 2008 , everything had suffered and only Fast moving Consumers goods industry which sales most of the over the counter  (OTC) Products had not only maintained the Sales Volumes but had shown growth in turnover and Sales.

Now I am sure if anyone wishes to start Business can look forward as to be part of the FMCg Industry. Lets Understand the Various intermediaries in the Supply chain.

Manufacturer Sends Goods to Distributor/Super stockist

   

Distributor supplies to Retailers /Wholesalers in the assigned Market  area 

Super Stockist Suppliers to Small town distributors   

Retailers services the consumers in their locality                                      

        

                                                    

Lets understand the above chart and the inter mediators involved in the Fast moving consumer good industry.Some may find it very basic info but necessary to have the same.

Manufacturer : It is the first person in FMCG who has an Idea ,who manufactures goods as per the need of the Consumers. He obtains the raw material, produces finished goods and make available same for the Use to consumer.

CFA : is a Carrying and forwarding Agent who has Huge go-down space with huge capacity and stores the goods in his go-down his remuneration is fixed .His main function is to store sufficient stocks in his go-down and execute the orders received from Distributors, Super stockist  arranging the despatches ,on time with the help of Transporters. CFA is not responsible for collection of payments, he only provides his services and gets remuneration for the same

Distributor /Stockist : Distributor or Stockist is main link who manages the distribution of goods in assigned area. They are Local suppliers who have infrastructure to ensure timely supply of products to Retailers in the particular locality or area. Distributor places orders with the Company and supplies the same I market place.for a Distributor they need infrastructure ,like goods  carrying vehicles, Salesman Delivery boys, accounts  billing staff, small office, internet connections computer to make the operations smoothly. Distributor buys the goods from Company and sells the goods to retailers ,he has invest money in goods on which company gives commission. He can sell either in cash or can offer credit in the market place , as per situation demand. Normally a Distributor can serve 300/400 retail outlets in the area with good services, to be cost effective and earn good profits in terms of ROI. we will discuss the Roi concept in detail later on. The distributor has  bears the risk of offering   credit,in the market place,and the company is not responsible for bad debts if any occurs. Distributor being a localite have good contacts knows the retailer very well so chances of loss or bad debts are minimum. Distributors also supplies goods to Wholesalers who sells to retailers where distributor may not reach.

Wholesalers :They  are nothing but Big retailers who are normally located in Heart of marketplace Bazar or mandi and sales goods to small retailers.They have all products available and retailer is at advantage that he gets all his requirements in required quantity under one roof only. As they buy in huge quantity they are in a bargaining position and gets extra commission, from distributor ,sells goods at the same prize or rate of retailer,as they work on very less margin and believes on turnover business.He is likea day trader in share markets buys and sells daily ,and books profits, may not very loyal, buys from anyone who gives more margin.

Super-Stockist : Super stockist is  nothing but a Distributor who caters large area may be a whole district or group of two three districts and supplies goods to small distributors or small town distributors. The concept of super stockist has emerged as india is a country where 70% of its market is scattered and in rural towns. For CFa to provide services in interior towns was challenging but ,if you have a super stockist at district level or taluka level he can further take care of needs of small town distributors. normally Super stockist supplies goods on advance payment and at their own discretion may or may not offer credit to the distributors under him. this model serves best for Fmcg industry, as stocks are available near the small towns and they can place the orders in small quantity with super stockist and it is very easy logistically to supply on time, so market gets services and availability of goods in each and every town of the country.

What we have discussed is a traditional way of business but still has it own distinct advantages. With the revolution in technology with internet and mobile accessibility everyone has info at figurtips at a click of mobile. So a New concept has emerged of Online marketing .Online marketing  is direct or one step contact between Consumer and the Product manufacturer. Online marketing has got its own advantages as well as shortcomings. Consumers gets product at cheaper rate as all the intermediaries from CFA –Stockist-Retailers are removed so the cost of their services can be passed on to the end consumer. Online marketing has given good boost to Supply chain management , the courier industry.

Friends so far I have discussed the structure of Fmcg   Industry ,today, in the next Blog I would discuss more about the dynamics specially related to Sales in detail. The above blog notes might be known to everyone but can really help the New Investor who is looking to invest funds in to business or looking for an opportunity to earn good R.O.I.

To manage all the Intermediaries we need  Sales People , to have maximum Output with minimum expenses we need SMART PEOPLE  and they have a very important role to play .they serve as a very important Link between the Company and the End market place where sale happens.so we will discuss about the role of Sales Staff in the next Blog.

Myself shirish have spent almost a decade plus in FMCG, learned ABC of Sales as a front-liner, Representative with Reputed Cos like Marico, Wipro Cons care, Murugappa group and had reached to a state head level. Currently we are into training FMCG, Banking and service Industry.It is my pleasure to share my experience ,which can be useful to the existing Sales organisation as well as people who are entering into the field

Lets stay in touch , watch this space for new Tips On sales on my blog SalestipsbyShirish

Regards

Shirish S. Patil

Sales Strategist & Sales Training Consultant

Pune

Email: shirish.patil@hotmail.com,     Website : @salestipsbyshirish                          

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