Diminishing profit margins of wholesalers and distributors (W&D) in FMCG supply chain

Abstract

Over-availability of distributors due to the reduction in small retail stores (rise of big modern trade stores like D-mart, Big Bazaar, etc. and E-commerce giants like Amazon, Flipkart) — small Kiranawalas are shifting to Wholesale and Distributors (W&D) business. Implication — Increased competition in distribution & wholesale marketing — driving down profit margins 2™ Level Impact — Decreased motivation of W&D, stickiness to a brand/company is reducing, increased volatility in the supply chain of the company b. Companies are focusing more on (1) CO (consumer offer) to final consumers to improve offtake of the respective brand and gain market share (ii) Increased Retailer margin to gain more shelf space & personal selling by retailer salesperson to improve overall sales volume (& gain market share)